Thursday, May 7, 2009
Chapter 8 -Stabilization Policy
Summary:
The increasing spending in Olympic Games becomes a game for riches and increased government spending. Vanoc and the B.C. government further insist that the final Olympic tab will be around $1.8 billion, a figure that has been widely discredited. The security tab alone is $1 billion, with 13,000 personnel involved in the largest deployment in Canadian history. High-tech operations, including unmanned aerial vehicles and remote sensors, have led to the dubbing of 2010 as the "Surveillances Games" by sociologist David Lyon. On the other hand, the devastating reality is that Vancouver has experienced a 300-per-cent increase in homelessness since the Olympic bid, residents in the Downtown Eastside are being affected through aggressive police ticketing, Native communities are opposing Olympics-related development on their lands, and environmentalists are challenging the "Green" Games.
Connections:
Chapter 8 discusses the possible problems of large amounts of government borrowing. As mentioned in the article, “Since 2004, Vanoc and government officials have claimed that the Olympics will be on budget.” It was said to be around $1.8 billion. Unfortunately, the actually costs range turns out to be from $3 billion to $6 billion depending on which projects are included. As the size of the debt increases, there is more concern over the negative aspects of such a debt. Some of these aspects are increased inflation, higher interest rates, the burden that is passed on to future generations, possible income redistribution, and the consequences of externally held debt.
Reflection:
With all these criticisms, I still believe the Olympic Games will bring profits to our city. Yet, we are spending more money than we expected. On the other hand, extra spending on constructions and security systems create lots of job opportunities to many people. As long as people have jobs, they are likely to spend more instead of waiting in the line to get Unemployment Insurance. Also, since it’s recession, materials are cheaper than before. Therefore, in the long run, we are saving more. Moreover, as mentioned in the article, our government is spending more money on homelessness, which helps poors. Also, we all believe that Olympic will attract tourist around the world, which will eventually help our economic.
Monday, May 4, 2009
Chapter 7-Money and the Canadian Banking System
Summary:
This article discusses the impact of the rapid climb of dollar. Many believe we are about to overcome the economic crises. But analysts have different points of views. They believe the rapid climb of dollar will increase the cost for Canadian exporters to sell their goods abroad. That is why the country is expected to post its worst export performance on record. Also, the higher dollar could further dampen inflationary pressure, as it reduces the cost of importing products – most notably food, whose prices have been climbing. “There is no significant sign that global growth is picking up,” Mr. Rangasamy said, adding data from China Monday was “minor” in context. “Unless we see sustainable growth numbers, the Canadian dollar may continue to appreciate in an unsustainable manner.”
Connections:
In Chapter 7, we learned the relationship between the money supply and the interest rate as well as how Bank of Canada works. As mentioned in this article, the Canadian dollar closed above the US85 cents mark Monday for the first time in almost six months, which means Canadians have more money to spend in U.S now. It also means an increase in money supply. In order to get rid of the situation, Bank of Canada also decreases in the bank rate, lower interest rate. Therefore, the overall spending in the economy would likely increase. Later on, if the Bank of Canada saw inflation as a more serious problem, it would takes steps to reduce the money supply and try to reduce spending.
Reflection:
From looking at this article, I realize that it’s not as easy as many people think to deal with the economic crises. Yet, by increasing the dollar value and lowering interest rate will help to increase spending for now. With these being said, more problems will be needed to solve after all. For example, inflation will be a major concern. “The Bank of Canada did not envisage inflation hitting its 2% target until mid-2011”. Inflation will be a problem because it would hurt those people who are on fixed incomes. It would hurt those people who are on fixed incomes and only favour those who have borrowed money, which is a very small group. Last but not less, it will hurt Canada’s economic. Because if products made in Canada become too expensive, foreign buyers will look elsewhere.
This article discusses the impact of the rapid climb of dollar. Many believe we are about to overcome the economic crises. But analysts have different points of views. They believe the rapid climb of dollar will increase the cost for Canadian exporters to sell their goods abroad. That is why the country is expected to post its worst export performance on record. Also, the higher dollar could further dampen inflationary pressure, as it reduces the cost of importing products – most notably food, whose prices have been climbing. “There is no significant sign that global growth is picking up,” Mr. Rangasamy said, adding data from China Monday was “minor” in context. “Unless we see sustainable growth numbers, the Canadian dollar may continue to appreciate in an unsustainable manner.”
Connections:
In Chapter 7, we learned the relationship between the money supply and the interest rate as well as how Bank of Canada works. As mentioned in this article, the Canadian dollar closed above the US85 cents mark Monday for the first time in almost six months, which means Canadians have more money to spend in U.S now. It also means an increase in money supply. In order to get rid of the situation, Bank of Canada also decreases in the bank rate, lower interest rate. Therefore, the overall spending in the economy would likely increase. Later on, if the Bank of Canada saw inflation as a more serious problem, it would takes steps to reduce the money supply and try to reduce spending.
Reflection:
From looking at this article, I realize that it’s not as easy as many people think to deal with the economic crises. Yet, by increasing the dollar value and lowering interest rate will help to increase spending for now. With these being said, more problems will be needed to solve after all. For example, inflation will be a major concern. “The Bank of Canada did not envisage inflation hitting its 2% target until mid-2011”. Inflation will be a problem because it would hurt those people who are on fixed incomes. It would hurt those people who are on fixed incomes and only favour those who have borrowed money, which is a very small group. Last but not less, it will hurt Canada’s economic. Because if products made in Canada become too expensive, foreign buyers will look elsewhere.
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