Chapter 7 - Monetary Policy

http://www.vancouversun.com/opinion/Monetary+policy+should+based+inflation+trends+blips/2601037/story.html

Summary:

In summary, the article linked above talks about the consumer price index rising, how pundits were wondering if the Bank of Canada were going to keep key overnight rates because of the inflation, and if Mark Carney, Bank of Canada’s governor forced to move interest rates before the US (and if done will most likely stiffen Canada’s economic recovery overall). Interest rates do need to rise although inflation pressures down the road of a year or two can be questionable. But actually, the inflation of prices might’ve come from last year’s price drop because gas prices were surely lower last year than it is this year. So the inflation prices had more to do with the past than with the future. In the meantime, the central bank waits for the interest rates as current agreement with the federal government expires next year and for recovery in the economy.

Connections:

The main connection between the article and the text is the monetary policy and the bank rate. The monetary policy is referred to “action taken by the Bank of Canada to alter the money supply, and ultimately economic conditions”. So in the article it’s stating that Canada’s money supply has been growing very much larger than expected because of the inflation in prices overall. People have to spend money more on the increase of gas and even the increase in new car prices leading them to borrow more money from the Bank of Canada. So they think that the only way to control the money being borrowed is to put interest rates up so the spending would be changed more into saving.

Reflection:

I think that the monetary policy shouldn’t be changed suddenly and significantly because it will be a shock to consumers. Especially since the inflations have been sudden as well, the Bank of Canada should take precaution in the changes they do want to make. I’m going to go with the title of the new article and say that the “monetary policy should be based on inflation trends and not blips” because if the inflations happen this time where is it to say that it’ll happen again? And if it does happen again then it might be a better time to change to monetary policy then and not now since they’d know which possible change would be the best for the economy.

Chapter 4 - Government in Canada

http://news.bbc.co.uk/2/hi/europe/8321967.stm

Summary:

This article is about rich Germans and how they’re having a petition for the government to make wealthy German people pay higher taxes. The rich Germans don’t mind the extra expense because they say they have “more money than they really need”. They also want to help out Germany’s economy and the financial crisis that is leading to an increase in unemployment, poverty and social equality. Dieter Lehmkuhl is the main man behind the petition. Signatory Peter Vollmer supports the proposal because he also inherited “a lot of money I do not need” and he also says and agrees that the tax is “a viable and socially acceptable way out of the flagrant budget crisis”.

Connections:

A connection between the article and text is the ability-to-pay approach. Even though the government isn’t the ones who are promoting the higher tax demands the rich Germans themselves see the opportunity from themselves for having the ability-to-pay the extra tax expenses. And they’d like to help Germany’s economic recovery in the meantime anyways. The wealthy Germans might even have benefits-received for the generosity they are bringing to the table from the government but at the same time it might even be a win-win situation for both parties. This is because if the rich Germans are to help out then they would help Germany’s economy and help themselves not have to pay for the governments needs in the long run.

Reflection:

I honestly think that this might not be such a bad idea. Even if it might be from a “made a fortune through inheritance, hard work, hard-working, successful entrepreneurship, or investment” person’s point of view then I wouldn’t mind too much. Especially if it’s just a temporary expense or payment to help boost the economy back up with a result of having a better country overall and to maybe even boost up my own income from the new business I’d be attracting. It can be possible but then again it also depends on how everyone else is going to react to the changes and if everyone else is going to be on the same page of thoughtfulness.

Chapter 2 - Demand & Supply

http://news.bbc.co.uk/2/hi/business/8305036.stm

Summary:

This article is about the Royal Bank of Scotland (RBS) and how they want to attract small business customers because they need to meet their loan targets. Royal Bank of Scotland and Lloyds committed to lend to firms and homeowners of this year. But despite this generosity the government feels that “the banks were demanding ‘unrealistic’ interest rates on their business loans”. The real problem was not the fact that there was a lack of demand in their loans but the fact that maybe the pricing was a bit too high to afford. So RBS and Lloyds have been told that “they must meet their obligations” and this was a condition of the banks’ taxpayer bail-out.

Connections:

Connections between the article and text were: change in demand, change in quantity demanded, change in supply, and elasticity. There was change in demand because their pricing was too high and "unrealistic" for potential borrowers. The quantity demanded decreased because customers actually paid back more this time than before. And there was a change in supply because RBS has actual lending targets to meet as of now. So this meant that RBS may have more to lend this year but not enough potential borrowers to use their services. All this leading to the situation being elastic because there was lending targets to be met that result in the pricing of loans going up, but it also meant that the potential borrowers have moved on to other lenders who they could afford.

Reflection:

I think that this is fair because if the banks were making “unrealistic” goals in the first place so these are the consequences that are paid to them. It’s only natural that people would research on the lowest possible interest on loans so they could have their money worth. RBS and Lloyds shouldn’t be surprised if this was happening because after all, they did increase their rates to meet their target loans. This is just a way that the potential borrowers are responding to it. If the demand is low then they should do something about it instead of trying to rip people off for the loss they've gained.

Chapter 1 - Opportunity Cost

http://www.smh.com.au/opinion/no-such-thing-as-a-free-market-20090908-fg2o.html

Summary:

In summary of the article, it was about the government’s slack in regulating all markets. The government’s irresponsibility led to a history of a global financial crisis and created fallible business people who we can no longer trust. Unreliable business will continue if the government doesn’t start enforcing their regulation upon all these markets. All in all, “there is no such thing as a free market” because “all markets are regulated by governments to a greater or lesser extent”. But it may have only seemed like a free market because the government hasn’t been adequately policing in the first place.

Connections:

A connection between the article and text was opportunity cost because while the government was putting and giving their attention and time to things (like the environment maybe) other than business markets, they gave up the time to regulate and enforce their laws. This gave the impression for all markets to have freedom and do what they wanted with little or no “supervision” at all in what they were doing, either right or wrong per se. So the cost of giving up the government’s time to certain markets and to maximize regulations, was a higher population of fallible people and a global financial crisis in history nonetheless.

Reflection:

I personally think that the government does need to take more action into enforcing their laws and to actually practice them because it’s not fair to the consumers of the business. Although, sometimes or most of the time life may not be fair it would still be nice if the businesses we were buying from, were somewhat more ethical than they are now. But even if it didn’t have to be fair to consumers or anyone else for that matter at least the government should be maximizing regulations because what’s the point in having a law if there’s no use to it in the first place?