Trade barriers are set in place for a reason, to stifle economic trade, and to help out their own economy. Back in March, 17 countries of the 20 countries in global trade, violated their trade agreements to not use protectionist policies. Protectionist policies are basically the restraining of trading between two countries because of prices or other factors. Originally, all the countries vowed to not let this happen, but it did, and it could affect the global economy drastically.
Trade wars are not unusual, but highly not liked because it freezes the trade in those countries and decreases their real GDP. According to the Washington Post, many countries, including the U.S., have started to take measures to find ways to make a bigger profit, even if it is violating the NAFTA and WTO rules. An example of this would be, China and India because of the recent tax subsidies that were raised for domestic exporters. This means that these subsidies will help those domestic exporters lower their prices, because of the supply of their money they just received, and initiating a competitive advantage to the exporters, because they can now sell for less and still make a big profit.
This of course relates to the classroom work we have been doing because we weigh the cost and benefits of trade with trade barriers, tariffs and quotas. Basically, if we were to use a price and quantity graph, of demand and supply, for my example in the last paragraph, the total supply with a subsidy curve would be shifted to the right from the equilibrium supply, thus having quantity of the product increase and the price decrease. This in simple terms means that they can now sell more of a certain product for a lower price because of a government subsidy.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703218.html
Thursday, April 30, 2009
The Currency of Zimbabwe By Shane Tully
Just recently, Zimbabwe has gone into hyperinflation. The hyperinflation is sure not a good word their economy and was caused by excessive printing of money by their current president Robert Mugabe. He,being the leader since the country became independent from Great Britain in 1980, is now 85 years old and has recently joined the opposition government, controlled by Morgan Tsvangirai, that it will no longer use the Zimbabwe's currency for a whole year. This was mostly out of fear that there country's currency could soon turn into worthless paper.
The country of Zimbabwe is currently in hyperinflation mode because of the 230 million, that's right, million percent increase in inflation. The obvious consequences to this economic environment certainly has put a detrimental effect on their prices of goods and services. This continued for months and has recently fallen again to even lower consumer prices.
Some suspicion has arose about the ways Mugabe is running the country though. Recently critics have said that he "has destroyed one of Africa's most promising economies through controversial policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers" (Zimbabwe shelves), but Mugabe denies the charges and says that it's the enemies of his that oppose his nationalistic policies.
This most certainly relates to what we are doing in the class room right now. For one thing we just reviewed foreign currency exchanges and how they depreciate and appreciate. In this case, of course we have a vast supply of Zimbabwe's currency out in the country. The problem is though that since there is way too much, the demand for it has skyrocketed downward. Basically if we were going to compare it to the U.S., we would be able to buy a lot more for our money, and I mean a lot more. This would also mean that we would import more, which is what were not doing right now since they don't make various different goods that we need and because of the unemployment rate there is higher than 90%, which obviously means there not getting much done to distribute any products.
http://www.reuters.com/article/worldNews/idUSTRE53B0SF20090412
The country of Zimbabwe is currently in hyperinflation mode because of the 230 million, that's right, million percent increase in inflation. The obvious consequences to this economic environment certainly has put a detrimental effect on their prices of goods and services. This continued for months and has recently fallen again to even lower consumer prices.
Some suspicion has arose about the ways Mugabe is running the country though. Recently critics have said that he "has destroyed one of Africa's most promising economies through controversial policies, including the seizure of white-owned commercial farms for redistribution to inexperienced black farmers" (Zimbabwe shelves), but Mugabe denies the charges and says that it's the enemies of his that oppose his nationalistic policies.
This most certainly relates to what we are doing in the class room right now. For one thing we just reviewed foreign currency exchanges and how they depreciate and appreciate. In this case, of course we have a vast supply of Zimbabwe's currency out in the country. The problem is though that since there is way too much, the demand for it has skyrocketed downward. Basically if we were going to compare it to the U.S., we would be able to buy a lot more for our money, and I mean a lot more. This would also mean that we would import more, which is what were not doing right now since they don't make various different goods that we need and because of the unemployment rate there is higher than 90%, which obviously means there not getting much done to distribute any products.
http://www.reuters.com/article/worldNews/idUSTRE53B0SF20090412
Katy Prairie Houston Texas By Shane Tully
With the recent stimulus plans President Obama has put into place, there is a lot of spending to do. With the billions of dollars in stimulus, the government has left about $27.5 billion to the states to spend on transportation. The conflict in mind in this article is about the recent activity in the Katy Prairie region in Houston, Texas. The States wants to build a new highway with its new money, but environmentalists are not too happy with this plan. Environmentalists have lately been trying to oppose the plan and have even filed a lawsuit to have the project stopped, so someone can first do an environmental review of the prairie. President Obama has also commented on the issue and says that the project would use renewable energy, energy efficient buildings, and that the stimulus plan gives tax credits to people who own hybrid vehicles.
The current times in our economy have been bad, and President Obama has gone through a whole lot of mess that former President Bush has left behind. Obama’s views on this economic issue are geared towards more government spending and stimulus. His fiscal policy would be best described as an expansionary effort, but its not looking that way so far.
In this article, the author shows the ways of how the current state of Texas is dealing with their spending money on transportation. Many people have gotten involved on this issue, including environmentalists, governors, and other government officials. The conflict is that the Katy Prairie reserve is located just outside of a large city, Houston. Government officials from this state have set out a plan to build a highway right through this prairie for future use, as the state grows in population. But, environmentalists see this as a threat to the wildlife that lives there and have been trying to block this road from being built. On the other hand, Houston is becoming a larger and larger city everyday and some government officials see this as an opportunity to get ahead on the population boom, other than just letting it happen.
Because this stimulus bill gives full control to the states they can consider this a key issue to use the money for. In the article as well, it points out that under the Recovery Act this, according to Mr. Shapiro, “creates jobs by investing in immediate projects such as highways, bridges and tunnels — and within limitations to prevent waste, fraud, and ‘highways to nowhere’ — grants the states and their citizens broad discretion to choose which highway projects get funding,” (New York Times 2). Although, this is an opinion oriented article and there seem to be many good possibilities to make their decision based on any of them.
This article relates to what we are doing in class because it shows the various monetary and fiscal policies our government is trying to use by implementing the stimulus plan. Another thing is that it closely relates to how we are learning about the federal reserve and how they produce and give the money to the government to spend on things that will help the bad economy we are in now.
http://www.nytimes.com/2009/03/23/us/23sprawl.html?_r=1&pagewanted=2&ref=todayspaper
The current times in our economy have been bad, and President Obama has gone through a whole lot of mess that former President Bush has left behind. Obama’s views on this economic issue are geared towards more government spending and stimulus. His fiscal policy would be best described as an expansionary effort, but its not looking that way so far.
In this article, the author shows the ways of how the current state of Texas is dealing with their spending money on transportation. Many people have gotten involved on this issue, including environmentalists, governors, and other government officials. The conflict is that the Katy Prairie reserve is located just outside of a large city, Houston. Government officials from this state have set out a plan to build a highway right through this prairie for future use, as the state grows in population. But, environmentalists see this as a threat to the wildlife that lives there and have been trying to block this road from being built. On the other hand, Houston is becoming a larger and larger city everyday and some government officials see this as an opportunity to get ahead on the population boom, other than just letting it happen.
Because this stimulus bill gives full control to the states they can consider this a key issue to use the money for. In the article as well, it points out that under the Recovery Act this, according to Mr. Shapiro, “creates jobs by investing in immediate projects such as highways, bridges and tunnels — and within limitations to prevent waste, fraud, and ‘highways to nowhere’ — grants the states and their citizens broad discretion to choose which highway projects get funding,” (New York Times 2). Although, this is an opinion oriented article and there seem to be many good possibilities to make their decision based on any of them.
This article relates to what we are doing in class because it shows the various monetary and fiscal policies our government is trying to use by implementing the stimulus plan. Another thing is that it closely relates to how we are learning about the federal reserve and how they produce and give the money to the government to spend on things that will help the bad economy we are in now.
http://www.nytimes.com/2009/03/23/us/23sprawl.html?_r=1&pagewanted=2&ref=todayspaper
Monday, April 27, 2009
GM to cut 21,000 jobs and shed Pontiac as part of restructuring
Under General Motors newly revised restructuring plan 21,000 US jobs will be cut, as well as cutting out Pontiac. GM is trying everything to fight for its life in the worst auto climate in 27 years. If this plan does not satisfy the government by June 1, it will go into bankruptcy. Gm is also offering stock to pay for benefits for its retirees. Though there are fears of a government run company, the Treasury says they want no part in running GM. If plans with the UAW don't workout, stocks will crash to little or nothing. GM plans to cut these jobs through the closing of several factories, as well as reductions in wages.
I think that the government should stop giving any taxpayer money to GM, a private business. When our government was established there were strong sentiment from British government rule, and so the Framers believed private and public sectors should never interact. 230 years later though, the government is taking control of a private company with taxpayer money. So what if GM goes out of business. When the dot.com boom produced thousands of busts, you didn't see anyone complaining for bailout money. GM is only a business that has too many expenses, and not enough revenue. How is it that other companies are able to make so much profit in the same quarter that GM lost tons of money. Even if GM is bankrupt, the factories will be bought by other companies that will make efficient, low costs products for consumers to buy. Maybe GM should take from lessons from other car companies, and learn how to make enough revenue to cover expenses.
http://www.startribune.com/business/43762462.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
I think that the government should stop giving any taxpayer money to GM, a private business. When our government was established there were strong sentiment from British government rule, and so the Framers believed private and public sectors should never interact. 230 years later though, the government is taking control of a private company with taxpayer money. So what if GM goes out of business. When the dot.com boom produced thousands of busts, you didn't see anyone complaining for bailout money. GM is only a business that has too many expenses, and not enough revenue. How is it that other companies are able to make so much profit in the same quarter that GM lost tons of money. Even if GM is bankrupt, the factories will be bought by other companies that will make efficient, low costs products for consumers to buy. Maybe GM should take from lessons from other car companies, and learn how to make enough revenue to cover expenses.
http://www.startribune.com/business/43762462.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
Bloomington office park draws new tenants
In the BLM complex near the Mall of America, the announcement of three new tenantse gave a positive outlook on this bleak economy. The space bought by these new tenants brought space filled to 90%, better than 85% space filled in nearby areas. Though this news lifted the hearts of many, the demand was still not great enough for more supply of space to be built. The economic downturn has shifted the equilibrium point to a decrease in GDP(space), and price level. Though demand is not great enough yet, there are plans occurring for a third building complex to be added once an upturn in the economy occurs.
In my opinion I think this shows that big name companies are starting to have a really positive outlook on the end of our current recession. Instead of saving their money, these companies are investing it into other places. This will eventually create more jobs, which will lead to a greater demand in the economy with new wages. Though the BLM complex is not filled up, it is filling at a very slow rate. Though the GDP fell 6.1%, overall our country's economy is still growing. I think that our current recession is going to end soon as banks will begin to lend soon, and let the supply of credit flow throughout the sectors of our economy.
http://www.startribune.com/business/43647352.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
In my opinion I think this shows that big name companies are starting to have a really positive outlook on the end of our current recession. Instead of saving their money, these companies are investing it into other places. This will eventually create more jobs, which will lead to a greater demand in the economy with new wages. Though the BLM complex is not filled up, it is filling at a very slow rate. Though the GDP fell 6.1%, overall our country's economy is still growing. I think that our current recession is going to end soon as banks will begin to lend soon, and let the supply of credit flow throughout the sectors of our economy.
http://www.startribune.com/business/43647352.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
Friday, April 24, 2009
Swine flu name to change
The outbreak of a newly discovered "swine flu" has been sweeping the world the past couple of weeks. It all started in Mexico, and is now spreading to other countries across the world as tourist are returning to their native countries. Though the strands are part pig, people have been trying to change the name. Why? To protects the nearly $97 billion pork industry, as the name implies this virus is transferred through the consumption of meat. Some people agree, some others. Other countries have decided to stop the importation of pork from any suppliers.
From an economic perspective this is a very good thing to do. With less free trade, countries are going to have higher prices, less GDP, and an overall lower standard of living. Production possibility curves will shrink back to what they were before free trade. This does creates some winners, but many more losers. The losers will be all of the consumers of a country, spending much more money to keep their domestic producers in business because of the increased opportunity cost. The winners will be the domestic producers. This policy is known as protectionism.
In my opinion this is a very, very good thing to do. The costs weigh out the benefits, and most people are stuck with a lower standard of living. Medical studies even prove that you cannot contract this virus through the consumption of pork, and each country should continue trading with each other.
http://apnews.myway.com/article/20090501/D97T57SG1.html
From an economic perspective this is a very good thing to do. With less free trade, countries are going to have higher prices, less GDP, and an overall lower standard of living. Production possibility curves will shrink back to what they were before free trade. This does creates some winners, but many more losers. The losers will be all of the consumers of a country, spending much more money to keep their domestic producers in business because of the increased opportunity cost. The winners will be the domestic producers. This policy is known as protectionism.
In my opinion this is a very, very good thing to do. The costs weigh out the benefits, and most people are stuck with a lower standard of living. Medical studies even prove that you cannot contract this virus through the consumption of pork, and each country should continue trading with each other.
http://apnews.myway.com/article/20090501/D97T57SG1.html
Thursday, March 19, 2009
Extraordinary Times call for Extraordinary Measures
Recently in the news was the interview of Ben Bernanke, his comments on our current economy, and of what the future economy will look like. He is currently in defense of the Fed's effort to try and contain the economic crisis and is devoted to do whatever it takes to get out of this "downward spiral". During the interview of Ben Bernanke at the National Press Club, the first time a Federal Reserve Chairman has ever spoken to journalists, he tried to lessen the concern of the dangers of printing all the money they had recently printed by backing the Fed's and expressing his trust in them to do a good job and said: “The Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability,” (New York Times). He also focused on the rate of unemployment and how it would for sure rise this year (now at 8.1%, up from last months 7.6%). Even after these statement were said, the central bank gave a report on how the Federal Reserve "had become considerably more pessimistic" (New York Times) about our unemployment rate, which could be even higher than predicted. The Federal Reserve also came out with its predictions on economic growth for the next five years and said that it would rise about "2.5 to 2.7 percent anually" (New York Times). Another major issue Bernanke focused on was the government spending that has gone from $900 billion last September to approximately $2 trillion this year. This spending was issued to help the Financial System and improve the economy with new programs that it will issue and will hopefully not fuel inflation to rise or lose money from these risky loans.
My opinion on this matter is that Ben Bernanke has been hit with a hard and difficult crises and has a lot on his hands right now. I believe this economic crises will take a lot of work to overcome and will be a slow process to heal at best. I also think these economic recovery plans and programs will eventually work with a lot of the money being poured into them. With this government spending it will hopefully reduce unemployment and act as an Expansionary fiscal policy. This expansionary effect with a bit of luck will fuel our economy, lower taxes, and increase our demand. With the 3 basic tools our Fed uses, it would decrease the reserve requirement, decrease the discount rate, and buy more securities, so that the economy, with the increase in money supply, will soon decrease our interests rates and increase investment. Well, times call for extraordinary measures, and this is certainly one of them.
http://www.nytimes.com/2009/02/19/business/economy/19fed.html
My opinion on this matter is that Ben Bernanke has been hit with a hard and difficult crises and has a lot on his hands right now. I believe this economic crises will take a lot of work to overcome and will be a slow process to heal at best. I also think these economic recovery plans and programs will eventually work with a lot of the money being poured into them. With this government spending it will hopefully reduce unemployment and act as an Expansionary fiscal policy. This expansionary effect with a bit of luck will fuel our economy, lower taxes, and increase our demand. With the 3 basic tools our Fed uses, it would decrease the reserve requirement, decrease the discount rate, and buy more securities, so that the economy, with the increase in money supply, will soon decrease our interests rates and increase investment. Well, times call for extraordinary measures, and this is certainly one of them.
http://www.nytimes.com/2009/02/19/business/economy/19fed.html
Wednesday, March 18, 2009
The Fed's power over our economy
The Fed is a powerful department of our government, able to print limitless amount of money quickly and easily to help in times of trouble. Our country is currently in a deep recession, and the Fed is now going to print about 1 trillion dollars worth of money to buy "up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac". With the Fed's tool of open-market operations, they hope for money supply to increase, interest rate to decrease, and investment to increase, causing an overall expansionary effect on our economy. With easier credit lending, banks will feel safe lending to those in need, who will in turn use that money to buy consumer goods, or invest in the stock market. This will hopefully yield an escape from our recession, and bring us to the positive slope of the business cycle. The Fed is able to do this easily as they have instant speed and flexibility, as well as isolation from political pressure.
In my opinion, I think that this plan may work in the short run. Already in the past week the stock market has grown to mid 1700's, and even Fannie Mae, and Freddie Mac stocks have increased about a quarter of a dollar. Bank stock prices have also increased, which may lead them to begin lending again, just as the Fed is trying to do by employing their open-market operations tool. The big thing which I am concerned about is the fear of rapid inflation in the future. This may occur due to this massive printing of money, which may cause the Fed to sell securities. This will cause a decrease in money supply, increase in interest rate, and a decrease in investment. This may yield a displacement of 0, only prolonging the effects of our housing crisis.
http://finance.yahoo.com/news/Fed-to-buy-up-to-300B-apf-14679757.html
In my opinion, I think that this plan may work in the short run. Already in the past week the stock market has grown to mid 1700's, and even Fannie Mae, and Freddie Mac stocks have increased about a quarter of a dollar. Bank stock prices have also increased, which may lead them to begin lending again, just as the Fed is trying to do by employing their open-market operations tool. The big thing which I am concerned about is the fear of rapid inflation in the future. This may occur due to this massive printing of money, which may cause the Fed to sell securities. This will cause a decrease in money supply, increase in interest rate, and a decrease in investment. This may yield a displacement of 0, only prolonging the effects of our housing crisis.
http://finance.yahoo.com/news/Fed-to-buy-up-to-300B-apf-14679757.html
Recession or Depression???
Times are hard. But is the world economy turning into a Depression? My opinion, no. I believe what goes up must come down. Everything bounces back right? Stocks go up and down all the time. So why in this cartoon, are people worrying so much? One thing, misinterpretation. Everybody in the world misinterprets things all the time, but that's not just a bad thing, it could also be a good thing too. Why? Well, for one thing we learn from our mistakes all the time and learn to take caution towards those same issues in the future (well, currently not so much, our government can't learn to stop bailing out all these companies, especially AIG).
Now, back to the cartoon. It displays, mainly the stock market, and how the stock prices can rise and fall in an instant from careless thinking of CEO's to the little guy, the stockholder. The cartoon goes from a calm perspective when the stock market doing just fine, until someone brings up a fact that may or may not be harmful to the opinion of the of the shareholders keeping or selling their stocks. And when they are harmful the stocks could plumet or rise in value because of the buying or selling of their stocks. This could also turn into panic as seen with the last man on the right yelling "SELL! SELL!", but it's not very probable unless you have your entire life savings in stocks.
This cycle of ups and downs is commonly known as the Business Cycle. It operates and is controlled mainly by the levels of GDP, inflation, unemployment, and many other factors. Currently the US would be categorized as in a period of Recession, where the real GDP has been in decline for at least six months. Hopefully, as the DOW seems to be going up in the last few days, we'll overcome this Recession and hit the recovery stage of the business cycle and then the peak, to benefit the economy.
Now, back to the cartoon. It displays, mainly the stock market, and how the stock prices can rise and fall in an instant from careless thinking of CEO's to the little guy, the stockholder. The cartoon goes from a calm perspective when the stock market doing just fine, until someone brings up a fact that may or may not be harmful to the opinion of the of the shareholders keeping or selling their stocks. And when they are harmful the stocks could plumet or rise in value because of the buying or selling of their stocks. This could also turn into panic as seen with the last man on the right yelling "SELL! SELL!", but it's not very probable unless you have your entire life savings in stocks.
This cycle of ups and downs is commonly known as the Business Cycle. It operates and is controlled mainly by the levels of GDP, inflation, unemployment, and many other factors. Currently the US would be categorized as in a period of Recession, where the real GDP has been in decline for at least six months. Hopefully, as the DOW seems to be going up in the last few days, we'll overcome this Recession and hit the recovery stage of the business cycle and then the peak, to benefit the economy.
Tuesday, March 17, 2009
market economy
As any rookie investor has noticed in the past year, stock market prices have fallen considerably across the world. Trillions and trillions of dollars have been lost in world wealth, due to the housing crisis we are now experiencing. In the past 5 of 6 trading days, we have begun to see this process reverse. Housing companies are reporting positive gains in their stock prices, and even the major banks pouring out bad loan after badc loan have reported a positive gain in their stocks. Home building in February grew, and investors have rallied around this, creating a mini bull-market. The sign of home prices stabilizing has created a key economic stabilizer. With this stabilizer incomes will now correlate with home prices, and retail capitalists will follow suit, and soon the economy shall pick up. With this restored confidence, everyone will soon spend their money, creating huge increases in demand, which will in turn create many jobs to create the supply needed. The government may soon follow suit by de-privitizing major corporations which they have taken into their control. With less Keyseian economics, and greater classical markets, and global market may soon restore to their pre-housing crisis levels of wealth.
My opinion is that beginning signs are appearing towards a stable economy. We may not attain the levels of wealth we once experienced soon, but I believe if this momentum keeps going then we will have a favorable increase in our countries GDP on a year to year basis. We, as a world, have learned now to invest in stable long-term assets that will yield a profit to them, while creating a multiplier effect to create great wealth. I think we are in the trough region of the economic cycle, and soon will get to the growth period of the cycle.
http://www.startribune.com/business/41392437.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
My opinion is that beginning signs are appearing towards a stable economy. We may not attain the levels of wealth we once experienced soon, but I believe if this momentum keeps going then we will have a favorable increase in our countries GDP on a year to year basis. We, as a world, have learned now to invest in stable long-term assets that will yield a profit to them, while creating a multiplier effect to create great wealth. I think we are in the trough region of the economic cycle, and soon will get to the growth period of the cycle.
http://www.startribune.com/business/41392437.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr
Wednesday, February 11, 2009
Unemployment and the Economy
Unemployment has become a big fear for everyone in the US this year as the economy worsens and big companies as well as small businesses have already begun to layoff some of their workers. Companies such as Target have let "go about 9 percent of its headquarters workforce, the deepest cuts in company history." (Star Tribune). Because of the recent factors in the economy, corporations like Target have had to let go several workers from their labor force to try and save their company from losing money and to cut costs to seek better profits. Even small businesses are being hurt also and many have been forced to go out of business and liquidate their products. In December 2008 a reported 524,000 jobs were lost and the number of unemployed workers is said to continue to rise to almost to 9% by 2010. Even some economists are more worried about the new economic stimulus plan Obama has created because "Obama claims his plan will 'create or save' 3 million jobs over the next two years. But the crisis is presently destroying over 500,000 jobs a month. Even if his plan is adopted and implemented in full, the jobs it creates will be overwhelmed by the ongoing contraction, leading to a further rise in the unemployment rate to double-digit levels" (wsws.org).
This crisis of unemployment rates relates heavily to what we are currently learning in the class room. For one, it shows how the economy can effect large and small businesses through the supply and demand of the world economy. While the economy has started to dwindle down less people are willing to pay for the goods they usually buy, like luxury items, and some have even been using substitutes to lessen the cost of their bills. While the demand for some products might be up, like basic goods such as milk or bread, others have gone down, such as companies who sell new cars, or homes, because of the recent housing market crisis. Also the Market System has been a major factor in the role of these companies, mainly because of competition. As we have seen, Target sales have gone down because of current incomes being reduced or slashed, while dollar stores have actually increased their profits.
My opinion is that our government should stop wasteful spending on luxuries for the cabinet members and start to get to work on the economy to stop the current rate of unemployment to rise. If we don't, I believe that the economy will get even worse and the sales of big corporations will fall do to the lack of money in these future jobless households. These companies will be forced to lower their prices and soon they'll probably brake even or worse on their luxury goods, since the demand would be low because of effect of lower incomes. Hopefully our unemployment rate will lower in the next year or two to balance out the economic downfall happening as we speak, but for right now this number of unemployed people will probably get higher and higher.
http://www.startribune.com/business/38457219.html?elr=KArks8c7PaP3E77K_3c::D3aDhUxWoW_oD:EaDUiacyKUnciatkEP7DhU
http://www.wsws.org/articles/2009/jan2009/jobs-j10.shtml
This crisis of unemployment rates relates heavily to what we are currently learning in the class room. For one, it shows how the economy can effect large and small businesses through the supply and demand of the world economy. While the economy has started to dwindle down less people are willing to pay for the goods they usually buy, like luxury items, and some have even been using substitutes to lessen the cost of their bills. While the demand for some products might be up, like basic goods such as milk or bread, others have gone down, such as companies who sell new cars, or homes, because of the recent housing market crisis. Also the Market System has been a major factor in the role of these companies, mainly because of competition. As we have seen, Target sales have gone down because of current incomes being reduced or slashed, while dollar stores have actually increased their profits.
My opinion is that our government should stop wasteful spending on luxuries for the cabinet members and start to get to work on the economy to stop the current rate of unemployment to rise. If we don't, I believe that the economy will get even worse and the sales of big corporations will fall do to the lack of money in these future jobless households. These companies will be forced to lower their prices and soon they'll probably brake even or worse on their luxury goods, since the demand would be low because of effect of lower incomes. Hopefully our unemployment rate will lower in the next year or two to balance out the economic downfall happening as we speak, but for right now this number of unemployed people will probably get higher and higher.
http://www.startribune.com/business/38457219.html?elr=KArks8c7PaP3E77K_3c::D3aDhUxWoW_oD:EaDUiacyKUnciatkEP7DhU
http://www.wsws.org/articles/2009/jan2009/jobs-j10.shtml
Thursday, January 29, 2009
gas prices
As you all know, gas prices in the US have increased and decreased dramatically in the past three years. When increasing we were shelling out as much money as we could to pay for the blood of the USA, and now when they have decreased dramatically to historic lows allowing American families to yet again enjoy the goodness of life before gas rose considerably. But why is it that prices can be so high, yet so low in a short span of time. This is due to the law of supply and demand, and various fiscal policies our government with the middle eastern countries.
When a barrel of oil rose in price tenfold, we saw the price per gallon only triple or quadruple. This does not make sense, but this is due to fiscal policies our government uses to subsidize the true cost of oil. The federal government subsidizes the oil industry with numerous tax breaks and government protection programs worth billions of dollars annually. These benefits are designed to ensure that domestic oil companies can compete with international producers and that gasoline remains cheap for American consumers. The cost of securing our access to Middle East oil - deploying U.S. forces in the Persian Gulf, patrolling its water and supplying military assistance to Middle East countries - is estimated at $50 billion per year, which adds additional dimes to each gallon of gasoline we purchase. If our government did not pay for this, the cost of gas would be even greater, as oil makes up 75% of the gas we use in our vehicles.
Supply and demand also caused the great flux in oil we have seen in the past couple of years. When supply was cut short not too long ago due to middle eastern conflicts disrupting the steady flow of oil we once received. This is reflected in the price as demand stayed just about the same, and the equilibrium point in the oil market shifted to a higher price for a lower quantity. From 2005-2008 prices soared from $50 to over $140, and gas prices reflected that (4.00 per gallon or more) as less quantity was supplied the sellers were forced to raise the price in order to compete at the equilibrium without causing shortages or surpluses. When oil prices decreased to a fraction of what they used to be, the equilibrium price of the oil market decreased as well, with more quantity supplied, this allowed sellers and buyers to come back into a favorable equilibrium point.
I think that what happened to the price of gas was fair. Sure it became very expensive, but if you just gave up one time going out to meet, or a couple of movies, then you could easily make up that price jump. For the cost of a barrel of oil to increase over tenfold, and have our prices max out at $4.00 a gallon is a pretty good deal. We can predict what will happen to price through the supply and demand curves, and maybe be a little more thankful for what we have, and the high standard of living we have achieved , and be thankful of our government fiscal policies toward the countries we are importing oil from.
Gas prices vary greatly in times and trouble, and was reflected in the past couple years to a price that was guided by the our governments fiscal policy, supply and demand, and Smith's "invisible hand".
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24
http://www.iags.org/costofoil.html
http://www.dailywealth.com/archive/2008/jul/2008_jul_01.asp
When a barrel of oil rose in price tenfold, we saw the price per gallon only triple or quadruple. This does not make sense, but this is due to fiscal policies our government uses to subsidize the true cost of oil. The federal government subsidizes the oil industry with numerous tax breaks and government protection programs worth billions of dollars annually. These benefits are designed to ensure that domestic oil companies can compete with international producers and that gasoline remains cheap for American consumers. The cost of securing our access to Middle East oil - deploying U.S. forces in the Persian Gulf, patrolling its water and supplying military assistance to Middle East countries - is estimated at $50 billion per year, which adds additional dimes to each gallon of gasoline we purchase. If our government did not pay for this, the cost of gas would be even greater, as oil makes up 75% of the gas we use in our vehicles.
Supply and demand also caused the great flux in oil we have seen in the past couple of years. When supply was cut short not too long ago due to middle eastern conflicts disrupting the steady flow of oil we once received. This is reflected in the price as demand stayed just about the same, and the equilibrium point in the oil market shifted to a higher price for a lower quantity. From 2005-2008 prices soared from $50 to over $140, and gas prices reflected that (4.00 per gallon or more) as less quantity was supplied the sellers were forced to raise the price in order to compete at the equilibrium without causing shortages or surpluses. When oil prices decreased to a fraction of what they used to be, the equilibrium price of the oil market decreased as well, with more quantity supplied, this allowed sellers and buyers to come back into a favorable equilibrium point.
I think that what happened to the price of gas was fair. Sure it became very expensive, but if you just gave up one time going out to meet, or a couple of movies, then you could easily make up that price jump. For the cost of a barrel of oil to increase over tenfold, and have our prices max out at $4.00 a gallon is a pretty good deal. We can predict what will happen to price through the supply and demand curves, and maybe be a little more thankful for what we have, and the high standard of living we have achieved , and be thankful of our government fiscal policies toward the countries we are importing oil from.
Gas prices vary greatly in times and trouble, and was reflected in the past couple years to a price that was guided by the our governments fiscal policy, supply and demand, and Smith's "invisible hand".
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24
http://www.iags.org/costofoil.html
http://www.dailywealth.com/archive/2008/jul/2008_jul_01.asp
Subscribe to:
Posts (Atom)
