Thursday, September 29, 2011
一分钱, 一分货.
this cliche doesnt really hold water for economist i guess.
a good is worth as much as what the consumer is willing to pay.
producer will always seek to extract every cents of what the consumer is willing to pay,
that is why there is price discriminate every where.
in economics,
that is call consumer surplus,
producer wants to convert as much of consumer surplus as possible into their earnings.
that is why paying more doesn't necessary mean that you are getting better stuffs.
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:. @ 3:43 AM
Monday, September 26, 2011
You are a hands-on type of person who will throw them self into the most gutsy of challenges feet-first and without fear. It's this positive can-do attitude that makes you the successful fun-lover that people enjoy spending time with. You like to be challenged by thought provoking subjects and tend to find out all the facts before forming your own opinion.
You're a driven and high-spirited individual with a pleasure-loving streak that means you are always in the right sort of mind-set to enjoy a good game. Nothing is better for you than the thrill of a live sporting event and your competitive nature lends well to the electric atmosphere of a game. Equally, it's just as much fun checking out the impressive skills of the professionals while indulging in a bit of armchair refereeing. Your love of sports means that you understand that self-discipline and motivation are the keys to success. However, regardless of your own success, you are unwavering in your loyalty and passion.
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:. @ 12:09 AM
Saturday, September 24, 2011
so why is france and germany so worried that greece will default?
to many others in euro zone,
they are thinking greece dont deserve a bailout because of they are the ones overspent
and they cant wait to see the back of greece in the zone.
well,
this is except those who realize what a greece default means.
the only reason that the French and German are lobbying for a greek bailout is because their banks are holding on to a significant amount of greek bonds. If greece is to default, the French and German banks will certainly be hit hard. Firstly, these banks will have to make provision for bad debts that will be reflected in their financial statements, and this will affect their share price. Secondly, confidence in the banks will be dampen, depositors will seek to put their money elsewhere, and banks will suffer from loss in profits too. [banks generate profits by taking short term debts (deposits) to make loan term loans (mortgages and credits for profitable investment)].
Maybe people might think "so what if bank make less profits?"
the problem isnt so much with the banks.
it is the impact that it will cause to the economy.
People are so fixated with banks making obscene profits that they forgotten the function of bank in a economy. The function of a bank is to help channel funds so that the economy will function efficiently (e.g. citizens can get loans for cars or homes, profitable business ideas get the funds to do business and generate growth for country). So if Greece defaults, banks in Germany and France suffers, and their economy suffers.
Furthermore the rest of the P.I.G.S ( Portugal, Italy, Greece, Spain) are not far behind Greece in terms of their debts. If Greece were to default, the banks in the rest of the P.I.G.S will be certainly be affected in the same way as the germans and french, only that it will be worst because of their debts. If Greece were to default, Portugal, Italy and Spain are almost certain to follow suit and this will be a problem for global economy.
Some people might wonder..
"why is it that the US are having an even higher deficits, but they dont have to default?"
the answer is really simple.
As US has a currency of their own, they can effectively print more money to cover their debts (monetary policy). There are so many people in US lobbying for a cut in spending so as to reduce the deficit over time. An economist will never lobby for a cut in spending, especially when US is beginning to recover from a recession. By cutting spending, US is effectively shrinking their economy, and they can be sure that their economy will take a longer time to recover. Recently there are debates on whether US will default, but i believe that is just a wayang put up to show that they care about the huge deficit. US will never default.
So back to Greece.
By choosing to enter Eurozone,
Greece has effectively NO monetary policy at all.
They cant print more money to cover their debts as monetary policy is controlled by the European Central Bank. That's the reason why Greece is in such a dire state.
All these uncertainties in eurozone are causing a strain in global economy. A global recession is not necessary a bad thing for us Singaporeans. It will slow down the increase in price of property in Singapore, or even cause the price to fall.
However the bad-est thing with a global recession:
We used to complain we have to work 30yrs to pay for our flats.
With a global recession, we might not even have work to begin with.
haha..
Labels: crisis
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:. @ 11:07 PM
