Unions set to take stake in Air Canada
http://www.theglobeandmail.com/globe-investor/unions-set-to-take-stake-in-air-canada/article1175555/
Summary:
Air Canada's five unions could acquire a 10-per-cent stake in the airline as management tries to repair its strained labor relations, avoid a strike and preserve cash to survive the recession. Under a tentative deal signed late Monday, three of five unions agreed to accept shares in exchange for supporting the company's proposal to freeze wages and defer most contributions to the employee pension plan for 21 months. The agreement could represent a novel solution to Air Canada's cash problems and, more importantly, help it escape a $225-million pension payment due during the critical summer travel season.
Caisses Populaires and Credit Unions:
Caisses Populaires and Credit Unions were established in order to enable groups of individuals to combine their savings and thus to provide loans to members at relatively low interest rates. These individuals receive their funds by selling shares and accepting deposits from members. The agreement could represent a novel solution to Air Canada's cash problems and, more importantly, help it escape a $225-million pension payment due during the critical summer travel season. If forced to make that contribution, the airline is at risk of falling below the $800-million minimum cash balance it needs to keep payments flowing from a credit card processor.
Reflections:
Air Canada consists of many pilots and flight attendants, the deal’s success now hinges on whether the other two unions, which represent pilots and flight attendants, can be persuaded to sign aboard. By giving equity to some of its 26,000 staff, Air Canada is taking a page from the government-mandated restructurings of General Motors Corp. and Chrysler LLC, in which unionized auto workers accepted an ownership stake in return for giving up wages and benefits. But it may also be an attempt to help blunt a key competitive advantage of rival WestJet Airlines, which uses employee ownership as a marketing tool.
Tuesday, June 16, 2009
Chapter 6 – Determination of National Income
Savings study points to low-wage setback
http://www.ft.com/cms/s/0/516a40f2-5a0e-11de-b687-00144feabdc0.html
Summary:
Reforms aimed at encouraging people to save for retirement are likely to boost the number of pension contributors but leave low-income earners with small pensions pot, a new report concludes. The Institute for Fiscal Studies report said that as of 2005, around 4.7 million employees were not offered the chance to join an employer's pension scheme. From 2012, when the reforms come into effect, they will be able to sign up to a pension through the newly created Personal Accounts scheme. Some pension experts have warned that the new rules are likely to lead to lower levels of pension savings because most employers, who currently offer more generous terms than those set as the minimum, would reduce them.
Saving:
On the economy, saving has both a positive and a negative impact. On the positive side, savings provide a pool of money that can be lent for investment. Most Canadian put their savings in the bank, and the bank lends out the money to businesses. The larger the available pool of money, the lower the interest rate. As a result, when Canadians save, they are helping to lower the interest rates. Negatively, saving is the opposite of consumption. Canadians are not spending when they save, and when they are not spending, they are not creating employment opportunities. Private saving in Canada is approximately 15% of GDP.
Reflection:
The article states that, “The legislation will require all employers automatically to enroll workers in a savings scheme and contribute up to 3 per cent of referenced earnings.” In the words of Ros Altmann, an economist, “The risk is that you encourage employers to 'level down’”. I think that it is generally a good idea for everyone to save money but at the same time spend some of it to promote a growth in the consumption of an economy. The IFS researchers also found those least likely to save were low-wage workers with a median income of £14,000, compared with a median of £21,600 among those who are saving.
http://www.ft.com/cms/s/0/516a40f2-5a0e-11de-b687-00144feabdc0.html
Summary:
Reforms aimed at encouraging people to save for retirement are likely to boost the number of pension contributors but leave low-income earners with small pensions pot, a new report concludes. The Institute for Fiscal Studies report said that as of 2005, around 4.7 million employees were not offered the chance to join an employer's pension scheme. From 2012, when the reforms come into effect, they will be able to sign up to a pension through the newly created Personal Accounts scheme. Some pension experts have warned that the new rules are likely to lead to lower levels of pension savings because most employers, who currently offer more generous terms than those set as the minimum, would reduce them.
Saving:
On the economy, saving has both a positive and a negative impact. On the positive side, savings provide a pool of money that can be lent for investment. Most Canadian put their savings in the bank, and the bank lends out the money to businesses. The larger the available pool of money, the lower the interest rate. As a result, when Canadians save, they are helping to lower the interest rates. Negatively, saving is the opposite of consumption. Canadians are not spending when they save, and when they are not spending, they are not creating employment opportunities. Private saving in Canada is approximately 15% of GDP.
Reflection:
The article states that, “The legislation will require all employers automatically to enroll workers in a savings scheme and contribute up to 3 per cent of referenced earnings.” In the words of Ros Altmann, an economist, “The risk is that you encourage employers to 'level down’”. I think that it is generally a good idea for everyone to save money but at the same time spend some of it to promote a growth in the consumption of an economy. The IFS researchers also found those least likely to save were low-wage workers with a median income of £14,000, compared with a median of £21,600 among those who are saving.
Friday, April 17, 2009
Chapter 8 – Stabilization Policy
Liberals hiding out on the economy
http://rabble.ca/columnists/2009/04/liberals-hiding-out-economy
Summary:
Canada still faces its most severe economics crisis since the 1930s, but the Liberal party (the official opposition), says nothing about what needs to be done to improve the economy. One explanation is that they do not think the current economic situation is serious enough to raise new thinking. The Liberals did vote for the Conservative budget on January 27, 2009. Although far from offering adequate support for Canada’s failing economy, a recent report from the CCPA shows that Canada had already lost as many jobs (189,000) as the budget has planned to create in the next year.
The Public Debt:
The total amount of money owed by all levels of government is referred to as the public debt. Since borrowing is greatest at the federal level, Canadians have become increasingly concerned about the size and cost of this debt. Responding to this, the Liberals were proud of putting taxpayers’ money into paying down public debt, rather than using the $10 to 20 billion a year for health care, poverty reduction, child care or for research. During a recession, it is better to finance government expenditures through borrowing than through taxes. During a recession, people must be encouraged to spend money.
Reflection:
Canada’s national debt is a huge problem for the government. They should consider putting more money into public services like health care because the economic climate has deteriorated rapidly. The CCPA report points out that, in 2008, personal bankruptcies increased by 50 per cent. Also, over 300,000 people have lost their jobs in the last five months. Removing money from the circular flow by raising taxes and spending it to reduce the national debt reduces the ability of the public to spend money. The government should consider more action into supporting the people and stabilizing the economy by spending taxpayer dollars into public services.
http://rabble.ca/columnists/2009/04/liberals-hiding-out-economy
Summary:
Canada still faces its most severe economics crisis since the 1930s, but the Liberal party (the official opposition), says nothing about what needs to be done to improve the economy. One explanation is that they do not think the current economic situation is serious enough to raise new thinking. The Liberals did vote for the Conservative budget on January 27, 2009. Although far from offering adequate support for Canada’s failing economy, a recent report from the CCPA shows that Canada had already lost as many jobs (189,000) as the budget has planned to create in the next year.
The Public Debt:
The total amount of money owed by all levels of government is referred to as the public debt. Since borrowing is greatest at the federal level, Canadians have become increasingly concerned about the size and cost of this debt. Responding to this, the Liberals were proud of putting taxpayers’ money into paying down public debt, rather than using the $10 to 20 billion a year for health care, poverty reduction, child care or for research. During a recession, it is better to finance government expenditures through borrowing than through taxes. During a recession, people must be encouraged to spend money.
Reflection:
Canada’s national debt is a huge problem for the government. They should consider putting more money into public services like health care because the economic climate has deteriorated rapidly. The CCPA report points out that, in 2008, personal bankruptcies increased by 50 per cent. Also, over 300,000 people have lost their jobs in the last five months. Removing money from the circular flow by raising taxes and spending it to reduce the national debt reduces the ability of the public to spend money. The government should consider more action into supporting the people and stabilizing the economy by spending taxpayer dollars into public services.
Monday, March 9, 2009
Chapter 5 – Economic Indicators
Statistics Canada Reports a 3.4% Drop in Real GDP In 2008’s Fourth Quarter
http://www.reedconstructiondata.com/news/2009/03/statistics-canada-reports-a-34-drop-in-real-gdp-in-2008s-fourth-quarter/
Summary:
In the fourth quarter of 2008, “real” inflation adjusted GDP in Canada dropped 3.4% on an annualized basis in the latest measured period, according to Statistics Canada. This would be the poorest performance for Canadian GDP since the first quarter of 1991, where the change was -5.9%. The fact that personal consumer spending fell by 3.3% was the main contributing factor to the GDP decline. Also, the volume of imports dropped in Canada for two reasons; the weaker economy cut into buyers’ demands and the higher price of imports was an inhibiting factor.
Real GDP:
The Gross Domestic Product value is the level of economic activity in a country. In Canada, one way of measuring the level of economic activity would be to add up the total amount of spending during a calendar year. GDP is determined not only from households, but also businesses, government, and buyers from foreign countries (who buy our exports). Investments also affect the GDP value, businesses make purchases from other businesses for such things as machinery, equipment, and new buildings. Government spending and purchases contain goods and services as well, such as the purchase of a new fighter aircraft.
Reflection:
Referring to the economic situation as of now, consumer spending has certainly decreased, thus lowering the GDP. Inflation, the price raise of consumer products, causes households to reduce their spending and affects the economic balance causing other’s to do the same. Imports coming into Canada should also naturally drop because of the inflation and the prices of import to protect the value of the products in Canada. I believe that the statistics discussed were inevitable, probably the only solution is to use strategies like stimulus plans and government action. I find that even my own personal spending has been effected by the inflation and I am now more cautious of how I use my own money.
http://www.reedconstructiondata.com/news/2009/03/statistics-canada-reports-a-34-drop-in-real-gdp-in-2008s-fourth-quarter/
Summary:
In the fourth quarter of 2008, “real” inflation adjusted GDP in Canada dropped 3.4% on an annualized basis in the latest measured period, according to Statistics Canada. This would be the poorest performance for Canadian GDP since the first quarter of 1991, where the change was -5.9%. The fact that personal consumer spending fell by 3.3% was the main contributing factor to the GDP decline. Also, the volume of imports dropped in Canada for two reasons; the weaker economy cut into buyers’ demands and the higher price of imports was an inhibiting factor.
Real GDP:
The Gross Domestic Product value is the level of economic activity in a country. In Canada, one way of measuring the level of economic activity would be to add up the total amount of spending during a calendar year. GDP is determined not only from households, but also businesses, government, and buyers from foreign countries (who buy our exports). Investments also affect the GDP value, businesses make purchases from other businesses for such things as machinery, equipment, and new buildings. Government spending and purchases contain goods and services as well, such as the purchase of a new fighter aircraft.
Reflection:
Referring to the economic situation as of now, consumer spending has certainly decreased, thus lowering the GDP. Inflation, the price raise of consumer products, causes households to reduce their spending and affects the economic balance causing other’s to do the same. Imports coming into Canada should also naturally drop because of the inflation and the prices of import to protect the value of the products in Canada. I believe that the statistics discussed were inevitable, probably the only solution is to use strategies like stimulus plans and government action. I find that even my own personal spending has been effected by the inflation and I am now more cautious of how I use my own money.
Tuesday, March 3, 2009
Chapter 4 – Government in Canada
Government – backed interbank lending program up and running.
http://www.financialpost.com/news/story.html?id=1332885
Summary:
The department of Finance has informed banks that it can now tap into an insurance program that guarantees interbank lending, four months after the government announced its creation. The chartered banks, on the other hand, are not expected to line up and seek help, observers say, in large part thanks to their solid balance sheets that has allowed them to tap credit. More conservative lending practices and banking regulations helped the Canadian banks avoid most of the US $1.1-trillion in debt-related write downs and losses taken by finance companies worldwide.
Government Borrowing:
All levels of government in Canada borrow money in order to pay for expenditures. Government borrowing is done by selling various types of securities to the public. With the efforts of the Department of Finance, this offers support to Canadian chartered banks, but for its part, the Canadian Bankers Association said in a statement that its members "won't necessarily need to use this facility, but it's good to know it is there as one more tool in the toolkit." Mr. Drummond, chief economist at Toronto-Dominion Bank, states that “Canadian banks have been able to obtain short-term financing through the Bank of Canada, via its buybank of government securities; and medium-term financing through Ottawa's acquisition of insured mortgage pools.”
Reflection:
Looking back into the recession, many American banks went bankrupt because they could not keep up with their debts. As a result, many businesses were at stake and once one bank falls, others follow suit. Ever since the bank fell, many people were afraid of losing their jobs because of poor financial relationships between businesses and households. Many people are refraining from purchasing too freely and also limiting their spending. I believe the Canadian banks are working very well in trying to evade all the havoc that the American banks have aroused, by being careful with their borrowing and their balance sheets.
http://www.financialpost.com/news/story.html?id=1332885
Summary:
The department of Finance has informed banks that it can now tap into an insurance program that guarantees interbank lending, four months after the government announced its creation. The chartered banks, on the other hand, are not expected to line up and seek help, observers say, in large part thanks to their solid balance sheets that has allowed them to tap credit. More conservative lending practices and banking regulations helped the Canadian banks avoid most of the US $1.1-trillion in debt-related write downs and losses taken by finance companies worldwide.
Government Borrowing:
All levels of government in Canada borrow money in order to pay for expenditures. Government borrowing is done by selling various types of securities to the public. With the efforts of the Department of Finance, this offers support to Canadian chartered banks, but for its part, the Canadian Bankers Association said in a statement that its members "won't necessarily need to use this facility, but it's good to know it is there as one more tool in the toolkit." Mr. Drummond, chief economist at Toronto-Dominion Bank, states that “Canadian banks have been able to obtain short-term financing through the Bank of Canada, via its buybank of government securities; and medium-term financing through Ottawa's acquisition of insured mortgage pools.”
Reflection:
Looking back into the recession, many American banks went bankrupt because they could not keep up with their debts. As a result, many businesses were at stake and once one bank falls, others follow suit. Ever since the bank fell, many people were afraid of losing their jobs because of poor financial relationships between businesses and households. Many people are refraining from purchasing too freely and also limiting their spending. I believe the Canadian banks are working very well in trying to evade all the havoc that the American banks have aroused, by being careful with their borrowing and their balance sheets.
Sunday, January 18, 2009
Chapter 3 Economics Blog
British PM to announce bank bailout plan Monday.
http://www.cbc.ca/money/story/2009/01/18/britain-banks.html
Summary:
The Prime Minister of Britain, Gordon Brown, states that his government with implement a new bank bailout plan on Monday to encourage bank lending. He announced this move in an interview with Sky News as he spoke on an airplane flying from the Egyptian Red Sea resort of Sharm el-Sheik to Jerusalem. According to reports carried by the BBC, the Sunday Times, and other media organizations, said the treasury was preparing to underwrite loans made by the banks to increase flagging confidence in the financial sector of the country.
The Role of Government in a Market Economy: Market Shortcomings:
I feel that many financial banks and corporations are desperate in this situation and the Government is admitting that it is desperate and is doing what it can, at least in the UK. This situation may differ in many other places like Canada, rumors have it that the Prime Minister in Canada, Steven Harper, closed parliament during the worst financial crisis since the great depression, and now he is trying to spend his way into keeping his job. In other words, the situation in Europe is not as urgent as the situation here in Canadian banks. All in all, many people believe that the Canadian banks should certainly work on their own economic and financial situation.
Reflection:
I believe the government is doing everything it can to preserve and save the financial crisis of the economy at the moment. The government is certainly playing it safe, because there is certainly a huge risk at hand if there are any miscalculations or bad decisions. Although the Canadian government is helping the economic situation, I believe it is not doing enough to stabilize confident lending. Banks are still very reluctant to lend money out; they interest rates have not been practically cut to assist their clients in borrowing money. The banks’ interest rates are still way higher than the prime rates that they were offering.
http://www.cbc.ca/money/story/2009/01/18/britain-banks.html
Summary:
The Prime Minister of Britain, Gordon Brown, states that his government with implement a new bank bailout plan on Monday to encourage bank lending. He announced this move in an interview with Sky News as he spoke on an airplane flying from the Egyptian Red Sea resort of Sharm el-Sheik to Jerusalem. According to reports carried by the BBC, the Sunday Times, and other media organizations, said the treasury was preparing to underwrite loans made by the banks to increase flagging confidence in the financial sector of the country.
The Role of Government in a Market Economy: Market Shortcomings:
I feel that many financial banks and corporations are desperate in this situation and the Government is admitting that it is desperate and is doing what it can, at least in the UK. This situation may differ in many other places like Canada, rumors have it that the Prime Minister in Canada, Steven Harper, closed parliament during the worst financial crisis since the great depression, and now he is trying to spend his way into keeping his job. In other words, the situation in Europe is not as urgent as the situation here in Canadian banks. All in all, many people believe that the Canadian banks should certainly work on their own economic and financial situation.
Reflection:
I believe the government is doing everything it can to preserve and save the financial crisis of the economy at the moment. The government is certainly playing it safe, because there is certainly a huge risk at hand if there are any miscalculations or bad decisions. Although the Canadian government is helping the economic situation, I believe it is not doing enough to stabilize confident lending. Banks are still very reluctant to lend money out; they interest rates have not been practically cut to assist their clients in borrowing money. The banks’ interest rates are still way higher than the prime rates that they were offering.
Tuesday, November 18, 2008
Chapter 2 – Supply and Demand – Canadian car sales
http://www.cbc.ca/consumer/story/2008/10/14/cars.html
Summary:
Automobile sales in Canada dropped in August, August is the third month in a row that the country has seen fewer cars and trucks sold. According to statistics Canada, 137 937 vehicles were sold by Dealerships in August. A drop of 2.3% compared to July. Other cars, like passenger cars, slid 4.2% in the month, to 73 484 vehicles. Entirely responsible for the fall of sales down 6.8% in August was the North American build cars. The article states that sales of new cars and trucks fell 0.8% in July and 1% in June compared to the month before. The cause of these sales is most likely caused by the rising oil prices combined with the heightened economic uncertainty factor.
Connections:
The concept of supply and demand is when manufacturers and consumers connect and communicate to establish a supply and demand market. The car manufacturers are producing cars, but consumers are not willing to purchase any more cars from them. External factors like rising oil prices and environment concerns are influencing the consumers. Consumer characteristics and income also highly affect consumers of cars. Therefore, the sales of automobiles in Canada dropped because mainly overseas car manufacturers are in more of a demand than North American cars. Mainly, the external effects of high oil prices affect the expectations of future outcomes and characteristics of buyers and consumers.
Reflection:
The sales of automobiles certainly reflect on the world’s current economic situation. I understand that oil and gas prices is a very hot topic today in the market, I think that automobile sales would certainly drop in demand because buyers are more concerned about lowering their daily spending. As for myself, I would preferably look for a convenient and fuel efficient vehicle instead of a heavy duty gas guzzler. I think that preferences and characteristics of buyers and consumers have a big say on this issue. Although automobiles are a necessity to many people, people tend to minimize fuel consumption to try to save money on other things, and help the environment while they are at it.
Summary:
Automobile sales in Canada dropped in August, August is the third month in a row that the country has seen fewer cars and trucks sold. According to statistics Canada, 137 937 vehicles were sold by Dealerships in August. A drop of 2.3% compared to July. Other cars, like passenger cars, slid 4.2% in the month, to 73 484 vehicles. Entirely responsible for the fall of sales down 6.8% in August was the North American build cars. The article states that sales of new cars and trucks fell 0.8% in July and 1% in June compared to the month before. The cause of these sales is most likely caused by the rising oil prices combined with the heightened economic uncertainty factor.
Connections:
The concept of supply and demand is when manufacturers and consumers connect and communicate to establish a supply and demand market. The car manufacturers are producing cars, but consumers are not willing to purchase any more cars from them. External factors like rising oil prices and environment concerns are influencing the consumers. Consumer characteristics and income also highly affect consumers of cars. Therefore, the sales of automobiles in Canada dropped because mainly overseas car manufacturers are in more of a demand than North American cars. Mainly, the external effects of high oil prices affect the expectations of future outcomes and characteristics of buyers and consumers.
Reflection:
The sales of automobiles certainly reflect on the world’s current economic situation. I understand that oil and gas prices is a very hot topic today in the market, I think that automobile sales would certainly drop in demand because buyers are more concerned about lowering their daily spending. As for myself, I would preferably look for a convenient and fuel efficient vehicle instead of a heavy duty gas guzzler. I think that preferences and characteristics of buyers and consumers have a big say on this issue. Although automobiles are a necessity to many people, people tend to minimize fuel consumption to try to save money on other things, and help the environment while they are at it.
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