http://www.vancouversun.com/news/Arizona+immigration+crosses+line+Obama+says/2946466/story.html
Summary:
On Friday April 23, 2010 U.S. President Barack Obama initiated a new immigration law in Arizona. With the new law, it gives privilege to officers to stop individuals and check their identification due to suspicion of being an illegal immigrant or have a criminal background. This new law is very controversial because many people believe that it can lead to racial profiling which is a very severe problem in the U.S. The purpose for creating this law was because too many illegal immigrants were sneaking pass the borders. Obama believes that this law will drastically decrease the amount of people who are illegally sneaking pass the borders. Studies reveal that there are 11 million people who are illegal immigrants and majority of them are from Mexico. 11 million people are cheating the U.S. system and escaping taxes.
Connection:
With this law in act, there will be a significant decrease in the amount of people coming and going from Arizona. This will hurt the tourism industry because people don’t want to go through the trouble of being searched for suspicion. The revenue that the tourism business earns will definitely decrease. Therefore there will be less government spending and the overall economy will decrease. Also tourist attraction sites like shopping areas will be affected because of the decrease of traffic.
Reflection:
In my opinion this will prevent a lot of illegal immigrants trying to sneak into the U.S. With less illegal immigrants, it will benefit the U.S. economy. Although some people may not like this law because it is a big hassle to be checked even though one is not a suspect. Looking at this situation in a open minded perspective, in the end all the benefits is for the country. With the 11 million illegal immigrants, they are avoiding taxation. Thus, the government will have less money to spend into health care, education and infrastructure departments.
Monday, April 26, 2010
Tuesday, April 6, 2010
Canada’s consumers’ incomes not keeping up with debt levels, study finds
http://www.vancouversun.com/business/Canada+consumers+incomes+keeping+with+debt+levels+study+finds/2754124/story.html
Summary:
Canadians are spending more freely due to cheap credit. Their incomes cannot support their magnitude of spending. The appreciating rate of assets being purchased is not at par with the liabilities. Therefore people cannot pay off the amount of debt owed. The consumer capability index measures a consumer’s ability to spend. It is based on: debt-to-income, debt-to-asset ratios, real income growth, long-term unemployment rate, house price to income ratio, personal savings rate, and personal bankruptcy rate. A mortgage is 147 percent of a person’s income. Although they receive an income growth with low interest rates, nevertheless, people are still spending. The low interest rate stimulates and encourages people to borrow money and spend it to help our economy. With increased interest rates, people would rather pay off their debts and start saving.
Connection:
People are spending more money due to low increased incomes and low interest rates. Low interest rates encourage people to easily spend money. Thus, people are putting more money into our economy and this inflation will occur. As the demand increases because of consumer spending, the total demand for goods and services would ultimately exceed the supply. This results in a demand-pull inflation. This would eventually lead to the increased prices in the Consumer Price Index. With families spending more money, it allows businesses will experience increase in revenue. This leads to businesses having the potential to increase wages. In the circular flow of money, increased wages does not support the amount of debt owed.
Reflection:
In my opinion, the demand-pull inflation is not a good idea. Due to the habits of consumers, the debts will end up compiling up. In the early stages, it wouldn’t be too difficult for consumers because of low interest rates. In the long run, their debts will be their Achilles heel. If this continues and people are unable to pay off their debts, our economy will go into recession. It is significant that the inflation rate is controlled so the economy can stay inert.
Summary:
Canadians are spending more freely due to cheap credit. Their incomes cannot support their magnitude of spending. The appreciating rate of assets being purchased is not at par with the liabilities. Therefore people cannot pay off the amount of debt owed. The consumer capability index measures a consumer’s ability to spend. It is based on: debt-to-income, debt-to-asset ratios, real income growth, long-term unemployment rate, house price to income ratio, personal savings rate, and personal bankruptcy rate. A mortgage is 147 percent of a person’s income. Although they receive an income growth with low interest rates, nevertheless, people are still spending. The low interest rate stimulates and encourages people to borrow money and spend it to help our economy. With increased interest rates, people would rather pay off their debts and start saving.
Connection:
People are spending more money due to low increased incomes and low interest rates. Low interest rates encourage people to easily spend money. Thus, people are putting more money into our economy and this inflation will occur. As the demand increases because of consumer spending, the total demand for goods and services would ultimately exceed the supply. This results in a demand-pull inflation. This would eventually lead to the increased prices in the Consumer Price Index. With families spending more money, it allows businesses will experience increase in revenue. This leads to businesses having the potential to increase wages. In the circular flow of money, increased wages does not support the amount of debt owed.
Reflection:
In my opinion, the demand-pull inflation is not a good idea. Due to the habits of consumers, the debts will end up compiling up. In the early stages, it wouldn’t be too difficult for consumers because of low interest rates. In the long run, their debts will be their Achilles heel. If this continues and people are unable to pay off their debts, our economy will go into recession. It is significant that the inflation rate is controlled so the economy can stay inert.
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