Systemic Risk of Greece [Governments are the Primary Creators of Systemic Risk]

31 05 2011

Article can be found here

Discussion Questions:

1. Do you believe the other European countries should of lent money to Greece? Why? If not, what would you of done differently?

2. Who do you think is responsible for this potential financial crisis: the Greek Government, ECB, or the government representatives that put government loans into a special category that has a 0% risk requirement?





New Tax Policies May Aggravate Gap Between Rich and Poor: A Recipe for Risotto

30 05 2011

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Key Points:

– In most recent years, Canada has been experiencing among the highest rates of gap expansion. Meaning that the distance between the rich and poor is gaining significantly.

– Between 2005 to 2009, the total monetary wealth that the top 3.8% of Canadian households controlled jumped from 60.6% to 66.6% and is estimated to head to over 70% in 2018.

– Despite this, as well as a 30 Billion Dollar deficit, Stephen Harper plans on making even more corporate tax breaks, costing an estimated 6 billion dollars in forgone revenues for next year.

– This “trickle down economic” theory states that companies with tax breaks will use that money on machinery, making new jobs, among other things that give back to the country’s economy.

– This sounds good on paper but the majority of Canadian companies, despite extensive tax reductions, have been reluctant in recent years to make the investments in machinery and equipment needed to strengthen the country’s economic prowess.

Questions:

1) What do you believe should be the right gap between rich and poor? Smaller, or larger? Should the richer control more or less and why?

2) How do you propose the government taxes citizens and should it change?





Canadian Economic Challenges: Housing Prices

30 05 2011

To view the news article, click here.

Discussion:

  1. Do you believe the Canadian housing bubble will burst in the near future? If so, why? If not, why?
  2. Do you believe that shortening the insurable amortization period (the number of years you pay for your mortgage) is good for sustaining the housing market?




Government Deficits and Debt

30 05 2011

Focus on Ontario

Focus on Federal Budget

If we have time for it…

First, some more on stimulus spending… (overdosing on Krugman)

Ontario Budget 2006 t0 2009

Federal Budget

Where does the money come from?

How much can the U.S. government borrow?

The Global Debt Clock

Two sides of the U.S. Debt Debate

Can you fix the U.S. Budget?





Simulation Round 7

27 05 2011

We will play one more round after this one.  Keep that in mind when making decisions.

Your results for round 6 were emailed to you last night.

All pricing, purchasing and production decisions must be completed by end of class at 10:20. Purchases of energy and raw material can be made online through the production decision form.  Reputation point tasks are due by midnight tonight.

The sales tax will be added to your price and Willians will make their purchase decision based on that price.  When you receive your revenue it will be at the unit price you enter into the decision form.

Example:

If you decide on a price of $1, it will be entered into my sales formulas at $1.08 as the price Willians pay.  You will earn $1 per item sold.

Reputation Points due by Midnight tonight

  1. Draw a supply and demand graph for Lyons in cycle 6.
  2. Make three predictions for the economy in cycles 7 &8.




Fiscal Policy Specifics…

26 05 2011

From the Daily Show and the Colbert Report





Low Interest Rates seen sticking arond

25 05 2011

The article can be found here.

Explanation for bond and interest rate inverse relationship has been found here.

Discussion Questions:

1. Do you think it is healthy for Bank of Canada/US to keep the interest rates this low? What could be some challenges that would appear after having  low interest rates for a long period of time?

2. What do low interest rates do to each of the letters in the equation C+I+G+XM?