4 Comments
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Apr 12.10
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Macroeconomics
/ by Ro Econ
This post was originally made in our forum by a user. The forum is now closed but we've moved the post here to keep the conversation.
It seems to be me that the financial crisis would already have started after the burst of the dot.com bubble in late 2000/beginning of 2001, had George Bush not implemented huge tax cuts, which gave the consumer some relief. The investment banks' strategy of a heavy focus on assets, causing them to continuously expand their leverage, worked fine from the 80's until 2000, because this was undeniably a period of economic boom, where stock markets and other indicators rose rapidly. However since 2000 economic growth was only possible with the help of low interest rates (way too low) and huge tax breaks. This delayed the financial crisis, because key financial indexes and commodity prices went up, enabling the investment banks to post staggering profits. But this growth wasn't sustainable.
Do you agree?
12 Comments
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Apr 08.10
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Macroeconomics
/ by Ro Econ
This discussion was originally posed by a user in our old economics forums (that are now closed). The question was: what the current macroeconomic situation in the US and Canada? We'll continually add some more insight in this thread for more insight.
What is the current macroeconomic situation (e.g. worrying about inflation or recession) in the U.S.? What should the Federal Reserve do about it?
**DiscussEconomic will post updates on the current macro situation in the comment section below**
List of Websites with Updating Macroeconomic Indicators:
2 Comments
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Apr 05.10
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Microeconomics
/ by Ro Econ
This question was originally penned in our Economics Forum, but we closed that so it's been reposed here.
Background: We are located in an economic model where product A has a "high product substitutability" with product B, which means (I think) that products A and B are substitutes.
In this same economic model, it has been determined that when products A and B are not present in the market, the sales of product C increase.
*Question 1: Does this mean that product C is a substitute for products A and B?
Now, it was further determined, within the same economic model, that in the presence of product C, the demand elasticity for product D increased.
*Question 2: Considering the previously stated relationship between products A, B and C, would it be fair to say that the demand elasticity of product D will also increase in the presence of either product A or B? In other words, can product C be replaced with product A or B in the previous statement and the result will be the same?
If you could state the source of your reply, even you yourself are the source, this would be greatly appreciated.
Continue reading this article »
2 Comments
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Apr 01.10
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Macroeconomics
/ by Ro Econ
I sometimes answer Yahoo questions/answers and post more complete answers here.
Q. How exactly can the government control money supply? Clearly it's not a matter of printing more of less money cause most of the time is just a number of a computer somewhere in the world. Continue reading this article »
26 Comments
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Mar 30.10
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Macroeconomics
/ by Ro Econ
This post was originally made in the now closed DiscussEconomics forum.
I signed up because we are having this specific argument at work, and I'm wondering if anyone here can provide some educated insight.
So, the argument is this... instead of taxing our income, why doesn't the government just print more money to pay for what it needs? We keep our whole income, and the hypothesis is that it equals out in the end. The value of the dollar would go down over time, but the income would go up.
Now, intuitively that just seems wrong to me. It feels like this would have a non-linear effect of massively devaluing the currency such that it would soon be worth nearly nothing. I don't know how to prove this one way or the other though, hence my posting here.
Anyone have an informed opinion on this?
13 Comments
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Mar 24.10
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Insurance
/ by financewriter
**Read part one of the this crucial series on Universal Life insurance by visiting the universal life scams and complications page.**
Important Questions to Ask About Universal Life 'Insurance'
If you still INSIST on looking at UL here are crucial questions you must ask:
I understand that there is flexible and accelerated funding but if I make only the minimum payments over a period of time what happens?
Can I get money from my investment account at anytime?
How useful are the illustrated values in the early years if I can't access them?
Continue reading this article »
1 Comment
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Mar 22.10
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Personal Finances
/ by Ro Econ
Young Canadians are notorious for being incapable of thinking long term with their financial strategies. Fun is the name of the game when it comes to living life to its fullest. What they don't know is that without any (or limited) savings plans early on in earning years they will be setting themselves up for Freedom 85--not 55. Savings are so low that all financially savvy people are begging Canadians both young and old to think harder about tomorrow and less about the wants of big toys today.
Why? Because expectations are mostly incorrect. What does that mean? Canadians think the government will take care of them, or their company pension will cover their expenses. Fact is: if you want to maintain your quality of life around the same pre-retirement earnings then you MUST save around 10 - 20% of income every year. That's what former Bank of Canada David Dodge seems to think, and we tend to agree. But all is not yet lost for Canadians wanting to have a bit of fun today, there are ways to approach your retirement savings that won't leave you bored. Continue reading this article »
2 Comments
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Mar 21.10
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Foreign Exchange
/ by Ro Econ
Q. Why do you think Central Banks might prefer a managed exchange rate system over a fixed or a floating exchange rate?
A. Managed exchange rate systems permit the government to place some influence on an exchange rate that would otherwise be freely floating. Managed means the exchange rate system has attributes of both systems. On one hand allowing one's currency to be dictated in its entirety by a foreign nation would be undesirable since exogenous shocks from the pegged country would affect your currency. Continue reading this article »
No Comments
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Mar 19.10
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Personal Finances
/ by Ro Econ
Canadians are now capable of using a tax-free savings account thanks to their Conservative government. The investment device permits up to $5,000 deposit annually without paying taxes on the interest earned. Question though, is the TSFA right for you, and should you use it as an retirement investment tool?
Continue reading this article »
2 Comments
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Mar 18.10
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Foreign Exchange
/ by Ro Econ
Why Higher Dollar Means Bank of Canada Can Keep Interest Rates Unchanged
The Canadian dollar is on a tear, and some think that a correction is due, but over the longterm the CDN dollar is strong given the nature of the economy. Bank of Canada Governor Mark Carney has noted the trend but also considers it some good news if the Bank of Canada is going to fulfill their pledge to keep interest rates the same for another quarter.
So why is it a good thing that the dollar is high if you're going to plan to keep interest rates the same?
Continue reading this article »
