12/10/2011
SMH.com.au
Today the Australian share market has closed lower for the first time in a week as Australian investors turns its attention to the European debt crisis and the US economy. This is not good for the future of the stock market as these are the two largest economies in the world and if they are affected by a possible downturn or recession it may translate to a lot of worldwide panic across the world especially as they are just recovering from the GFC.
In the last week the Australian dollar was very close to parity again with the US dollar, showing instability overseas but also how Australia has been riding out the recent economic times. Shares (also shown by the analysis of the share market game) have also risen but analysts have said that the market was due for a fall especially after the unprecedented run of good form.
‘‘Throughout the day, I noticed that every time we saw a bit of weakness, we’d gravitate back to the 4200 level; that tells me that there is a lot of conviction in the rally which we’ve seen over the last week,’’ he said. ‘‘Certainly we’ve got the catalyst for a sustained rally to year end.’’
Wednesday, October 12, 2011
Myer doubles its oursourcing from China
SMH.com.au
16/5/2011
http://www.smh.com.au/business/myer-doubles-its-outsourcing-from-china-20110515-1eo8n.html
In Commerce we have learnt that outsourcing can help businesses cut costs but in the long run it may cause backlash from many people who are asking questions at why their jobs are being moved overseas instead of stimulating the Australian economy.
In this case Myer are hoping to increase their profits by outsourcing fashion to China where it has originally been cheap to send jobs there but due to working conditions and concerns of recent times it may increase prices in the stores. This is due to the Chinese economy being stronger than ever and as a result China is being 'Westernised', and their workers are now 'seeing people work 44 hours a week as the sort of mandatory hours, seeing people earn rates that have double and triple time when they work over the 44 hours and have Sunday shifts where they get double and triple time.'.
This can translate to good and bad outcomes for the consumers that may be pleased that there are better working conditions overseas but may also be distressed at seeing prices rise as a result. It may also question outsourcing strategies in the future as companies may now need to seek new countries in which to outsource from, or to stop this practice altogether as it may become difficult to find a good deal in China in the near future.
16/5/2011
http://www.smh.com.au/business/myer-doubles-its-outsourcing-from-china-20110515-1eo8n.html
In Commerce we have learnt that outsourcing can help businesses cut costs but in the long run it may cause backlash from many people who are asking questions at why their jobs are being moved overseas instead of stimulating the Australian economy.
In this case Myer are hoping to increase their profits by outsourcing fashion to China where it has originally been cheap to send jobs there but due to working conditions and concerns of recent times it may increase prices in the stores. This is due to the Chinese economy being stronger than ever and as a result China is being 'Westernised', and their workers are now 'seeing people work 44 hours a week as the sort of mandatory hours, seeing people earn rates that have double and triple time when they work over the 44 hours and have Sunday shifts where they get double and triple time.'.
This can translate to good and bad outcomes for the consumers that may be pleased that there are better working conditions overseas but may also be distressed at seeing prices rise as a result. It may also question outsourcing strategies in the future as companies may now need to seek new countries in which to outsource from, or to stop this practice altogether as it may become difficult to find a good deal in China in the near future.
Samsung ambushes Apple's iPhone 4S launch in Sydney
12/10/2011
SMH.com.au
http://www.smh.com.au/digital-life/mobiles/samsung-ambushes-apples-iphone-4s-launch-in-sydney-20111012-1lk0d.html
In Commerce we have been learning at how consumers are able to make choices and they are usually influenced by price. As Samsung are offering their new smart phone for $2 people are exercising their right to comparison shop and it is working, as this time the line is longer than the line outside the nearby Apple store, where people are waiting for the release of the iPhone 4S.
In some ways the decision to camp outside the Samsung (or the Apple store) is an example of consumer decisions as they are able to get the new product first, and cheaply in the case of the Samsung store. In the news article there is a story of two people waiting in line so they could sell their new Tablets and go on a trip to India.
In the news article there is also an example of impulse buying as two teenagers are waiting in line for the Apple iPhone 4S. It may not be necessarily be getting the best deal money can buy but they are approached if they want to line up for the Samsung product, in which they decline because they believe that an iPhone is better.
SMH.com.au
http://www.smh.com.au/digital-life/mobiles/samsung-ambushes-apples-iphone-4s-launch-in-sydney-20111012-1lk0d.html
In Commerce we have been learning at how consumers are able to make choices and they are usually influenced by price. As Samsung are offering their new smart phone for $2 people are exercising their right to comparison shop and it is working, as this time the line is longer than the line outside the nearby Apple store, where people are waiting for the release of the iPhone 4S.
In some ways the decision to camp outside the Samsung (or the Apple store) is an example of consumer decisions as they are able to get the new product first, and cheaply in the case of the Samsung store. In the news article there is a story of two people waiting in line so they could sell their new Tablets and go on a trip to India.
In the news article there is also an example of impulse buying as two teenagers are waiting in line for the Apple iPhone 4S. It may not be necessarily be getting the best deal money can buy but they are approached if they want to line up for the Samsung product, in which they decline because they believe that an iPhone is better.
Stock Market Game Reflection: No2
This game does not officially end until the 26th of October 2011, 13 days after the assessment task is due. As a result all opinion and facts stated will be up until the 12th of October 2011.
All shares bought summary and very honest opinion:
If I could have had a decision I would not have bought any shares in August-September due to the fact that the US economy was shaky as it was just downgraded a credit rating by Standard and Poors, down to AA+. However this game could not be played without buying shares and I decided to buy shares from trusted companies that usually performed well. Also the current economic situation in Europe did not help Australian shares; except for a very recent surge in the stock market that meant that I did not lose as much money as originally thought.
I had thought of not buying any shares until the last minute but I did not trust myself in remembering to log on and buy some shares.
Due to this downturn I did not like the thought of logging onto the game and seeing how badly I was doing. I maintain my decision in not buying more shares however as it may have worsened my losses. By looking at the current Arden rankings however I don't think I could have done much worse than my current position.
Shares bought and reason:
BHP: I bought these shares as they are mining stocks and they usually perform well. However they are better for long term investment as the current economic climate does not tend well to short term investing.
RIO: These are also good shares for investing in the long term, and they usually perform well like BHP. However the current economic situation in the US and Europe affect Australia and it means that shares all round usually tumble. The recent recovery has improved my shares but it has not improved the fact that I lost a lot of money.
MQG: After buying RIO and BHP I felt that I needed another share in the pot in order to not just put all my money into the mining sector. Otherwise I cannot remember another reason in which I bought Macquarie shares. As stated earlier if I could play the game without buying shares I would have done it due to the economic situation in August.
Share performance:
BHP: It was steadily recovering from the news of the US credit rating decrease but by the beginning of September it declined due to news that Greece may not be bailed out. It declined to about 34 dollars a share until the October recovery where it is at approximately 37 dollars per share.
RIO: Like BHP it decreased in September but a steady but sharp decrease was not noted until the middle of September where its share price fell about 12 dollars in a matter of days. It has since recovered to just under 68 dollars.
MQG: The October increase was one of the only highlights for the Macquarie share price this year as it has fallen for the best part of this year before recovering in October. Like the other shares it fell dueing September and rose again in October, the rise nearly compensating for the losses it sustained in September.
All shares bought summary and very honest opinion:
If I could have had a decision I would not have bought any shares in August-September due to the fact that the US economy was shaky as it was just downgraded a credit rating by Standard and Poors, down to AA+. However this game could not be played without buying shares and I decided to buy shares from trusted companies that usually performed well. Also the current economic situation in Europe did not help Australian shares; except for a very recent surge in the stock market that meant that I did not lose as much money as originally thought.
I had thought of not buying any shares until the last minute but I did not trust myself in remembering to log on and buy some shares.
Due to this downturn I did not like the thought of logging onto the game and seeing how badly I was doing. I maintain my decision in not buying more shares however as it may have worsened my losses. By looking at the current Arden rankings however I don't think I could have done much worse than my current position.
Shares bought and reason:
BHP: I bought these shares as they are mining stocks and they usually perform well. However they are better for long term investment as the current economic climate does not tend well to short term investing.
RIO: These are also good shares for investing in the long term, and they usually perform well like BHP. However the current economic situation in the US and Europe affect Australia and it means that shares all round usually tumble. The recent recovery has improved my shares but it has not improved the fact that I lost a lot of money.
MQG: After buying RIO and BHP I felt that I needed another share in the pot in order to not just put all my money into the mining sector. Otherwise I cannot remember another reason in which I bought Macquarie shares. As stated earlier if I could play the game without buying shares I would have done it due to the economic situation in August.
Share performance:
BHP: It was steadily recovering from the news of the US credit rating decrease but by the beginning of September it declined due to news that Greece may not be bailed out. It declined to about 34 dollars a share until the October recovery where it is at approximately 37 dollars per share.
RIO: Like BHP it decreased in September but a steady but sharp decrease was not noted until the middle of September where its share price fell about 12 dollars in a matter of days. It has since recovered to just under 68 dollars.
MQG: The October increase was one of the only highlights for the Macquarie share price this year as it has fallen for the best part of this year before recovering in October. Like the other shares it fell dueing September and rose again in October, the rise nearly compensating for the losses it sustained in September.
Advertising Campaign Analysis No.2
Tooheys New- The official currency of the Beer Economy
http://www.youtube.com/watch?v=uT120JBL4yo
*The following analysis refers to different parts of the Youtube link, please click and follow to the suggested areas.
This advertisement is another witty beer advertisement possibly produced in the wake of the Global Financial Crisis. It incorporates humour aimed at young males and it places a person faced with several scenarios and what his 'mate' should pay him in beer.
The scenarios the people are placed in will only be humourous to males with a fairly extensive Australian background from 13 up to around 40 years of age- the age in which people are either interested in or are drinking beer. People watching from other age groups may not get the humour or jargon expressed in these advertisements or may also get offended- primarily females of the same age group as these advertisements usually poke fun at this group.
The fact that they are using beer to buy services or products is also humourous as this economy is claimed to be better than the normal, or 'rich mans' economy of money. This is shown through comparisons to the global and Australian economies and how effective the beer economy is, and the fictional graph of the differences between 'when the world economy s**t itself' and when the beer economy was growing.
This advertising campaign is mainly getting the product out in the public through slightly contraversial methods, and through this to also increase sales. However I believe these types of advertisements is to just put the company name out there and to just have a laugh (for males anyway) at the humour presented. Usually Australian beer ads are done for these purposes and the aim of the advertisement is to not actually receive beer for actions but to laugh at the scenarios the person is faced with and the amount of beer that he is paid.
This advertising campaign I think reflects well on the current times Australia is going through right now as we are just coming out of the Global Financial Crisis and it also shows one of the many ways in which humour is incorporated into mainly beer advertisements in order for it to be effective. These commercials are also shown on television at major sporting events which increases its exposure and can therefore increase its sales.
The YouTube video shown here is stating the fictional impacts and aftermath of the beer economy being introduced, the individual advertisements are after 0:45 to 1:40.
http://www.youtube.com/watch?v=uT120JBL4yo
*The following analysis refers to different parts of the Youtube link, please click and follow to the suggested areas.
This advertisement is another witty beer advertisement possibly produced in the wake of the Global Financial Crisis. It incorporates humour aimed at young males and it places a person faced with several scenarios and what his 'mate' should pay him in beer.
The scenarios the people are placed in will only be humourous to males with a fairly extensive Australian background from 13 up to around 40 years of age- the age in which people are either interested in or are drinking beer. People watching from other age groups may not get the humour or jargon expressed in these advertisements or may also get offended- primarily females of the same age group as these advertisements usually poke fun at this group.
The fact that they are using beer to buy services or products is also humourous as this economy is claimed to be better than the normal, or 'rich mans' economy of money. This is shown through comparisons to the global and Australian economies and how effective the beer economy is, and the fictional graph of the differences between 'when the world economy s**t itself' and when the beer economy was growing.
This advertising campaign is mainly getting the product out in the public through slightly contraversial methods, and through this to also increase sales. However I believe these types of advertisements is to just put the company name out there and to just have a laugh (for males anyway) at the humour presented. Usually Australian beer ads are done for these purposes and the aim of the advertisement is to not actually receive beer for actions but to laugh at the scenarios the person is faced with and the amount of beer that he is paid.
This advertising campaign I think reflects well on the current times Australia is going through right now as we are just coming out of the Global Financial Crisis and it also shows one of the many ways in which humour is incorporated into mainly beer advertisements in order for it to be effective. These commercials are also shown on television at major sporting events which increases its exposure and can therefore increase its sales.
The YouTube video shown here is stating the fictional impacts and aftermath of the beer economy being introduced, the individual advertisements are after 0:45 to 1:40.
Advertising Campaign Analysis
Advertising Campaign No 1: That's my Woolies
http://www.youtube.com/watch?hl=en&v=L43yqIVy24U&gl=US
*The following analysis refers to different parts of the Youtube link, please click and follow to the suggested areas.
http://www.youtube.com/watch?hl=en&v=L43yqIVy24U&gl=US
*The following analysis refers to different parts of the Youtube link, please click and follow to the suggested areas.
This advertisement slogan replaces 'Woolworths, the Fresh Food People' and capitalises on the Australian 'nickname' for Woolworths- Woolies. This gives it a more community feel as it sends a message that Woolworths is compatible with the times that Australia lives in.
The advertisement consists of people of different ethnic backgrounds, ages, livelihoods, genders all saying 'That's my Woolies', which implies that they are united under one Woolworths. This is backed up by the conversation at 0:29 where the two people say 'That's my Woolies', 'No, that's my Woolies', and then the man saying that 'Okay, we can share' means that both people are in the 'That's my Woolies' experience. It also repeats the slogan which, throughout the course of the advertisement, imprints it into the buyers brain so that when they see the symbol of Woolworths they immediately think of the slogan.
The advertisement consists of people of different ethnic backgrounds, ages, livelihoods, genders all saying 'That's my Woolies', which implies that they are united under one Woolworths. This is backed up by the conversation at 0:29 where the two people say 'That's my Woolies', 'No, that's my Woolies', and then the man saying that 'Okay, we can share' means that both people are in the 'That's my Woolies' experience. It also repeats the slogan which, throughout the course of the advertisement, imprints it into the buyers brain so that when they see the symbol of Woolworths they immediately think of the slogan.
This advertising campaign will be mainly aimed at people anywhere from a 20 to 65 age group from both genders as they are the age range of people appearing in the advertisement- usually families or people around that age, and this is true of the company as a large supermarket chain it wants to attract everyone that has the monetary means to buy their products.
The children in the advertisement implies that children, while shopping with their parents, will find a place to fit into the Woolworths system and therefore are welcome here along with their parents to shop at Woolworths.
It also has reasons why people shop at Woolies, which adds to the community feel of the supermarket chain as people will be able to relate to it. It is also incited to create humour within the advertisement that also draws people from younger age groups.
The fact that very different people all appear in the advertisement is why this advertising campaign is successful as it reinforces the fact that everyone is welcome at Woolworths, and it can also reveal the prices of their product range, as it can cater for everyone- people with different socio-economic backgrounds are shown, with young families, surfers, and even Woolworths staff making an appearance to show that they are all connected. I think that this campaign is successful mainly because of that reason, and also that they are all saying the slogan backs up that statement.
The children in the advertisement implies that children, while shopping with their parents, will find a place to fit into the Woolworths system and therefore are welcome here along with their parents to shop at Woolworths.
It also has reasons why people shop at Woolies, which adds to the community feel of the supermarket chain as people will be able to relate to it. It is also incited to create humour within the advertisement that also draws people from younger age groups.
The fact that very different people all appear in the advertisement is why this advertising campaign is successful as it reinforces the fact that everyone is welcome at Woolworths, and it can also reveal the prices of their product range, as it can cater for everyone- people with different socio-economic backgrounds are shown, with young families, surfers, and even Woolworths staff making an appearance to show that they are all connected. I think that this campaign is successful mainly because of that reason, and also that they are all saying the slogan backs up that statement.
Tuesday, October 11, 2011
Australia Post upgrades its parcel operation
TheAustralian.com.au
11/10/2011
With the recent surge in email usage there are increasingly less letters sent across Australia, but according to Australia Post 'E-commerce is the new core of our business', as parcel deliveries increased by 10.9% over 2011, and a massive 57% in increase in parcels sent from overseas. This is due to the increasing demand of websites such as eBay and Amazon.
This new venture by Australia Post would be of more value to the customer and increase the amount of jobs, as it adds more services and therefore convenience to the public.
This change therefore reflects the changing times of Australia as it continues to look abroad, but also to the internet as an increasing destination for their shopping and their needs.
Australian Court Overturns Gillard Plan to send refugees to Malaysia
Bloomberg.com
31/8/2011
This article is stating at how the Malaysia deal was overturned by the High Court of Australia as it does not meet the criteria for dealing with refugees, as Australia is part of the UNHCR, and also from public backfire under this plan for the same reasons. At the time of the overturning of the Malaysia deal Gillard's approval rating was 33% and she was the most unpopular Labor leader of all time due to this asylum seeker deal and the carbon tax.
In Commerce we have learnt that laws reflect change in society- this reflects the change of the Labor Party's current popularity and how serious Australia is in its protection of asylum seeker policy, or possibly how desperate Australia is to get into the UN Security Council from this ruling. Through this it also shows the Australian people and their dislike for this Malaysia deal as it does not give protection from asylum seekers, who are attempting to get into Australia for its good human rights record and protection.
It also shows the power that the Australian High Court has over the Government to keep it in check and to only let through policy that is constitutional.
Monday, October 10, 2011
Reflection on Assessment Task No 4
Mark awarded: N/A, not received yet
I believed I did a good job in editing the video and organising times where our group was able to record the video, and also writing the script- it was difficult finding case studies for Unfair Dismissal and also attempting to find ones without swearing- in the end I couldn't so I had to make do with what I had.
In initial filming the film audio was hampered by background noise, this was a weakness as I was not able to hear this noise and I ended up having to film it again the night before this was handed in.
As this assessment task was not handed back yet I cannot comment on the areas I need to improve on but possibly organising my group to do more work as I seemed to be doing most of it.
Comments: I would have preferred the assessment task to have a longer duration of video but looking at the other assessment tasks this comment may not be true of the other workplace scenarios.
Reflection on Stock Market Game Assessment
Mark awarded: 15/20
Strengths: I believe I adhered to the word count well and still was able to write about my strengths and weaknesses I showed in the stock market game. I think I also wrote a good reflection while adhering to the word count which was very restrictive of the level of detail that I was able to write.
Weaknesses: I did not think that I wrote a very good spreadsheet and more research is needed before I do another one.
Areas to improve: Most probably the spreadsheets as it brought my mark down from a possible Excellent category.
Information learnt: It is very hard to write such an assessment task within 500 words as I could have been able to elaborate about many of the shares but I could not because of the word count.
My only comment is that in the future make the word count at least +-1000 words as I could have easily written that much as well and I had to stick to making one sentence answers to why I bought my shares and also possibly one statement for the reflection on how each of my stocks went.
Marketing Plan- Reflection
Mark awarded: 21/30
Strengths I believe I demonstrated in doing this task:
I believe I wrote a good Marketing Objectives and Goals area as the goals were realistic and also logical to what I believed would happen in the future if another Cafe was to be set up in the Oxford St area. I also believe that I made a good analysis of the surrounding competition and their strengths and weaknesses despite not having visited any of the precincts that I had described as competitors, and only using online reviews as my source of information. Since I am not a coffee drinker I probably did not do as well as others for the Target Market area of the assignment but I think I was able to target a realistic demographic for the coffee shop. I also think that I set this report out logically, which was a comment written by the marker.
Weaknesses I believe I demonstrated in doing this task:
I think that I could have written more under marketing strategies (especially under Place and Promotion) but that was hampered by the word count in which I had to summarise in some areas as I had previously written too much. I could also have written a shorter Executive summary as there was a comment stating that it was too long and some parts were irrelevant. I also think that I could have written a more detailed SWOT analysis but I could not think of too many relevant points.
In this assessment task I could have improved my SWOT analysis and marketing strategies as those are the main areas of my assignment that hampered me from achieving a higher mark. I also could have written a shorter Executive Summary as that could have helped me with the word count and therefore given more words to write in separate areas of the assignment.
I learnt that this particular marker (who is not from Arden) is probably marking this assignment at a much higher level than what we are used to and it is good preparation for the future if I decide to do any more marketing plans for my studies in Year 11 and 12. I also learnt that the SWOT analysis and Marketing Strategies are pivotal areas of a Business plan and I needed to include more detail in those areas.
No other comments, but however some practice in writing a Business Plan prior to doing this assessment could be good.
Sunday, October 9, 2011
Dollar jumps in relief rally
SMH.com.au
9/10/2011
As the Eurozone attempted to reach an agreement over their debt crisis the Australian dollar was affected as it rose to nearly 98 US cents, up from 96.56 cents on Thursday. The Australian dollar is influenced by global economic news which makes the dollar rise and fall depending on other currencies around the globe, and the influence that those economies have on Australia's- mostly the European and US economies and markets.
As the dollar had appreciated (then depreciated) against the US dollar in recent times it has pushed up the price of imports as the United States is one of Australia's largest trading partners and they are not as willing to import here as it would cost more for the business and supplier. As the Australian dollar had also risen against other currencies it also would affect trading in their countries, meaning that it would cost less for buyers in Australia, therefore more overseas.
Meanwhile the current depreciation of the Australian dollar against the US dollar has pushed it below parity meaning that Australian products are more profitable for overseas buyers, but overseas products are more expensive for Australian consumers. The rise of the US dollar is now better for investors as it is mainly a stable currency against Australia's, except for the recent GFC which meant that Australia was better off against America which was reflected in the currency exchange rate.
Sunday, October 2, 2011
Shares pile on 90 bn in 3 days
SMH.com.au
8/10/2011
8/10/2011
In Commerce we have learnt that because of the many foreign investments in Australia we are highly affected by overseas financial news. In this case the ASX had jumped $90 billion in 3 days as Australian investors were more confident over the European debt crisis- the European Central Bank decided to keep interest rates steady despite fears of recessions in countries using the Euro, and as a result had decided to construct re-financing operations. The renewed confidence means that investors, governments and consumers are more ready to invest amd buy products in companies which pushes the share price up, indicating more confidence which drives this cycle.
Because of this renewed confidence shares in the US went up, as did Australia's, recovering from the recent downturn in share prices. This follows the pattern of the business cycle in the short team- shares fall but usually they expand again over time.
However this pattern is not to continue for long due to the general uncertainty in Europe over their debt crisis and the natural cycle of the business cycle- the economy (and other economies) will eventually slow down and contract.
Saturday, October 1, 2011
RBA tipped to stay on hold until 2013
SMH.com.au
30/9/2011
The Reserve Bank of Australia is to keep interest rates on hold for another policy meeting and a Reuters poll shows that interest rates may follow a trend of staying steady next year as well.
In Commerce we have learnt that the business cycle is affected by rising and falling interest rates- in booms there is a lot of spending that pushes inflation and interest rates up. There are other features of a boom such as high income and production, high employment levels and high salaries. Meanwhile in a recession there is little spending that pushes interest rates down- there is low income, unemployment is high as there is not enough money to sustain it, and therefore business demands are low.
In this case as Australia is not in either category the Reserve Bank has decided to keep interest rates on hold after it had risen significantly as Australia seemed to be recovering from the Global Financial Crisis.
Australia is a mixed economy which means that consumers and producers in Australia have power to decide what Australia produces, but there is also government involvement, in which the government through the form of the RBA regulates the economy- in this case, keeping interest rates on hold.
Friday, September 30, 2011
Latest Qantas strike hits 8500 passengers
SMH.com.au
30/9/2011Qantas employees have begun a one hour strike today at 8am on the 30th of September. As a result 2 flights were cancelled and 33 were rescheduled or delayed. This followed a strike by the Transport Workers Union on September 20 and yesterday Customs and Quarantine staff stopped work for separate pay problems. Meanwhile today Qantas baggage handlers and ground staff were protesting over ongoing pay and conditions.
Trade Unions are the result of people in the same area of work coming together to bargain for more strength of improved pay and conditions. They generally aim to protect the interests of union members by negotiating higher pay rates, improve the working conditions of members and promote quality of life issues. When strike action occurs, it stops or slows the flow of profit that the company receives, and in the case of Qantas, it inconveniences the public as well, which may influence the public's decision in which airline carrier they decide to fly in the future. Here in Qantas they are attempting to exercise their right as part of the Trade Union to attempt to stop work and force Qantas to consider their case for better pay and conditions.
Thursday, September 29, 2011
Australian bonds follow US Treasuries higher
SMH.com.au
29/9/2011
Investors in Australia have chosen to go with more secure sources of investment by going with government bonds, and have followed suit with the US Treasuries, after a 10 year bond futures contract was trading at 95.750, while on Wednesday it was trading at 95.690, with a yield of 4.25%.
This is due to the ongoing uncertainty over Greece's debt crisis and the measures the G20 and the Eurozone are going to initiate to solve this problem.
In Commerce we have learnt that Government bonds hold less risk, but also less return. People that purchase these bonds generally prefer the security of these bonds, and therefore are prepared to take less risk. In these current times of economic uncertainty it is therefore a good time to hold these types of investments as stocks are likely to fall, or be very uncertain for an extended period of time. These types of assets are called Income or defensive assets. This is a particular area in most investment portfolios, which can also consist of investment accounts, shares, property, managed funds and superannuation.
Wednesday, September 28, 2011
Newspaper Article on Great Depression
In America during the Great Depression of the 1930's, living conditions for most Americans were very poor. At the beginning of the Depression in 1929, the employees of companies were the first to go. This meant that there was less money being spent on goods and services, which meant that more people became unemployed, and at the height of the depression 25% of Americans were unemployed. This cycle ensured that spending fell from $79 billion to $46 billion between 1929 and 1933.
This meant that businesses by the thousands were becoming bankrupt, unemployment was rife, and savings were wiped as banks went bankrupt. This meant that no money was now within the reach of people who needed to repay their mortgage, and therefore were evicted from their homes.
In America there were two main areas where people resided- in farms or in cities. As the Depression worsened farmers had to leave their livelihoods and properties after becoming bankrupt, and this was not helped by American Dust Bowl that was caused by severe drought that destroyed many farmer's crops from 1930 to 1936. Meanwhile in cities there were many 'food lines' which consisted of people lining up for soup or bread, as people did not have enough money to buy necessities. However these lines were usually a place of shame for the people, as it meant that they did not have enough money to care for themselves or their families.
President Hoover supported volunteer groups and charity and many groups heightened morale, but this effort was short lived as it relied on public support, which did not have enough money.
People that still had a place to live were most likely to have to offer their place to a friend or to extended family, and with the usually uncomfortable living conditions that had few furnishings and little hot water they soon became crowded.
For those who were evicted out onto the streets, shanty towns (named Hoovervilles, after President Hoover which was blamed for the Depression) were set up outside major cities that consisted of wood and cardboard boxes. Homeless men slept on park benches with newspapers as blankets, and as a substitute for meat gophers and rabbits were caught and then roasted on a fire.
Hoovervilles were usually constructed with material found in garbage dumps and construction sites, and were built next to rivers. Due to the high turnover in these homes, homes could be sold, and the top market price was usually $50. In some cities land was set aside for these Hoovervilles, but sometimes police and other intolerant groups would come and destroy these shanty towns.
By the year of 1933 many Americans were out of work. This meant a lot of pressure on the breadwinner of the family, and they also felt a lot of pain as he couldn't provide for the family. This would cause men to abandon their families and 'wander' America, looking for food, begging and looking for work- however usually hundreds of men would look for one place of employment, meaning that there was even more pressure.
These bread lines would often form as early as 4am on winter mornings as men prepared to have their soup. In 1931 there were 82 bread lines in New York, serving 85 000 meals daily.
In the bread lines they were served different things, depending on the demand of the food. There was usually stale bread and soup (that was watery, lukewarm, and with the odd vegetable). After a few minutes an authority figure would ask them to leave to make room for the people still waiting, and then the men would go into another food line to wait for another meal.
These poor living and surviving conditions were suffered by the people of America during the Great Depression, until it lifted in the middle of the 1930's.
BHP reveals WA Ambitions
SMH.com.au
28/9/2011
BHP has said that its growth ambitions are bigger than its main rival Rio Tinto. As both companies are doing battle in the current Australian mining boom, they are aiming to sell more iron ore to growing countries such as India and China, who are currently leading steel production growth.
This would mean that BHP would now have a consistent higher share price, possibly coming close or catching up to Rio Tinto as they attempt to grow their business at Pilbara by growing it to obtain 240 million tonnes annually, and an overall target of 350 million tonnes a year.
This growth would mean more money into the Australian economy because of the amount of exports BHP are producing to China and India, and this would mean more economic stability for Australia's economy as it prepares for another recession due to the European debt crisis, and also because mining accounts for over 5% of Australia's Gross Domestic Product.
Tuesday, September 27, 2011
Aussie stocks set to surge (Live blog)
SMH.com.au
27/9/2011
This article is about how Wall Street's latest gains overnight will mean that Australian shares will jump as well. This optimism is caused by the fact that Europe may find a way to resolve its debt crisis, and the ASX is set to rise as much as 2.7% after the US rose 2.5% and Europe rose 2%.
This means that the rise in confidence in Europe will equate to a further rise in share markets around the world, as it is due to the increasing reliance of globalisation around the world. As Australia is heavily reliant on Western stock exchanges for its confidence.
However Australia is also reliant on the US dollar, as America is one of our largest trading partners. It has fallen against the US dollar in recent times, but it has only fallen half as much as BHP since May, and the dollar is the reason why Australia's economy has been able to go through the debt crisis better than other nations.
Monday, September 26, 2011
Debt Crisis- Saying goodbye to Greece- softly
SMH.com.au
25/9/2011
This is a column by financial journalist Michael Pascoe that believes that Greece will default on its bailout by the Europeans. He shows that Australian Treasurer, Wayne Swan, cannot give a simple answer on Greece's problems, as he knows that Swan knows that it is impossible for Greece to pay off its debt. Therefore the EU should no longer be funding Greece to not default
Usually if a country like Greece was in debt it wouldn't be much of a problem as Greece does not have a rather large economy. However it is part of the European Union, which services the second largest stock exchange in the world. And therefore it had been bailed out by the European Central Bank, in a loan in which Greece will not pay back. This will leave Europe in plenty of debt, and meaning that stock markets around the world but especially in Europe will fall, possibly sparking a double dip recession, which will be worse than the GFC of 2008-09.
Pascoe does not believe that the IMF or the G20 will do anything about this problem except to throw more money at Greece that seems incapable of sorting its finances.
Sunday, September 25, 2011
G20 plea falls on deaf ears as shares nosedive
The Australian
24/9/2011
http://www.theaustralian.com.au/business/markets/g20-plea-falls-on-deaf-ears-as-shares-nosedive/story-e6frg916-1226144913121
Shares from around the world and in Australia tumbled on the 24th as shares fell again after its horror day on Thursday. Korean shares fell 5.6%, Hong Kong fell 2.2% and even China fell 1.1% in the Asian region, meanwhile in Europe the STOXX 600 fell 4.6% and the S&P 500 also fell 3.2%. The G20 in the possibility of a second financial crisis has stated that it is committed to an action plan of policies to ensure global economic stability by introducing its bailout fund of $605 billion AUD.
However due to the Australian dollar falling below parity with the US dollar it means that stocks with offshore earnings rose, especially BlueScope steel rising 6.2%, but with mining stocks came a fall, with both mining players BHP and Rio Tinto both falling around 3%.
24/9/2011
http://www.theaustralian.com.au/business/markets/g20-plea-falls-on-deaf-ears-as-shares-nosedive/story-e6frg916-1226144913121
Shares from around the world and in Australia tumbled on the 24th as shares fell again after its horror day on Thursday. Korean shares fell 5.6%, Hong Kong fell 2.2% and even China fell 1.1% in the Asian region, meanwhile in Europe the STOXX 600 fell 4.6% and the S&P 500 also fell 3.2%. The G20 in the possibility of a second financial crisis has stated that it is committed to an action plan of policies to ensure global economic stability by introducing its bailout fund of $605 billion AUD.
However due to the Australian dollar falling below parity with the US dollar it means that stocks with offshore earnings rose, especially BlueScope steel rising 6.2%, but with mining stocks came a fall, with both mining players BHP and Rio Tinto both falling around 3%.
This fall was due to American and European stocks falling, which affects Australian and overseas stocks heavily due to their influence in foreign trade. Australia exports 7.3% of its products to the US and imports 13.6% from America which means that whatever happens overseas is bound to affect Australia. The countries of the EU is another large trading partner (including the UK) but trade has fallen throughout the last couple of years.
Friday, September 23, 2011
Dollar licks wounds after heavy loss
SMH.com.au
23/9/2011
The Australian Dollar has fallen to a 10 month low of 96.92 US cents. This over the last 20 years is an extremely high figure but in recent times any price below $1.02 is a cause for worry.
It has lost 5% so far this week, showing the instability of foreign markets and currencies as they brace for worse economic times ahead, as Greece may default on its loans.
This is bad news for Australians buying overseas as the dollar depreciated below parity against the US dollar meaning that items, especially through online shopping, will be more expensive. This will mean that exports will be more of a viable option for overseas buyers but with the current instability the Australian exports may not be bought as it may go over parity again in the near future, even though experts predict it may hit a 'low' of 95 US cents.
Along the same lines of the Australian dollar it may not increase tourism to Australia as prices may change in the near future.
This current currency fluctuation will affect global business as there is a lot of currency risks riding on the Australian dollar as it flaunts above and below the parity line.
Thursday, September 22, 2011
ASX plunges below 4000 points
The Australian Share Market (ASX) fell below 4000 basis points today after the US Federal Reserve warned that the US economy is heading towards bad economic times and after they had found evidence of China's economy slowing. As a result the Australian dollar fell to a level of approximately 103 US cents and the loss of 4000 points means that $31 billion in value has been wiped off, and the ASX is trading at its lowest point since April... which was when the last share market game was played.
This relates to Commerce as with economies world wide being battered by this news and news of the Eurozone debt crisis this is not good news for investors as markets world wide are being hit similar to Australia. For example, previously stable mining companies such as Rio Tinto had dropped $4.49 in one day, while BHP Billiton had fallen $1.50, at 6.45% and 4% respectively. Big 4 banks all dropped 2% of their value as the worsening economic crisis could hurt their long term profitability and growth.
This news is therefore not good for players of the share market game and for real investors as the uncertainty in Europe and America are hurting the market. However investors in Fosters will have something to smile about as SABMiller took over the company in an offer worth $12.3 billion. As a result Fosters jumped 8.2% and other liquor based groups such as Treasury Wine Estate and luxury accessories group OrotonGroup also rose after sales had exceeded expectations.
This news is therefore not good for players of the share market game and for real investors as the uncertainty in Europe and America are hurting the market. However investors in Fosters will have something to smile about as SABMiller took over the company in an offer worth $12.3 billion. As a result Fosters jumped 8.2% and other liquor based groups such as Treasury Wine Estate and luxury accessories group OrotonGroup also rose after sales had exceeded expectations.
This hit on the share market has not helped the Australian dollar that is to go below parity against the greenback as it has been steadily dropping within the last few days, that could spell the end of the Australian dollar's strength against the US dollar.
Tuesday, August 2, 2011
US Debt Deal wins approval in US House of Representatives
SMH.com.au
2/8/2011
http://www.smh.com.au/business/world-business/us-debt-deal-wins-approval-in-house-of-representatives-20110802-1i8um.html
This article is about the US Debt Deal that passed the US House of Representatives to appease the US of a possible economic crash to increase the amount that the United States can borrow.
This article relates to Commerce as this deal tests the stability of the US economy. Also if the economy ran out of money the US would lose its triple A credit rating, which can limit the amount of spending the United States can do in maintaining the country. This deal will raise the US Government's $14.3 bn borrowing limit and it will remove the risk of the US not being able to borrow money to pay its bills.
However this late deal has prompted world economies to slump in days previous, and it has also bothered overseas governments which were anxious for a deal to pass, and for the political war between the Republicans and Democrats to end, as it has hampered the making of a deal within the past week. This has caused critics to not be happy with the United States Government as it was playing a large risk in delaying the passing of this bill; playing a political game.
If the AAA rating were to be downgraded it would raise US borrowing costs, hamper its economic recovery and rattle global investors, and also worsen the European debt crisis.
Tuesday, July 19, 2011
Phone hacking scandal- London
SMH.com.au
July 8 2011
http://www.smh.com.au/business/media-and-marketing/phone-hacking-scandal-rupert-murdoch-closes-down-the-news-of-the-world-20110708-1h5bk.htmlAfter many high profile resignations were caused by the News of the World phone hacking scandal now David Cameron, the Prime Minister of the United Kingdom, is under fire. He has called an emergency meeting of MPs the day after the Murdoch parlimentary committee is to take place, and there are accusations of senior MPs and high profile police taking bribes from senior executives from News of the World, after the case was closed in 2009.
This relates to Commerce as this phone hacking can impact world economies and governments due to distrust among different parties.
This is a major impact on Rupert Murdoch's media empire and his credibility of his various newspapers, after it has been revealed that phone hacking is commonly used as a source of information. This also impacts the credibility of Scotland Yard police, as the resignations of the police was caused by either negligence in the 2009 case or corruption. David Cameron also has had contacts with various members of the Murdoch family, as had other previous high ranking MPs and Prime Ministers, and various government ministers in the United Kingdom also may be in danger of being charged due to the scandal.
Thursday, May 12, 2011
Cut above: the tycoon tailor who survived war and terror
Theage.com.au
12/05/2011
This entrepreneurial profile by The Age, a Melbourne newspaper, covers Abraham Hatoum- he lived in Lebanon in his childhood, came to Australia in 1985 and founded LookSmart in 1994, and now has a $28 million/year turnover.
His life has a entrepreneurial start, as he sold drinks in his Palestinian refugee camp where he lived when he was 10 years old, but luck dropped off from him later in life when his father was murdered, young Hatoum was bashed and sustained more injuries from a bomb blast. After arriving in Australia he took 12 years to gain his Bachelor of Commerce degree but now has won the 22nd national Ethnic business awards.
Entrepreneurs can accomplish anything- a view shared by Hatoum, as he shared his view about his drinks business. His view on life as well- you make your own luck- is also like that with entrepreneurs because they only get out what they put into it.
One lesson that he has learnt from business is to choose the right people. 'If you choose the right people, a business will succeed. If you put your people first, sales and profit follow.' In Commerce we have learnt that putting people first and thinking about what they want is essential- there would be no business if there were no people.
Entrepreneurs can change the world
YouTube.com- GetGrasshopper
Uploaded on May 3 2009
http://www.youtube.com/watch?v=T6MhAwQ64c0
This video sums up what entrepreneurs do in the world. Although the target audience is American (as shown at 0:27 with the American flag and country) and this video is a form of advertising the message is internationally understood. Entrepreneurs show that one individual can make a difference (0:19) and that this individual, with a 'single brilliant idea' (0:34) 'change the way we think about what is possible' (0:50).
In Commerce we have been learning about what is an entrepreneur, and these main points sum it up. We also have been finding about what challenges entrepreneurs face but the video shows that 'turbulence creates opportunities for success, achievement, and pushes us to discover new ways of doing things.' (1:01-1:10)
This video also covers the rewards of being an entrepreneur. They 'drive innovation changing people's lives, creating jobs, fueling growth, and making a better world' (1:19-1:28)
The remainder of the video lists what entrepreneurs do for the world, such as designing tools to help us stay connected, solving society's oldest problems, but also covers one important point- an entrepreneur can be anybody.
Uploaded on May 3 2009
http://www.youtube.com/watch?v=T6MhAwQ64c0
This video sums up what entrepreneurs do in the world. Although the target audience is American (as shown at 0:27 with the American flag and country) and this video is a form of advertising the message is internationally understood. Entrepreneurs show that one individual can make a difference (0:19) and that this individual, with a 'single brilliant idea' (0:34) 'change the way we think about what is possible' (0:50).
In Commerce we have been learning about what is an entrepreneur, and these main points sum it up. We also have been finding about what challenges entrepreneurs face but the video shows that 'turbulence creates opportunities for success, achievement, and pushes us to discover new ways of doing things.' (1:01-1:10)
This video also covers the rewards of being an entrepreneur. They 'drive innovation changing people's lives, creating jobs, fueling growth, and making a better world' (1:19-1:28)
The remainder of the video lists what entrepreneurs do for the world, such as designing tools to help us stay connected, solving society's oldest problems, but also covers one important point- an entrepreneur can be anybody.
Wednesday, May 11, 2011
The elephant riding entrepreneur
SMH.com.au
4/4/2011
This article is an interview with Sydney entrepreneur Creel Price, that started Blueprint Management Group with $5000, and 10 years later sold it for $100 million. Price, the captain of Australia in the sport of Elephant Polo, had unique business practices in his time, for example taking his staff to climb Mount Kilimanjaro and bicycle riding from Bangkok to Ho Chi Minh City. In this interview it explores some of his hardest challenges, business tips and what is next in the future.
At the moment in Commerce not too many other topics have been discussed as the class has had limited time on the topic of creating a business. However in this interview it covers many aspects discussed previously, such as taking no shortcuts- 'good business takes time', and his toughest challenge in business- 'starting a business (Blueprint) with only $5000 in capital and to try and compete with cashed up multi-national corporations.' He overcame this problem by installing a rule that customers pay him within 48 hours and stretching entry level people to do jobs beyond their previous experience. Successful entrepreneurs need to think outside the square, and he has done that.
Monday, May 2, 2011
Profile - Monique Conheady
Lucinda Schmidt, SMH.com.au, 12/5/2010
http://www.smh.com.au/money/investing/profile--monique-conheady-20100524-w65d.html
This article is about an entrepreneur called Monique Conheady, that owns a company called 'Flexicar' that is a car hiring service for people that do not generally need a car for their day to day lives. Flexicar is a business that has focus on an environmental concern- Climate Change- but she says it also has to be financially viable. "That's the philosophy behind Flexicar - it has to be financially viable but with a social and environmental benefit."
In Commerce we have learnt about entrepreneurs and ideas they have in order to make money and grow their business. In this example Monique Conheady started the idea of Flexicar in the 1990's, when she visited a friend in Boston that had a business similar to Flexicar, called Zipcar. She could see this car sharing venture needed in the everyday lives of people, as the world began to support climate change, or just did not have the money to buy a car to use.
Monique's father also planted a seed for her to start her own business, saying that you have to do your own thing, he was very independent minded."
Nowadays she has accumulated a $2 million turnover and is aiming to expand her company, especially in Sydney, after she won a 2009 Telstra business award.
Our Economy- Reflection
Total Mark: 29/30
This assessment task was to research the economy of Australia and one other economy of my choice- this country in question was Hong Kong. The assessment task consisted of a report describing the economy in both Australia and Hong Kong with a comparison of the two economies and describing the differences.
I learnt from the assessment task about Hong Kong's economy- that they were one of the last Laissez-faire economies in the world (with no government intervention) and how they suffered and recovered from the Global Financial Crisis. I found out that their GDP also fell after their split from the United Kingdom in 1997 as well as the GFC. Their GDP fell more than Australia's but ended up recovering better than the Australian economy, indicating that they are able to bounce back from economic struggles.
I also learnt that the split from the United Kingdom made inflation rates go backwards in the 1997-1998 year and the changes in the CPI have been more unstable than Australia's as they have not had an inflation target as Australia has.
I generally did all parts of the assignment well as shown by the 29/30 mark, however I struggled to find relevant graphs to back up my written work, as shown by my Australian GDP Growth Rate graph because I was only able to find a graph for 14 years instead for 20 years.
I can elaborate more in the aspects of Hong Kong's economy but however I wasn't able to find too much information apart from Wikipedia- with the exception of the CIA World Factbook.
This assessment task was generally well written but the word count was fairly difficult to adhere to.
This assessment task was to research the economy of Australia and one other economy of my choice- this country in question was Hong Kong. The assessment task consisted of a report describing the economy in both Australia and Hong Kong with a comparison of the two economies and describing the differences.
I learnt from the assessment task about Hong Kong's economy- that they were one of the last Laissez-faire economies in the world (with no government intervention) and how they suffered and recovered from the Global Financial Crisis. I found out that their GDP also fell after their split from the United Kingdom in 1997 as well as the GFC. Their GDP fell more than Australia's but ended up recovering better than the Australian economy, indicating that they are able to bounce back from economic struggles.
I also learnt that the split from the United Kingdom made inflation rates go backwards in the 1997-1998 year and the changes in the CPI have been more unstable than Australia's as they have not had an inflation target as Australia has.
I generally did all parts of the assignment well as shown by the 29/30 mark, however I struggled to find relevant graphs to back up my written work, as shown by my Australian GDP Growth Rate graph because I was only able to find a graph for 14 years instead for 20 years.
I can elaborate more in the aspects of Hong Kong's economy but however I wasn't able to find too much information apart from Wikipedia- with the exception of the CIA World Factbook.
This assessment task was generally well written but the word count was fairly difficult to adhere to.
Wednesday, April 27, 2011
Map to venturing out into business
Mark Bouris, Sunday Telegraph- Money, 27/3/2011
Obtained from Ms Owen
This newspaper article is a beginners guide when they are entering the Australian business market and it shows the steps one has to take- obtaining legal advice, the set-up of the business, and looking at your own personality so that your business can suit it, and the other way around.
This article relates to the topics discussed in Commerce as currently we are looking at 'Being an Entrepreneur'. This article shows the steps required to further that, by starting a business and noting what other steps are to be taken- expert advice, the decision making whether to have a high-growth start-up, buying an existing business or becoming a franchisee owner, which are all entrepreneurial but at different levels, and some with more risk.
Being an entrepreneur means that there must be a desire to make it succeed, and also actions to back that up. This theme is not only explored in this article, but also in the example of Jesse Hancock in the textbook (p 313) as he built his company NueVue Graphics from the ground up. He says to not underestimate the power of passion- 'If you are passionate about what you do and where you want to go, then you will get there.'
Obtained from Ms Owen
This newspaper article is a beginners guide when they are entering the Australian business market and it shows the steps one has to take- obtaining legal advice, the set-up of the business, and looking at your own personality so that your business can suit it, and the other way around.
This article relates to the topics discussed in Commerce as currently we are looking at 'Being an Entrepreneur'. This article shows the steps required to further that, by starting a business and noting what other steps are to be taken- expert advice, the decision making whether to have a high-growth start-up, buying an existing business or becoming a franchisee owner, which are all entrepreneurial but at different levels, and some with more risk.
Being an entrepreneur means that there must be a desire to make it succeed, and also actions to back that up. This theme is not only explored in this article, but also in the example of Jesse Hancock in the textbook (p 313) as he built his company NueVue Graphics from the ground up. He says to not underestimate the power of passion- 'If you are passionate about what you do and where you want to go, then you will get there.'
Thursday, March 24, 2011
Aussie Dollar expected to stay strong for months
SMH.com.au
Oct. 26 2010
This article, published back in October of 2010, indicates that the Australian Dollar will be above 90 US cents throughout 2011 as the Reserve Bank of Australia continues to raise interest rates in the aftermath of the Global Financial Crisis.
During this period in October 2010 the Australian dollar had reached parity with a high of 100.04 US cents, and that has been driven because the US Federal Reserve will print money to stimulate the economy has depreciated the US dollar against the Australian dollar and lifted commodities.
The Reserve Bank of Australia received a report that stated that Australia's economy is unlike the United States, it 'dances to a different drum' and continuing good economic news is likely for the RBA to lift interest rates again.
Since then the Australian dollar has jumped above parity and only going below that in March after the Japanese earthquake and tsunami, but since recovering over that again.
In Commerce we have found that the Australian Dollar can appreciate and depreciate against different currencies. At the moment as the Australian dollar is recovering from the Global Financial Crisis is it appreciating against the US Dollar, which has begun to print money- which can lead to hyperinflation, as we have learnt that in Commerce as well with cases in the past such as Germany, Zimbabwe and Argentina.
Tuesday, March 22, 2011
Dollar rises against yen as calm returns to markets
Newspaper- SMH.com.au
March 22 2011
The consistency of the Australian dollar against the Japanese Yen means that the global financial market was stabilising after the Japanese earthquake 10 days earlier and the Libyan conflict. The Australian dollar was trading at ¥81.39 yesterday (Monday 21st March), up from ¥77.33 on Thursday.
Global investors have been buying the English Sterling and European Euro on the expectation that the Bank of England (England's equivalent to the RBA) and the European Central Bank would raise rates. This means that investors have been staying away from the US Greenback, due to speculation that the US Federal Reserve would be the last out of all major currencies to rise, which has helped the Australian dollar in the past as it has stayed near parity to the US dollar throughout the last few months.
The VIX Index in America traded above 30 last week when it usually averages about 15-20, another sign that world markets are beginning to strengthen, which means that the Australian dollar will again gain ground of the US dollar- having reached parity today for the first time in a week.
In Commerce we have learnt about how foreign exchange rates affect the Australian dollar, and how other currencies can appreciate and depreciate against the Australian dollar. In recent times the Australian dollar has depreciated against the US Dollar due to global instability but today it has appreciated back to parity. The Australian dollar also has appreciated against the Yen, trading at 1 AUD= 81.39 YEN.
Saturday, March 12, 2011
Oil drops, yen gains in wake of Japan's disaster
March 12, 2011, SMH.com.au
World oil prices and the economy in the world in general has shaken in the aftermath of the Japanese Earthquake. Australian stocks lost 4.5% in one week, signalling the end of its worst week since May last year. Meanwhile the Japanese Nikkei dropped 1.7% as the Japanese Government pledged financial stability after this earthquake.
Around the world the price of oil has continued to rise hitting US $100 a barrel, and Japanese oil exporters JX Nippon have closed due to the earthquake and resulting tsunami, and their three plants produce 600 000 barrels of oil a day, providing even more pressure on the market that has had trouble in the Middle East currently.
Meanwhile the S&P 500, Bloomberg Europe 500, MSCI Asia Pacific Index have all fallen due to the earthquake.
In Commerce we have discovered that the economy is influenced by overseas pressures that have introduced recessions over the years that had not been begun on Australian shores. In this case oil is one pressure that is driving up prices in Australia and around the world, and combined with the earthquake in Japan it would mean that prices would continue to rise.
Thursday, March 3, 2011
Trade boom survives flood shock 3/3/2011, Blog Post 2
3/3/2011
SMH.com.au
http://www.smh.com.au/business/trade-boom-survives-flood-shock-20110303-1bfk3.html
The commodities boom is what is driving the Reserve Bank of Australia to drive up its interest rates (or cash rate as described here). The trade surplus in the past 10 months has reached over $1 billion Australian Dollars and last month's $1.88 billion surplus has exceeded expectations due to flooding and cyclones in Queensland, which in the end was offset by coal exports. The reason why the RBA is holding interest rates despite this data is the fact that Australians are spending less and saving more, even though household incomes jumped by 8.7% last year (in which Australians chose to save).
This shows that the economy is influenced a lot through imports and exports, and that patterns in spending and saving by Australians influences the interest rate. Also the natural disasters in Queensland have lessened the value of exports as coal lost 39 and 32% of their value in the past month. Imports have also dropped in January as there was a 29% drop in fuel imports.
However Australian commodity prices are set to increase as exports earnings are forecast to rise 29% in the year to June 2011, and miners are taking that opportunity to increase their spending so that in the financial year of 2011-12 their spending should reach $76 billion. Because of this spending by the mining sector it should increase exports, wage and tax receipts, and helping the country recover from the GFC.
Tuesday, February 22, 2011
The Business Cycle: Part Two P285
Activities
1: The Reserve Bank of Australia lowers interest rates during a conraction because it should raise people's confidence in the economy.
2: One of the main causes of a recession/depression is the lack of consumer spending, and not the inability of the economy to produce goods and services.
3: A depression is a prolonged time of recession ie: economic downturn.
4: Money not spent on products mean that businesses cut back on production. This in turn cuts incomes within the business and ultimately jobs. If the business shuts down because of the loss of employees and money through the lack of buying products consumer confidence is shaken more, especially if the company is a bank and millions of dollars are waged on the bank's survival.
5: a) Inflation is at a very low level which means low economic growth.
b) Inflation is at a very high level which means a lot of economic growth, plenty of spending, and high interest rates.
6: The government's main role in the economy is to regulate the mature and level of economic activity for the nation as a whole.
7: a) up, down, down, down, down, down, down.
b) down, up, up, up, up, up, up.
8) A rise in consumer confidence often means that people are more willing to buy. This, with increased demand, means that manufacturers make more produce and therefore spend more, injecting money into the economy which results in a boom.
9) a) Expansion
b) During the 1950's and 60's the economy was mainly steady, with spikes in 1950 and 53, but overall during that period the economy was in a slow expansion.
1: The Reserve Bank of Australia lowers interest rates during a conraction because it should raise people's confidence in the economy.
2: One of the main causes of a recession/depression is the lack of consumer spending, and not the inability of the economy to produce goods and services.
3: A depression is a prolonged time of recession ie: economic downturn.
4: Money not spent on products mean that businesses cut back on production. This in turn cuts incomes within the business and ultimately jobs. If the business shuts down because of the loss of employees and money through the lack of buying products consumer confidence is shaken more, especially if the company is a bank and millions of dollars are waged on the bank's survival.
5: a) Inflation is at a very low level which means low economic growth.
b) Inflation is at a very high level which means a lot of economic growth, plenty of spending, and high interest rates.
6: The government's main role in the economy is to regulate the mature and level of economic activity for the nation as a whole.
7: a) up, down, down, down, down, down, down.
b) down, up, up, up, up, up, up.
8) A rise in consumer confidence often means that people are more willing to buy. This, with increased demand, means that manufacturers make more produce and therefore spend more, injecting money into the economy which results in a boom.
9) a) Expansion
b) During the 1950's and 60's the economy was mainly steady, with spikes in 1950 and 53, but overall during that period the economy was in a slow expansion.
Monday, February 21, 2011
Unrest in the Middle East
Gulf Shares Drop In Middle East Unrest, SMH.com.au, 21/2/2011
Gulf shares drop on Mideast unrest
February 21, 2011 - 7:14AM
Stocks markets across the Gulf Arab states fell on Sunday, with Dubai's largest exchange registering the steepest drop as unrest in the Mideast lapped at the shores of oil kingpin Saudi Arabia.
The Dubai Financial Market closed down 3.66 per cent, to 1536 points, with developer Emaar Properties' shares sliding 4.73 per cent. The company was the force behind the Burj Khalifa, the world's tallest building. In Kuwait, the benchmark index closed down 2.52 per cent, to 6394, bringing its year-to-date losses to more than 8 per cent.
The drops in the oil-rich Gulf region's exchanges are largely linked to the unrest in Bahrain, where massive protests have roiled the island nation for more than a week as the Shi'ite majority presses the Sunni monarchy for greater rights and freedoms. Meanwhile, a bloody crackdown on protesters in Libya has further rattled markets as the unrest spilled over to the first major oil producer in the Middle East.
The uprisings in Libya and Bahrain "mark a new turn in the crisis," said brokerage house Nomura in a research note received on Sunday.
"Regional hydrocarbon producers are now being threatened, and sectarian divisions (notably in Bahrain) are increasing the risk of cross-border involvement in what have largely been domestic revolutions thus far."
Sunday is the start of the work week in the Arab world, except for Saudi Arabia, and the market selloffs reflected investors' first chance to weigh in on the developments over the weekend.
The protests in Bahrain marked the first time the unrest sweeping across the Arab world has seriously challenged the entrenched regime in one of the wealthy Gulf Cooperation Council nations.
Also aflame is Yemen, the Arab world's most impoverished nation, which sits on the south-western tip of the Arabian Peninsula.
The unrest on Saudi Arabia's doorstep has sparked fears of a spillover into the country, with concerns focusing both on the Sunni-Shi'ite divide in Bahrain and the fact that a significant change in Bahrain's political system could spark calls for similar reforms in Riyadh, which sits atop the world's largest proven reserves of conventional crude oil.
Saudi Arabia has a Shi'ite minority primarily located in its eastern province, where the bulk of its oil is located.
Any hint that stability is in question in the kingdom - the de facto leader of the 12-nation Organisation of the Petroleum Exporting Countries - could send oil prices surging across the world, threatening a continued global economic recovery.
"It's a general risk aversion in the region as a whole," said John Sfakianakis, chief economist with the Saudi Arabia-based Banque Saudi Fransi, explaining the drops in the region's markets.
With Egypt's market still shuttered after the unrest that toppled Hosni Mubarak, and the protests jumping from one Arab nation to the next, investors "are basically trying to hedge themselves against downside risks", Sfakianakis said. "And the downside risks are accumulating."
Saudi Arabia's TASI index closed down 0.78 per cent to 6333 points, building on a 1.6 per cent slip on Saturday, the start of the work week in the country.
In Kuwait, shares of telecommunication giant Zain fell 7.25 per cent to 1.28 Kuwaiti dinars.
The slide came a day after the investment company headed by Saudi billionaire Prince Alwaleed bin Talal withdrew its offer to buy a 25 per cent stake in the Kuwaiti telecom operator's division in the kingdom.
Kingdom Holding said in a statement on Sunday it believed the nonbinding offer it had submitted was "a reasonable offer to the shareholders of KHC and Zain Kuwait."
Qatar's exchange was down 1.6 per cent, to 8563 points, while Abu Dhabi's exchange was off 1.91 per cent to 2632 points.
AP
http://www.smh.com.au/business/markets/gulf-shares-drop-on-mideast-unrest-20110221-1b1bb.html
I have chosen this article because we are learning that in the world economy what happens in one country or region affects the entire world, notable the Global Financial Crisis in 2009 and the Great Depression in the 1930's. These however are extreme cases, but the Middle Eastern unrest (notably in Bahrain, Libya following up on Egypt's unrest) have made the share market in the affected countries and also in Dubai and Kuwait have dropped 3.66% and 2.52% respectively. Dubai's stock market slide was mainly due to Emaar Properties stock sliding down 4.73%.
The reason for the economic downturn in Libya and Bahrain (therefore affecting Dubai and the rest of the world) is that hydrocarbon producers are being threatened and that cross-border involvement is being increased. Yemen, the poorest nation on the Arabian Peninsula, is being affected as well.
Bahrain's conflict is being monitored closely by Saudi Arabia, as the Muslim Sunni-Shi'ite divide changed Bahrain's political system. This may spark a change in Saudi Arabia's policy as well, which just so happens to have a Shi-ite community on top of the bulk of Saudi Arabia's oil field. If stability is threatened there it would spark already oil prices to rise around the world, therefore threatening the recovery of the GFC.
Egypt has sparked all of this unrest, that has continued over to Libya, Bahrain and Yemen, but the economic impacts of the overall problem is that it could affect the rest of the world
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