Article - http://toronto.ctv.ca/servlet/an/local/CTVNews/20090323/Suncor_merge_090323/20090323/?hub=TorontoNewHome
Summary
This article summarizes the merger between Suncor Energy Inc. and Petro-Canada. With this merger, the largest energy corporation in Canada and fifth largest in North America is subsequently formed. Stockholders in both companies will then retain a certain amount of stocks in the newly-created company, 60 percent for the Suncor shareholders and 40 percent for the Petro-Canada shareholders. The merger is said to been “more than just a strategic fit and that the two companies shared ‘common ground’ with their corporate visions.” It is expected from the companies that they will save approximately $1 billion through “elimination of redundant spending and targeting capital budgets to high-return, near term projects.”
Connections
There are several ties this article has with chapter 10 in the textbook. The merger between Suncor Energy Inc. and Petro-Canada can be seen as a partnership. However, these companies are in fact corporations, each having their own shareholders and workers. Because of the two companies combined together, expenses could be cut and therefore more profits could be earned. The combined assets of both companies help them against our current economic conditions.
Reflection
Mergers are very big changes for both the companies and those that work for them. I have some experience as to how they affect the workers, as my sister is in a company that had been in a merger not so long ago. The transition puts a lot of strain for both sides, especially the lesser dominant company. Workload becomes heavier with information having to be transferred from company to company. Given that certain personnel are no longer needed, layoffs would occur, affecting many individuals via job losses. Mergers provide a new environment for both company heads and workers, and are ultimately done to achieve goals such as lower spending and higher profits.
Tuesday, June 9, 2009
Friday, April 17, 2009
Chapter 8: Stabilization Polcy
Article - http://www.thestar.com/comment/article/619098
Summary
In the following article, leader of the Liberal Party Michael Ignatieff has proposed to reform Canada’s current employment insurance program. This revision came from the fact that more than half of the unemployed in Canada do not qualify for the program’s benefits, even when most of them contribute to the fund through a portion of their paycheque. The problem as Mr. Ignatieff sees it is that the hours worked required for EI is not spread out evenly over unemployed areas in the country. For example, an area with 13% unemployment rate require just 420 hours in the preceding 52 weeks to qualify while an area below 6% requires 700 hours.
Connections
The connection between the chosen article and the current chapter is employment insurance, which is one of the automatic stabilizers not introduced as part of an economic stabilization policy. Employment insurance is supposed to provide money for those to spend and negate some of the negative consequences of unemployment on the economy. However, the current problem of certain areas requiring higher worked hours to qualify makes the EI program somewhat inefficient.
Reflection
Just through reading about the problems of our current employment insurance program, I can see how unfair it may be to those living in areas of lower unemployment rates. Although eligible for the same benefits as others, those unemployed individuals are compared to those that “have paid car insurance premiums for years only to discover after an accident that they are not covered because they live in the wrong town.” This kind of flaw in Canada’s EI program is a great disappointment to many workers and students that will work or is currently working. As one of those students, I believe that the money contributed is not being used to it full potential.
Summary
In the following article, leader of the Liberal Party Michael Ignatieff has proposed to reform Canada’s current employment insurance program. This revision came from the fact that more than half of the unemployed in Canada do not qualify for the program’s benefits, even when most of them contribute to the fund through a portion of their paycheque. The problem as Mr. Ignatieff sees it is that the hours worked required for EI is not spread out evenly over unemployed areas in the country. For example, an area with 13% unemployment rate require just 420 hours in the preceding 52 weeks to qualify while an area below 6% requires 700 hours.
Connections
The connection between the chosen article and the current chapter is employment insurance, which is one of the automatic stabilizers not introduced as part of an economic stabilization policy. Employment insurance is supposed to provide money for those to spend and negate some of the negative consequences of unemployment on the economy. However, the current problem of certain areas requiring higher worked hours to qualify makes the EI program somewhat inefficient.
Reflection
Just through reading about the problems of our current employment insurance program, I can see how unfair it may be to those living in areas of lower unemployment rates. Although eligible for the same benefits as others, those unemployed individuals are compared to those that “have paid car insurance premiums for years only to discover after an accident that they are not covered because they live in the wrong town.” This kind of flaw in Canada’s EI program is a great disappointment to many workers and students that will work or is currently working. As one of those students, I believe that the money contributed is not being used to it full potential.
Tuesday, March 31, 2009
Chapter 7 - Money and the Canadian Banking System
Article: http://www.vancouversun.com/business/fp//1425343/story.html
Summary
The above article speaks about how the Bank of Canada’s monetary policy affects the mortgage rates. The Bank of Canada can influence both variable mortgage rates and fixed mortgage rates. Variable rate mortgages are derived from prime rates, which many financial institutes set according to the Bank’s. Fixed rate mortgages are based on bond yields, which are influenced by the market and dependent on the Bank’s moves. High bond yields create higher mortgage rates due to higher funding costs. As the Bank’s main focus over the past few years have been inflation, interest rates are increased and decreased to influence demand, in order to maintain a two percent inflation rate target. To further encourage lending, the central bank has been injecting liquidity into the financial system via purchasing assets from financial institutions. Through all this, it seems to have made bond yields in the market low, making fixed mortgage rates more appeasable.
Connections
The connection between this article and the chapter is the Bank of Canada’s monetary policy. It is described as the action taken by the Bank of Canada to alter the money supply, and ultimately economic conditions in the text. In this case, the Bank aimed to keep the inflation rate target of two percent through raising or lowering interest rates. Money supply is altered by the changing interest rates, and the economic condition is the rate of inflation.
Refection
I can see how it is important for the Bank of Canada to maintain control over the economy through controlling the money supply. In our recessionary times where people do not spend as much, the inflation rate will just keep rising. Changes in interest rates, mortgage rates, etc helps provide an incentive for people to borrow money and/or spend. It is nice to known that the Canadian central bank is constantly trying to fix an economic problem, even if the current one is globally affecting everyone else in the world as well.
Summary
The above article speaks about how the Bank of Canada’s monetary policy affects the mortgage rates. The Bank of Canada can influence both variable mortgage rates and fixed mortgage rates. Variable rate mortgages are derived from prime rates, which many financial institutes set according to the Bank’s. Fixed rate mortgages are based on bond yields, which are influenced by the market and dependent on the Bank’s moves. High bond yields create higher mortgage rates due to higher funding costs. As the Bank’s main focus over the past few years have been inflation, interest rates are increased and decreased to influence demand, in order to maintain a two percent inflation rate target. To further encourage lending, the central bank has been injecting liquidity into the financial system via purchasing assets from financial institutions. Through all this, it seems to have made bond yields in the market low, making fixed mortgage rates more appeasable.
Connections
The connection between this article and the chapter is the Bank of Canada’s monetary policy. It is described as the action taken by the Bank of Canada to alter the money supply, and ultimately economic conditions in the text. In this case, the Bank aimed to keep the inflation rate target of two percent through raising or lowering interest rates. Money supply is altered by the changing interest rates, and the economic condition is the rate of inflation.
Refection
I can see how it is important for the Bank of Canada to maintain control over the economy through controlling the money supply. In our recessionary times where people do not spend as much, the inflation rate will just keep rising. Changes in interest rates, mortgage rates, etc helps provide an incentive for people to borrow money and/or spend. It is nice to known that the Canadian central bank is constantly trying to fix an economic problem, even if the current one is globally affecting everyone else in the world as well.
Saturday, March 7, 2009
Chapter 6 - Determination of National Income
Article: http://www.theglobeandmail.com/servlet/story/RTGAM.20090302.wgdp02/BNStory/National/home
Summary
The article I have selected is on an interview with Canadian Finance Minister Jim Flaherty with The Globe and Mail. Mr. Flaherty states that he expects a “sharp, substantive drop in GDP” for last quarter and the next from Statistics Canada. Along with Mr. Flaherty, many economists have predicted a 3 or 4 percent drop as well. The finance minister suggests that through the GDP figures, the stimulus-spending of $3-billion needs to be quickly enabled by the opposition MPs. Without the spending, Mr. Flaherty fears for a “longer, deeper recession for Canada”, which would subsequently damage Canadian families and businesses. Though Liberal finance critic John McCallum believes time is still available for the government and the opposition to decide on the distribution of the spending.
Connections
The connection between this article and chapter 6 is government spending and the Keynesian economic theory. Government spending helps increase GDP through putting money into businesses, which can then provide income to its workers. The workers can then use that income, putting back the money into the economy. This relationship between income and consumption can be seen in the circular flow of money. The Keynesian economic theory, where John Maynard Keynes proposes that the government takes an active role in the economy, includes government spending. This spending would help support demand for goods and services, therefore preserving employment. In this case, the $3-billion spending will help our current economy get out of or at least stall the effects of the current recession.
Reflection
With the current state of the economy, government spending would help keep up employment in the country. As seen in my previous entry, unemployment rates in the province of British Columbia, Ontario, and Quebec is increasing. The decrease in employment would most likely drop Canada’s GDP, resulting in further unemployment. By stimulating the economy via spending, there will be more money circulating around. More money means more products and services can be bought. The increase in demand would be matched with an increase in supply, creating more jobs and money in the market. Because of this, I agree and support the spending and would like to see it implemented as soon as possible.
Summary
The article I have selected is on an interview with Canadian Finance Minister Jim Flaherty with The Globe and Mail. Mr. Flaherty states that he expects a “sharp, substantive drop in GDP” for last quarter and the next from Statistics Canada. Along with Mr. Flaherty, many economists have predicted a 3 or 4 percent drop as well. The finance minister suggests that through the GDP figures, the stimulus-spending of $3-billion needs to be quickly enabled by the opposition MPs. Without the spending, Mr. Flaherty fears for a “longer, deeper recession for Canada”, which would subsequently damage Canadian families and businesses. Though Liberal finance critic John McCallum believes time is still available for the government and the opposition to decide on the distribution of the spending.
Connections
The connection between this article and chapter 6 is government spending and the Keynesian economic theory. Government spending helps increase GDP through putting money into businesses, which can then provide income to its workers. The workers can then use that income, putting back the money into the economy. This relationship between income and consumption can be seen in the circular flow of money. The Keynesian economic theory, where John Maynard Keynes proposes that the government takes an active role in the economy, includes government spending. This spending would help support demand for goods and services, therefore preserving employment. In this case, the $3-billion spending will help our current economy get out of or at least stall the effects of the current recession.
Reflection
With the current state of the economy, government spending would help keep up employment in the country. As seen in my previous entry, unemployment rates in the province of British Columbia, Ontario, and Quebec is increasing. The decrease in employment would most likely drop Canada’s GDP, resulting in further unemployment. By stimulating the economy via spending, there will be more money circulating around. More money means more products and services can be bought. The increase in demand would be matched with an increase in supply, creating more jobs and money in the market. Because of this, I agree and support the spending and would like to see it implemented as soon as possible.
Sunday, February 22, 2009
Chapter 5 - Economic Indicators
Article: http://www.digitaljournal.com/article/266703
Summary
The article I have chosen briefly shed some light to the rate of unemployment in Canada from this past January. About 129,000 mainly full time jobs were lost, which brought the unemployment rate from 6.6% in December to 7.2%. The manufacturing sector in Canada had suffered the greatest loss in employment, losing approximately 101,000 jobs. However, industries in health care and social assistance had seen their employment increase by 31,000 despite of the downfall in jobs experienced by other industries. In the three largest provinces in Canada, the effects of unemployment were seen. Ontario had lost 71,000 of the 129,000 jobs, British Columbia had lost 35,000, and Quebec had lost 26,000. Those that were mainly affected were youth from ages 15-24 and men from ages 25-54.
Connections
The connection from chapter 5 to this article would be unemployment and its variants. While Canada’s economy is heading into recession, many residents are discouraged to spend money and would rather save the money in banks and in investments. This lack of demand for product results in demand-deficient unemployment for workers in different industries. Looking at the job loss in the manufacturing sector, the demand for the goods and services provided must be decreasing. The current unemployment rate in Canada is also in the estimated range of the natural rate of unemployment of 6 and 9.
Reflection
Looking at the economic status of our major trading partner, the United States, it seems that the problem of unemployment in Canada will continue to rise unless the US economy starts picking up. Although newly-sworn president Barack Obama and his advisors have came up with an economic plan to put a halt to the current recession, from the last article I have made it seems that certain parts of it may not be as effective as it seems. Unless the Canadian government does something to help with the situation, the rate of unemployment will continue to increase for the next few months. As a student coming out of high school in the next few months, these job losses will hinder my ability to find a part time job as many of those unemployed will have to temporarily take part in any jobs available to keep up their income.
Summary
The article I have chosen briefly shed some light to the rate of unemployment in Canada from this past January. About 129,000 mainly full time jobs were lost, which brought the unemployment rate from 6.6% in December to 7.2%. The manufacturing sector in Canada had suffered the greatest loss in employment, losing approximately 101,000 jobs. However, industries in health care and social assistance had seen their employment increase by 31,000 despite of the downfall in jobs experienced by other industries. In the three largest provinces in Canada, the effects of unemployment were seen. Ontario had lost 71,000 of the 129,000 jobs, British Columbia had lost 35,000, and Quebec had lost 26,000. Those that were mainly affected were youth from ages 15-24 and men from ages 25-54.
Connections
The connection from chapter 5 to this article would be unemployment and its variants. While Canada’s economy is heading into recession, many residents are discouraged to spend money and would rather save the money in banks and in investments. This lack of demand for product results in demand-deficient unemployment for workers in different industries. Looking at the job loss in the manufacturing sector, the demand for the goods and services provided must be decreasing. The current unemployment rate in Canada is also in the estimated range of the natural rate of unemployment of 6 and 9.
Reflection
Looking at the economic status of our major trading partner, the United States, it seems that the problem of unemployment in Canada will continue to rise unless the US economy starts picking up. Although newly-sworn president Barack Obama and his advisors have came up with an economic plan to put a halt to the current recession, from the last article I have made it seems that certain parts of it may not be as effective as it seems. Unless the Canadian government does something to help with the situation, the rate of unemployment will continue to increase for the next few months. As a student coming out of high school in the next few months, these job losses will hinder my ability to find a part time job as many of those unemployed will have to temporarily take part in any jobs available to keep up their income.
Thursday, January 22, 2009
Chapter 4 - Government in Canada
Article: http://http://online.wsj.com/article/SB122714465532443171.html?mod=relevancy
Summary
This article I chose from The Wall Street Journal is about the opinions of two individuals, Newt Gingrich, and Peter Ferrara on the flaw in President Obama’s tax plan, which consists of creating or expanding federal income tax credits to low-middle income families. These credits provide little help to economic growth because it does not reduce marginal tax rates, which gives an incentive for people to save their money, invest, and work. Gingrich and Ferrara propose to have the 25% income tax rate paid by workers earning $32,550 to $78,850 reduced to 15% for everyone earning below that level. If one includes all the taxes along with the marginal tax for middle-income earners, it would add up close to 50%. By having these tax cuts instead of tax credits, middle-income earners would earn more money, and at the same time reducing the marginal tax rates for higher-income workers.
Connections
The concept tying into this article would be the marginal tax rates discussed in chapter 4. As suggested by the writers of the article, by reducing the tax rates, people would gain an incentive to save, invest, and work more than before due to benefits of gaining that extra income from the tax cut. The 15% flat tax rate would help further eliminate disincentive effects of the high marginal tax rates. However, the tax credits from President Obama’s tax plan currently acts as a disincentive to the workers, further discouraging risk taking and hard work rather than promoting it.
Reflection
The points brought up in this article are all very valid and of which I totally agree with. I personally would rather have a marginal tax cut than receiving tax credits. A 10% reduction in marginal taxes can be a considerable amount for me if I ever plan to live on my own. More so, a tax cut would really help the economy going, more people would work and there would be more money circulating in the system. I believe that Canada should have one of these reductions in their marginal tax rates, seeing the cut would benefit our economy just as it would if it was implemented in the US.
Summary
This article I chose from The Wall Street Journal is about the opinions of two individuals, Newt Gingrich, and Peter Ferrara on the flaw in President Obama’s tax plan, which consists of creating or expanding federal income tax credits to low-middle income families. These credits provide little help to economic growth because it does not reduce marginal tax rates, which gives an incentive for people to save their money, invest, and work. Gingrich and Ferrara propose to have the 25% income tax rate paid by workers earning $32,550 to $78,850 reduced to 15% for everyone earning below that level. If one includes all the taxes along with the marginal tax for middle-income earners, it would add up close to 50%. By having these tax cuts instead of tax credits, middle-income earners would earn more money, and at the same time reducing the marginal tax rates for higher-income workers.
Connections
The concept tying into this article would be the marginal tax rates discussed in chapter 4. As suggested by the writers of the article, by reducing the tax rates, people would gain an incentive to save, invest, and work more than before due to benefits of gaining that extra income from the tax cut. The 15% flat tax rate would help further eliminate disincentive effects of the high marginal tax rates. However, the tax credits from President Obama’s tax plan currently acts as a disincentive to the workers, further discouraging risk taking and hard work rather than promoting it.
Reflection
The points brought up in this article are all very valid and of which I totally agree with. I personally would rather have a marginal tax cut than receiving tax credits. A 10% reduction in marginal taxes can be a considerable amount for me if I ever plan to live on my own. More so, a tax cut would really help the economy going, more people would work and there would be more money circulating in the system. I believe that Canada should have one of these reductions in their marginal tax rates, seeing the cut would benefit our economy just as it would if it was implemented in the US.
