Economics 12 Chapter Four

Alberta's April 7 budget to contain small spending increase

Link: http://ca.news.yahoo.com/s/capress/090226/national/alta_fiscal_update

Summary

This article talks about how Alberta's next budget is likely to contain both small spending increases and an overall deficit.Finance Minister Iris Evans said that Alberta will be having a deficit next year and spending will continue to rise, although not as quickly as it did when high energy revenues filled the government treasure chest. Moreover, she also warned Albertans last week that the province will rack up a $1-billion deficit this year as well - down from budget projections of a $1.6-billion surplus. In fact, this year's red ink will total $1.4 billion, according to the third-quarter update. It's the first deficit in 15 years and may grow when the province's health authorities deliver their books. Many expect the health authorities to be hundreds of millions of dollars in debt. However, the Conservative government is not replacing the fund's losses, so it will still have enough cash to follow through on a $2-billion promise to fight climate change. Lastly, Evans acknowledged Alberta's energy-based economy is tumbling into a recession after leading the country for years. She projected the province will lose 15,000 jobs in the months ahead.

Connections

Chapter 4 talks about the growth of government spending and it also mentioned that the major alternative to taxation as a source of government revenue is borrowing. The article mentioned that there will be a deifct next year, and many assume Alberta will also be in debt which will led to thousands of unemployments. These are many factors involved in increased government spending, also including the transition from a rural to urban country and the government becoming more involved in the education system and to the public. These are true for Alberta, considering there is the $22.2-billion construction program for roads and schools. Two-fifths of the entire spending in Canada is controlled by the government. So the Canadian Government has to come up with a way to slove this issue which is to either borrow money from other countries or get money through taxations.

Reflection

I believe that even though Alberta is in debt and had increased its spending. It isn't the only provinces that is in this situation. Other provinces and territories are in the same position too, such as BC. Since Vancouver is hosting the 2010 Winter Olympics, there have been millions of dollars going into that project and yet the whole country is going into recession. It will only make matter worse. So I think all the provinces should work together as a whole and figure out a solution to slove this problem and clear the debts together as a country.

Economics 12 Chapter Three

Bush government paid too much for bank stocks

Link: http://www.cbc.ca/money/story/2009/02/06/bailoutoverpay.html

Summary

This article talks about how Bush administration paid tens of billions of dollars too much for stocks and other assets in its massive bailout last year of Wall Street banks and financial institutions. Moreover, it added to the frustrations of legislators already due to the $700-billion rescue plan, known as the Troubled Asset Relief Program, or TARP. congress members approved the plan last year,but many members from both parties critized this spending decision made by President Bush and former treasury secretary Henry Paulson.The oversight panel examined 10 transactions, including to ones designed to put liquidity into the banks in hopes of easing credit. However, that money went to banks considered financially healthy but in need of capital to make loans. Two other transactions went to AIG and to Citigroup Inc. under programs designed to help companies facing serious financial difficulties. Overall, the analysts conduct the valuation study found that the Treasury used taxpayers' money to pay $62.5 billion more than the value of assets in the 10 transactions it examined. By extrapolating hundreds of institutions it is concluded that the government in effect paid $78 billion more than the value of the assets at the time.

Connections

Chapter 3 talks about the role of government in a market economy and this article could be related to the chapter very well. It talks about how Bush and the goverment are spending billions of dollars too much on stock and other company that's collapsing to help the massive bail out last year. Moreover, many believes that it is the lack of a role of the government in the American banking system that has triggered the recent global economic crisis. In the taxtbooks it also mentioned about how only after conditions did not improve during the Great Depression, did governments realize they cannot wait for the market itself to readjust and must galvanize the economy with bold fiscal policies themselves. If the government realized earlier and started different act and summit in advance, it would offer more jobs which would decrease unemployment rates. If people have a job they will eventually start spending money which will slowly increase economic growth. Another solution the textbook mentioned was how the government can intervene to help stabilize the free-market system.

Reflection

I believe that if the government took a role in the economy earlier, it would help much more than just putting out billions of dollars trying to save when's been done already. The United States is going into a deeper recession and that will definitely affect other countries as well. If governement is different country could work together and imporve different system such as trade and gobalization. It might help the world's economy as a whole. Lastly, the govenerment should have used some of the money from the billions to help the public and increase unemployment rate, because it is the most direct ways to help citizens.

Accounting 12 Chapter 12

Gas prices drop record amount

Link: http://www.cnn.com/2008/US/10/26/gas.prices/index.html?iref=newssearch

Summary

The average price of self-serve, unleaded gas in the United States as of Friday was $2.78 a gallon, compared to $3.31 two weeks ago. A total of 53 cents drop in gas prices over the last two weeks has set another record, and the publisher of a national survey predicted that Sunday prices will continue to decline, but at a slower pace. The all-time high average was $4.11. Numbers based on responses from more than 5,000 service stations nationwide. Oil prices have fallen by more than half from $147 a barrel in July because of lower demand due to rough economic times, especially in the United States.

Connections

The connections I made between the article and chapter 12 would be cash discounts. The article talks about the massive drop in oil prices. With this chapter focusing on specialized journals, discounts are recorded in the Discounts Earned account (for the customer) and/or the Discounts Allowed account (for the retailer). While this focuses mainly on retailers businesses but I think prices drop has does the same effect as discount. They both attract consumer and increase the demand of such products. Moreover, there are discounts given when payments are made before its due date. These discount have terms that must be met before it is in effect.

Reflection

In my opinion, I think having discounts or lowering the price to attract consumer are great strategies, since not only consumer can get a great deal but at the same time retailer can make a profit and increase its demand of the product. Moreover, I think having discount encourage people to shop more and it could increase our country’s economy. Therefore I think lowering prices and having discounts are consider a win-win situation.

Economics Chapter Two

Airlines begin cutting fares for holiday travel

Link: http://www.cnn.com/2008/TRAVEL/10/30/airlines.holiday.fares.ap/index.html

Summary

This article talks about major U.S airlines cutting many fares for the upcoming Thanksgiving and Christmas seasons. Many airlines see price-cutting as necessary in the face of a recession economy that could affect both leisure and business travel. Northwest Airlines started the rush Tuesday night with a broad holiday fare sale, and most other major carriers matched the prices the next day, Wednesday. The cuts ranged up to 25 percent off the previous price for tickets that must be bought 21 or 30 days ahead of travel. Carriers would rather not be cutting prices now, but demand may be slowing faster than airlines can reduce the supply of available seats. In most cases, the prices are good until at least late November.

Connections

The connection that I found between this article and the text in chapter 2 is the concept of supply and demand. Due to the recession economy we have today, many businesses are cutting supplies to once again increase the demand for products or services. Moreover, consumer’s income has declined or affected due to the economy; therefore they will no longer spend money on travels or vacations. This will once again lower the demand for airlines and carriers. Prices for products or services will only increase if there’s a high demand and limited supply; however, the demands for airlines are at its worst compare to a few months back.

Reflection

I agree to what the airlines and carriers are doing. I believe that cutting the price will attract more consumers to travel during holidays and increase the demand. As we all know, the economy is in a complete recession. We've got to be prepared for a weak economy and weaker demand. Many other businesses are also cutting price due to the low demand, such as oil and etc. This way we can slowly bring the economy back up and balance out the supply and demand factors.

Accounting 12 Chapter 11

China orders milk products pulled

Link: http://www.cnn.com/2008/WORLD/asiapcf/10/14/tainted.milk.ap/index.html

Summary

A national affecting event took place last month as dairy suppliers in China added the industrial chemical melamine to watered-down milk to fool quality control tests and make the product appear rich in protein. Melamine can cause kidney stones as the body tries to eliminate it and, in extreme cases, lead to life-threatening kidney failure. Approximately four infants has been killed and tens of thousands of children nationwide has been sickened due to this. China ordered all milk products more than a month old are being pulled from store shelves for emergency testing, as another child in Hong Kong developed kidney stones after consuming melamine-contaminated products. All milk powder and liquid milk produced before September 14 must be tested. Moreover, no products would be sold unless they pass quality tests and are labeled as safe. Many companies and consumers are affected due to this serious crisis.

Connections

The connection between the article and Chapter 11 is COGS (goods that are lost, broken, or stolen). Due to huge amount of contaminated chocolates, cookies, candies and milk products, which will all have to be included on the income statement as either a return or as COGS. Many dairy suppliers are now in hold of serious debts as they have to cover large amount of returns and law suits that are taking place. If this crisis continues I believe many more people will be affected and more innocent child will be harmed.

Reflection

In my opinion, I believe China is doing the right decision as to pull off all the dairy products and put it into quality tests. However, I think they should put a more serious charge on the suppliers that added chemical melamine which will affect others and are against their moral. If China treats this crisis sucessfully then it would have a better image and gain trust from consumers again.

Economics Chapter One

Chinese demand for B.C. lumber takes off

Link: http://www.canada.com/vancouversun/news/business/story.html?id=08d079c6-eea7-41db-8b3f-ea97c900d0a7

Summary

This article talks about the sudden demand of B.C lumber from China. It was reported last week that they took on 10 million board feet of wood destined for Asia. Longshoremen loaded the Saga Wave with the largest load of lumber to leave Port Alberni in nine years, and half of it - five million board feet - was going to China. The article states that China's sudden emergence as a new major market for B.C. lumber is filling some of the void left when the U.S. housing market crashed two years ago, resulting in huge spread sawmill closures and worker layoffs here. B.C. exports to China have doubled since 2007, which was double 2006 exports. As a result, the forests ministry is forecasting 945 million board feet this year, but Forests Minister Pat Bell said he believes exports will reach the one billion mark.

Connections

The connection between the article and the concepts in chapter one is scarcity. Through out the years, China has been vastly developing using tons of woods and other resources. Therefore its scarce now and they are realizing the consequences of deforestation and are required to import foreign lumber. The high demand of woods moves lumber closer to an abundant resource

Reflection

In my opinion, I believe its a positive act towards lumber industry in B.C due to the huge demand by countries in Asia, especially China. Moreover, it opens up more opportunity for B.C lumber to be sold as the industry dispute with United States. Therefore, in the long run it will help increase B.C's lumber industry and provide more job positions in British Columbia.