Consumer Debt

7 06 2011

Article 1, 2

Questions:

1. If you were Prime Minister of Canada, what would government do to help Canadians reduce personal debts?

2.If you had any of these three debts (student loans, mortgage debts and credit card debts or a combination of three debts) which one would you choose to pay off first? And explain?

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Current Events Participation

7 06 2011

This does not include any comments made on the blog on today’s presentations.  There are two more presentations tomorrow.

Susan 8 Alejandro Alex 7 Molly 3 Alexei 1 Benjamin 5 Dylan 10 Steven 8 Joey 6 Shahid 6 Na Hee 5 Christopher 9 Linda 6 Christopher 2 Maria 4 Kiruban 2 Heshani 6 Ilia 5 Noah 8 Mike 3 Petr 2 Dani 2 Dmytro 10 Carolyne 8 John 8 Ngodup 4 Kevin 2 Oleksandr 6 Lok-Hin 1





Temporary Workers

7 06 2011

Here is the article:

1. Do you think that temporary workers will benefit Canada’s economy? Why or why not?

2. Should the government regulate the number of temporary workers a company can have in relation to the number of permanent employees?





Does Income Inequality Help Cause Financial Crises?

6 06 2011

Here is the article:

  1. Do you think that rising income inequalities is a primary cause of financial crises or a secondary cause?
  2.  Do you think it is possible that income inequalities are not a cause, but an effect of financial crises?




Commodity Prices, Oil and Resource Shortages

6 06 2011

Our article can be found here, and statistics on rising oil prices can be found here.

 

Questions:

1. Who do you believe holds responsibility for rising oil prices: Speculators, market commentators, suppliers, or a combination of all of them?

2. How do you think rising oil prices can be reigned in? Should they be reigned in?





Economic Challenges in Commodity Prices, Oil and Resource Shortages

4 06 2011

Key Concerns/Issues:

  • Commodity prices are on the rise. Concerns over the european debt crisis, slow growth in the US and the possibility that China’s economy may overheat are causing uncertainties in the market, and as a result, people are choosing to invest in more conservative, safer commodities such as precious metals.
  • Shifts in climate and ineffective transportation/storage are causing major losses in potential crop consumption and production, especially in crop-dependant countries. In addition to this, the current industrial agriculture policies make up one third of global greenhouse gas emissions.
  • Unrenewable sources of energy such as oil and coal continue to rise in price and are still relied upon for a large portion of energy worldwide. The market’s reigns being in the control of speculators has resulted in a steep rise in prices in the past couple of years, reaching significant highs in the 2007/2008 oil crisis.

Resulting Challenges to Canadians:

  • Increasing prices in oil, food, and other commodities means that Canadians have less disposable income available. This affects our economy in an adverse way: consumer spending encourages money to circulate instead of staying immobile in investments, and in some cases the majority cannot go without commodities such as gas- it is integral to a high number of businesses and industries as well as for personal use.
  • Oil is not only expensive, but unrenewable. It was long theorized that rising prices would encourage consumers to look towards alternative energy sources such as solar, wind and electric, but seeing as there is still much money to be made in the messier corners of the market, the shift has been significantly slower than is healthy for the economy and the environment.

Supporting Statistics and Evidence:

  • When oil per barrel was around $140 or $150, Canadians were paying $1.37 per litre, when this year oil is around $95 people are paying about $1.35 per litre (Federal Industry Minister Tony Clement)
  • Consumer prices rose 3.3% in the 12 months to April. On a seasonally adjusted monthly basis, consumer prices rose 0.3% in April (Stats Canada).
  • Currently, 35-40 percent of harvests are lost due to inadequate transportation and storage facilities, while a further 35-40 percent goes to wealthy Organization for Economic Cooperation and Development (OECD) countries.
  • According to experts like De Schutter, the inability of 10 percent of the world’s population to feed itself is a reflection of unsustainable patterns of consumption and deeply flawed models of industrialized agricultural production which, if allowed to continue, will divert 50 percent of global cereal harvests towards feeding cattle by the year 2050.
  • Industry insiders have indicated that oil speculators drive up market prices significantly; problematically, popular economics dismissed this concept, and further influences the market’s characteristic panic attacks.

Possible Solutions:

  • Agro-ecology, which includes systems that produce their own  fertiliser using materials and waste from the surrounding  environment, is being increasingly viewed as the only viable solution  to the hunger crisis. Since prices of fertiliser doubled during the  2008 food crisis, continents like Africa that import 95 percent of  their chemical fertilisers could see radically different outcomes in  production by adopting agro-ecological techniques.
  • NATO and global gobernments should help Arabic countries to recover from wars and conflicts in order to stabilize the situation. It will help to lower the oil price by reassuring speculators that oil will continue to flow.
  • A monitor should be established in order to control speculators and invesitgate possible collusions on oil pricing. It is integral that this panel represent an impartial global view of the situation, and not provide another revolving door for oil company moguls to use as a means of hiking prices even further.
  • In order to encourage both environmental responsibility as well as fiscal economic improvement, the government should continue to offer or increase funding for reimbursements and incentives for purchasing green and/or renewable technology. Not only will this eventually eliminate oil prices from everyday Canadians’ list of economic woes, but it will also encourage new facets of business in technology and engineering.




Consumer Debts, Mortgage Prices and Housing Prices Summary

3 06 2011

Key Concerns/Issues

– Possible burst of the housing bubble, as housing prices continue to rise (as a result of surging multimillion dollar property sales and increasing foreign investors that bids up the price) and number of sales go down (as the interest rate and household debt rises).

– Consumer debt is rising lately

– The economy is growing but the growing slows down due to decreased consumer spending

– Many Canadian aren’t aware of the current economic downturn that can affect their financial situation and debt is continuing

Resulting Challenges to Canadians

– If the housing bubble is burst, there will be a rise in housing foreclosures as middle class Canadians fail to pay their mortgages, debts or simply lost their source of income (More middle class Canadians will lose their homes)

– This rise in foreclosures will increase the supply line in housing, significantly dropping the housing prices and shutting away more jobs in the housing market.

– They also have to deal with their mortgages especially when they’re taking out home equity.

– Another major hurdle Canadians may have to deal with is the housing bubble bursting, dropping housing prices and value, leaving Canadians with more debt than they own in home value

Supporting Statistics and Evidence

– Average price of home sold in April across the country was $372,544, which is 8% rise from last year.

– Slow April sales figures shows that there is an activity dip of 4.4% from March, which is 14.7% down from last year.

– When the housing bubble burst inToronto andVancouver in the past, in the worst case had 35% of average housing value wiped out

– Household debt rose to $1.3 trillion in 2008

– 42% of people said that their personal debts were rising in the last three years

32% of respondents have no saving

– People under $35,000 a year, 49% people reported that their debt levels rose in the last three years. In comparison, 42% of those making $35,000 to $75,000 a year reported their debt levels rose, while 38%of those making over $75,000 annually reported an increase.

– Personal loans from banks was $48.5 billion, up 8.1 per cent from a year earlier, bank credit-card receivables were up 8.9 per cent at $51.5 billion.

– Consumers normally are 60% of the GDP, but high debt levels and the rising cost of living has brought that number down substantially.

– 3-4% of all mortgage holders representing about 200,000 home owners say they have no room for additional monthly increases in their payments

– Graph 

Possible Solutions

– Price ceiling for housing  to prevent skyrocketing housing prices

– Allow the market to burst the housing bubble and fall down quickly before demand rises again

– A series of mortgage rules set out by the government (such as increasing the interest rate on mortgage and decreasing the insurable amortization period) to prevent an unrealistic rise in housing demand and eventually burst of the housing bubble.

– In general mortgage laws and regulations should be changed to promote lowering debt for consumers, which would in turn promote consumer spending.

– Stricter laws on consumer borrowing, to prevent those already deep in debt from sinking further

Sources:

http://finance.yahoo.com/tech-ticker/article/152178/Best-Way-to-Fix-Housing-Market-Let-Prices-Fall-(Fast)?tickers=^gspc,^dji

http://www.theglobeandmail.com/report-on-business/banks-trim-mortgage-rates/article2037912/

http://www.moneyville.ca/article/997903–canadians-to-get-rate-hike-reprieve

http://okotoksmortgages.com/shawn-blog/a-warning-for-canadian-consumers-household-debt-could-spark-‘made-in-canada’-recession/#axzz1OB4zTm4H

http://www.iveybusinessjournal.com/departments/viewpoint/executives-should-monitor-household-debt

http://www.montrealgazette.com/business/Canadians+load+mortgages/4843035/story.html

http://www.theglobeandmail.com/report-on-business/economy/growth/consumer-fatigue-an-ominous-sign-for-economy/article2039584/

http://www.vancouversun.com/business/Report+cautions+that+over+indebted+consumers+drive+economy/4869489/story.html