Articolo di Mezzi di Capitolo Sette (7)

Thursday, May 04, 2006
"Gold Prices Still Expected to Rise, Analysts Say" - Canadian Press

World Gold Council, in a conference, states that gold is an unusual asset because it can be considered both a commodity and a monetary asset. Indeed, due to the gold's unusual qualities, its price seems to be unaffected by other forms of investments. In whole, this article describes the liquidity of gold, and how it is traded similar to stocks in marketplaces. In order for gold prices to raise, people can invest in gold-mining companies by the means of stocks, mutual funds, and trusts. Of course, as easily as people can invest in these companies (and gold bars), as easily as these investments in the gold industry can turn back to money/cash. Since gold is a very liquid asset, many of the 15 banks that have some 30,000 tonnes of gold in central bank vaults wish to buy more gold to diversify their assets (so the items in their bank vaults would not consist solely of stacks of paper). Since gold is a very widely accepted and recognized commodity, and its large demand in marketplaces, it is generally accepted that gold is a very liquid asset.


Relation to Chapter 7 – Asset Liquidity


"UBS Investment Research expects that the gold price will rise to $630 US per ounce in three months because of renewed weakness in the U.S. dollar, and it forecasts an average 2006 gold price of $560 US per ounce"

Indeed, the demand for cash's substitutes (especially gold) have been on the rise for the past years. Many people have wished to switch from cash (money) to gold, since gold itself has an inherent value that is widely recognized by many people, whereas cash is simply a piece of paper or an electronic data entry. Primary reason for people wishing to switch to gold (or invest in gold) is because of gold's asset liquidity. Of course, if someone simply buy "gold" electronically (online transactions), then this process is not so much different from simply saving money in a bank, as they are both electronic data entries. If one wishes to own gold physically, that person has to buy gold jewelries from a local jewelries store. This "physical" gold, although still a very liquid asset, is not as liquid as "electronic gold" or stocks, though. Nevertheless, the asset liquidity of many objects is low, or unliquid, whereas the asset liquidity of gold is very liquid (and can be turned into cash easily). In whole, the primary connection between the article and Chapter 7 is the liquidity of assets.

Article de Médias du Chapitre Six

Tuesday, March 07, 2006
"Bank of Canada Raises Interest Rate" - Canadian Press

This article describes an action that Bank of Canada has taken to counter the ongoing inflation in Canada. According to economic theories, inflation is caused by a rise in GDP (more consumption = more demand for goods). In order to lessen the effects of inflation on local economies, Bank of Canada tries to reduce the level of spending within Canada by increasing the interest rate. Increasing the interest rate will cause people to borrow less money, and thus, promote less spending within Canada. Of course, less spending within a community may be devastating for local businesses; however, if taken into the consideration of the detrimental effects of continually having high inflation, a bit less spending (and a bit less profits for businesses) will prove to be more favaorable. Therefore, having less Aggregate Demand within local economies may actually be the perferable step Bank of Canada has to take.


Relation to Chapter 6 – Aggregate Demand


"Some modest further increase in the policy interest rate may be required to keep aggregate supply and demand in balance and inflation on target over the medium term," central bankers said in a statement.

Indeed, the demand for products have been on the rise in the past few years. This trend is primarily contributed by the booming Canadian economy. However, if this continuous demand outnumbered the supply of products available, then extraneous amounts of personal disposable income will be left idle, useless, and purposeless as there would be not enough things to buy.

Inflation is caused by the quantity of supply not meeting the quantity demanded. As more money is flooded into the market with little things to buy, the prices of these scarce products rise and the value of these currencies decrease.

A solution to this problem would be to decrease Aggregate Demand (Consumption). Through increases in the tax rate, people will borrow less money (thus less money flowing in the market), and directly decrease the Aggregate Demand in the economy. Having higher tax rate is one way to control inflation. However, what if an economy is in recession? In order to lift economies out of recessions, the Bank of Canada will adjust the tax rates accordingly to promote more spending - and that is the exact purpose of having a central bank: to have a standard tax rate so inflation can be controlled ubiquitiously.



________________________________
Édition en Français - edited 6:58pm May 29, 2006

Mardi 7 mars 2006
La « banque du Canada soulève la pression canadienne de taux d'intérêt » -

Cet article décrit une mesure que la banque du Canada a prise au compteur à l'inflation continue au Canada. Selon des théories économiques, l'inflation est provoquée par une élévation en PIB (plus de consommation = plus de demande des marchandises). Afin de diminuer les effets de l'inflation sur des économies locales, la banque du Canada essaye de réduire le niveau de dépenser dans le Canada en augmentant le taux d'intérêt. L'augmentation du taux d'intérêt fera emprunter des personnes moins d'argent, et ainsi, favoriser moins de dépense dans le Canada. Naturellement, moins de dépense au sein d'une communauté peut être dévastatrice pour des entreprises locales ; cependant, si pris en compte des effets néfastes continuellement de avoir l'inflation élevée, un peu que moins de dépense (et un peu moins de bénéfices pour des entreprises) montrera être favaorable. Par conséquent, avoir moins de demande globale dans des économies locales peut réellement être la banque perferable d'étape du Canada doit prendre.


Relation au chapitre 6 - une demande globale


Un « certain accroissement plus ultérieur modeste du taux d'intérêt de politique peut être exigé pour maintenir l'offre et la demande dans l'équilibre et l'inflation globales sur la cible au-dessus de l'à moyen terme, » les banquiers centraux dits dans un rapport.

En effet, la demande des produits ont été sur l'élévation en dernières années. Cette tendance est principalement contribuée par l'économie canadienne éclatante. Cependant, si cette demande continue dépassait l'approvisionnement en produits disponibles, puis des quantités étrangères de revenu net disponible personnel sera laissé à vide, inutile, et tout sans but qu'il y aurait pas assez de choses à acheter.

L'inflation est provoquée par la quantité d'approvisionnement ne rencontrant pas la quantité exigée. Pendant que plus d'argent est inondé dans le marché avec de petites choses pour acheter, les prix de ces produits rares montent et la valeur de la diminution de ces devises.

Une solution à ce problème serait de diminuer une demande globale (consommation). Par des augmentations du taux d'imposition fiscal, les gens emprunteront moins d'argent (ainsi moins d'argent entrant dans le marché), et diminuent directement la demande globale dans l'économie. Avoir un taux d'imposition fiscal plus élevé est à sens unique pour commander l'inflation. Cependant, ce qui si une économie est dans la récession ? Afin de soulever des économies hors des récessions, la banque du Canada ajustera les taux d'imposition fiscaux en conséquence pour favoriser plus de dépense - et c'est le but exact de avoir une banque centrale : avoir un taux d'imposition fiscal ainsi l'inflation standard peut être commandé partout.


This translation is provided by http://translate.google.com
Not to mention, this translation tool really SU*KS. Even a Français idiot like myself believes that.

Chapter 5 Media Article

Confronting the Coming Talent Crunch: What's Next?
Manpower Inc. - February 2006

Very recently, Manpower Inc. has conducted a survey for 33,000 employers across 23 countries, and its result reveals that many employers are either unsatisfied with the lack of talented employees on the market. Out of which, 31% of Hong Kong's employers cannot find suitable candidates for various job positions, especially positions in Technicians, Sales Representatives, and Engineers. According to this article, "Employers are not just looking for bodies to fill sales jobs, they want experienced sales people who know their respective industries and can drive revenues". This may be a bit too much to ask for in Hong Kong, as demographic shifts such as aging population, lower birth rates, globalization, and social evolution are all occuring simultaneously. The new generation of youths in Hong Kong, already inexperienced, are subjected to cultural change that advocates for more enjoyment in life and less work. These Chinese youths simply cannot meet the insatiable demand of many employers to fill up these vacant job positions. However, just north of Hong Kong in mainland China lives many of these talents who are well qualified for these job positions. These people, should they not live at the wrong locality of the earth, may get these jobs and live contented lives.

Relation to Chapter 5:
Structural Unemployment (Geographic Dimension)

The supplies of jobs in Hong Kong are abundant, but many of these specific/technical jobs require so much qualifications that the supplies of these qualified skillsmen simply cannot meet their ever-increasing demands. On the other hand, though, these employers cannot simply find someone incompetent to fill up these job positions. An example of this situation would be the lack of talented Technicians in Hong Kong. Employers in Hong Kong, according to Manpower's Talent Shortage Survey, demanded Technicians (engineering, maintenance) the most in its top 10 want-list. Yes, there are numberous people who would fight over such high-paying jobs (so the supply of workers are not deficient), but it also does not necessarily mean employers are satisfied with the quality of the job applicants. However, according to this article, mainland China has many employable talents in the field of engineering and technical supports. Unfortunately, although some people in China may be well-qualified for this job, these people simply live too far away to be able to work at the jobs they can excel in; thus, the unemployment rate of China increases because some of these technicians are unemployed due to a geographic reason. This type of unemployment is called Structural Unemployment (Geographic Dimension). This type of unemployment results from a mismatching of workers and jobs, rather than a shortage of jobs. These situations are very commonplace in the world, and sometimes it is out of humans' limits to control their fates as to where they live in the world. Therefore, to counter the talent shortage in the world, I think employers may need to reduce the number of jobs that are in short supply, and increase the number of jobs that require more employable talents (or lessen the qualifications they look in their employees; or provide more trainings so these employees would meet their qualifications).

Chapter 4 Media Article

"GST a Taxing Debate"
- The Vancouver Province January 16, 2006 -

This article contrasts personal income tax with consumption tax (GST) and their roles of government intervention in Canada. According to economic theories, lowering personal income tax or consumption tax will provide more incentives for people to spend on goods and services, thus can promote local economies. However, this is also one of the crises faced by the Stephen Harper’s Administration after their recent victory in the federal election. The Conservatives, apparently, have promised to lower the GST as well as to improve public services; however, it is evident that Canada cannot afford to lower taxes and improve public services simultaneously without risking more national debts. How is the "Progressive Conservatives" (an oxymoron) planning to pay for more public services while reducing our consumption tax simultaneously? The Liberals believes not. The Liberals believes Canada should not reduce its consumption tax. It, on the contrary, advocates the reduction of personal income tax instead, and this article agrees with the Liberals by suggesting that it is more sensible for the government to tax on consumptions rather than to tax on individual incomes.

Relation to Chapter 4 – Government Involvement, Level of Taxation, Progressive Approach in Taxation

The high marginal tax rate due to Canada's progressive taxation system have frightened many indigenous intellectuals to move to more economically-freed nations such as the United States, where personal incomes are higher while personal income taxes are lower. This high marginal tax rate of highly-paid professionals is caused by government intervention in our society. As government expenditure increases due to more public services, taxes from taxpayers are the only way to finance these excessive expenses. One of the ways to raise taxes would be to to increase consumption tax (GST); another way would be to increase income tax rates in our progressive taxation system. However, according to this article, why "'punish' employment with our progressive income-tax system", and risk losing even more professionals to the United States, when we can "'punish' people who consume goods and use services"? Therefore, an increase in taxation on employment will only discourage people's willingness to work. Ultimately, to offset the financial trouble the Harper administration will soon be facing, this article concludes by stating it is much wiser to follow what the Liberals have been doing for the last few years - cut public services, and maintain taxation rates at a steady level. In whole, I believe this article addresses the need of taxation in Canada, and how it is impossible to lower tax and increase public services at the same time without risking more debts. However, this article also makes me realize why the previous governments would want to tax more on employment rather than consumption - because employment is a definite, fixed income for them, whereas people can choose to not buy anything and thus making consumption taxes an unreliable source of income.

Chapter 3 Media Article

"Health Care Organizations Release Vision for System"
-Canada NewsWire December 14, 2005-

The current medicare system has always been a major topic for debate in federal elections, and surprisingly (despite many convincing promises and compromises), it is still as inefficient as it always has been. This inefficiency can be explained with Canada’s political legacy of equality – that is, everyone is treated equally. With that in mind, long lineups result for people waiting for surgeries. That is theoretically going to change after the upcoming federal election, however, as health care organizations press for reforms for our health care system. According to this article, reducing the wait times in hospital, increasing the number of health care personnels, and providing advanced medical technology in Canadian hospitals are what the health care organizations advocate. Since the Canadian medicare system is one of the utmost concerns Canadians have, all the major party leaders (Liberals, Conservatives, NDP) promise immediate reform for the benefits of Canadian citizens. However, such an intervention by the federal government can cause more harm than good on the economy, although such an intervention is necessary to ensure the survival of our political ideology (that is, the theory of equality).

Relation to Chapter 3:
Third-Party Effect (Negative),
Macro Economics (Government Intervention)

Apparently, “nothing in life is perfect”, and this statement holds truth for the new health care systems that party leaders are advocating. The new medicare system, with its increased expenses, will cost Canadian citizens more tax dollars - yet, this public service will not benefit all Canadian citizens. Since incomes for individuals will not be likely to raise rapidly over the next few months, raising taxes is a terrible idea that can cause detrimentally lasting scars upon the Canadian economy (people will have less money to spend on goods due to taxes; therefore, local economies will shrink and everyone will suffer). Therefore, the introduction of a new health care system actually brings a negative third-party effect to the Canadian economy. However, as mentioned previously, the intervention of government in the health care system is necessary to ensure equality among Canadian citizens. Perhaps with Alberta’s new-found wealth in the oil industry, Canadian government will finally be able to subsidize for the costly health care system that we long to enjoy.