critique of dying companies

while it may be true that some businesses such as blockbuster, myspace, and saab are slowly fading away and falling behind their competitors, i think that it could possibly work out that these businesses will make a rebound. To me blockbuster has the most realistic chance to make a rebound because of what it offers that other companies do not. Blockbuster is fading because of the rise of netflix and other companies that provide streaming video and unlimited movies for a low monthly fee. its my belief that eventually netflix will level off and blockbuster will make a comeback. just as online shopping grew in popularity and then declined because people enjoy being able to see the tangible item and have it with them all the time. even though it may be easier to just download the movie online, eventually people are going to long for the old days where they could go to a store and actually see and experience looking for a movie. blockbuster needs to hold on and keep surviving because eventuall they will experiece a comeback. as for now they need to spread out and focus on providing some of the internet services that their competition does but not go all the way into internet. people enjoy the tangible too much to stick with online anything for too long. if this theory were true, everything would be done online because its much simple and easier for people who are lazy and dont want to leave their house.

Critique on "Studios disarming cable in battle with Netflix"

The writer of this article is correct in believing that cable companies and online streaming sites are definitely substitutes of one another. It is true that as technology develops and more options are given when it comes to entertainment, the one with the easier access will dominate. Though I do have to critique on why the writer had to group Hulu and Netflix together. Netflix does have an online base but the main difference between the two is that Netflix charges a monthly price whereas Hulu is a completely free online streaming site. Even though cable companies, Hulu, Netflix, and many more are considered substitutes of one another, when it comes to the choice of money and free; the average consumer will often leans towards the free side. The writer was correct in stating Netflix is dominating the cable company with the amount of subscribers, but even though we all know what Netflix is, the writer never mentioned that Netflix only provides movies whereas cable companies provides movies and TV series.

Because of the differences in the output of the product each of these two companies provide, there will obviously be a difference in the number of subscriptions. Because in this generation, the majority of the population does not have leisure time to catch up on their favorite sitcom or TV series, movies are becoming more popular. Not everyone has the time to follow a series from beginning to the end which usually takes about half a year; a movie is much more convenient to watch during leisure because a person can begin and finish a movie in as little as two hours. None of these points were pointed out in the writings. The writer only mentioned that the cable companies were in fear of being pushed out by Netflix.

If the writer had done a comparison between cable companies and Netflix then cable companies and online sites such as Hulu, the article would’ve been more understandable. Because websites like Hulu are hosting TV episodes online free of charge for the public. Therefore not only are the cable providers competing against Netflix for the movie showings, but also Hulu and other sites for free access to their copyrighted materials. The government itself is able to regulate this behavior by copyright infringement, which has already been put into action, yet it is still being done. Many points like the ones that I have mentioned will make this a better blog. Though overall the writer did a good job of summarizing and using economic terms we were taugh in class, though the blog itself is shorter than expected.

-Tien Nguyen

"Apple Not Likely to Feel the Economic Chill” Critique

"Apple Not Likely to Feel the Economic Chill” Critique

From the blog title it is obvious that it will be discussing whether or not Apple will be successful or unsuccessful with the recent economic downfall. I completely agree that Apple will not be affected and will even flourish in our economic hardship. Apple not only produces iPods, but now they produce the Iphone. They have many different versions of the Iphone and the prices all vary. In society the Iphone is considered the best phone in the market by most. The demand is extremely high on the phone because every kid wants to have the phone that can call, play music, have Internet, and thousands of amazing applications. With the demand this high, Apple is constantly producing more and more of the iphone in accordance with the shutdown point. In the original blog it talked about how Apple is always aware of its outputs and demand curves, so they can know their production. Due to the diligence that Apple possess towards its inputs and outputs, and how they affect the profit, they are the most valuable brand on Earth! Apple is extremely smart with their marketing and always engages the consumers with sales on items. There was a deal where you could get an iphone for $99.00. They lowered the price because the demand was so high, and now the demand will eventually rise again due to the want for an Iphone and the reduction in price. Kids these days see celebrities with the Iphone and want the Iphone for a fashion statement more so than for a way of communication. Apples results speak alone, they doubled their earnings and sales from the most recent quarter by going up 83% from a year ago. A thing I found interesting is that 59% of those sales came from overseas. Apple has expanded itself worldwide, so if for whatever reason everyone in The United States of America stops buying from Apple it would not completely diminish the company, because they have consumers all over the world. The world would have to end for Apple to shutdown as a company. On top on the revenue that Apple receives from the iphone, they continue receiving revenue from selling ipods. The IPod touch was extremely popular when it first came out because it was solely touch screen. After being in the market for along period of time it wasn’t producing, as it was when it was brand new. Apple created a sale where when a senior in high school heading off to college buys a fairly expensive laptop; they get a free iPod touch. This is a way Apple continues to spread and profit from its products. Apple has the laptop that is pretty expensive that you normally wouldn’t buy on its own, but then there is a free iPod touch thrown into the deal. Now the consumer doesn’t think the laptop is that expensive after all. Every time the deal is made Apple is doubling its revenue because the cost of production is a lot cheaper from the store item set price. If Apple continues with fair prices and sales on their products with top of the line technology then, it makes complete sense for them to not be affected by our societies economic downfall.

Critique: Can Gold Investors Profit From Apocalypse 2012?

This was an excellent article. It was well written, easy to understand and actually very interesting. I have recently seen commercials that try to sell away their gold and promise that the price of it has risen steadily over the last few years. They show graphs and charts to show how well it has performed and promise that gold is showing signs of growing in value even more. I assumed this would be a poor man's attempt to invest. No well managed business would sell their gold at this point in time if they thought that in the near future it would be worth even more than it is today. But with the recession and a possible doomsday approaching, I can see how the demand of gold could sky-rocket in the coming years. In the year 2012, people will be uncertain if civilization as we know it will come to an end. Those who truly believe in the Apocalypse will have no idea what to expect if they survive. The American dollar could be reduced to a fire starter but gold will remain rare and beautiful no matter what occurs. Even if we are reduced to caveman times, the value of gold will survive the impact.

The author did a great job in constructing the article. He gave it a good foundation starting with how gold has been used throughout virtually all of mankind and points out that it has done considerably well over the past few years. He uses the Y2k epidemic and the Great Depression as references to the fact that disaster scares are a perfect launching point for an already well performing commodity. He shows his knowledge of economics by giving a supply and demand prediction that the future chaos may produce. I like the ending to the article in which the author warns us that if the Mayan calendar ends and the world continues to go on as normal the gold that has been hoarded will become far less valuable and closes with a little humor on how to avoid it.

I found one grammatical error and he got a little comma happy, both near the bottom of the second paragraph. He used some informal language in some parts of the article but it was in good taste. Other than that this was a very good blog and a good read for me.

Critique of RIM Profit Falls Below Estimates

http://kassensecon121.blogspot.com/search?updated-max=2011-06-20T10%3A25%3A00-07%3A00&max-results=7

http://www.nytimes.com/2011/06/17/technology/17rimm.html?_r=1&ref=business

  The article I would like to critique is “RIM Profit falls below estimates.”  I found this article to contain lots of interesting information, as well as useful financial statistics about the company Research in Motion, and its competitors.  This company is the producer of the original Smartphone, the Blackberry.  However, I disagree that RIM is a member of an oligopoly market with Apple and Google.  I disagree with this, not only because it’s illegal in the United States, but also because they do not sell similar products.

  It is true that they sell smart phones and while they share similar features, the software, hardware, functions, and features are vastly different.  This seems to be a monopolistically competitive market to me.  When an oligopoly occurs it is among firms that sell products that are much more similar such as food, cigarettes, and oil.  Also, because of the nature of oligopolies, collusion and price setting tends to occur among the firms.  I am no expert in the inside dealings of RIM, Apple, and Google, but I see no reason for Apple, the leading firm in Smartphone technology, to collude with RIM, who is currently falling behind in Smartphone sales. 

  While I disagree that these firms make up an oligopoly, I felt that this article was very appropriate considering the number of Smartphone users and the impacts that these companies may have on consumers as well as stockholders.  I found it very interesting that even though RIM made the original Smartphone, they have fallen behind competitors who entered the market late.  The volume of sales apple made with their ipad also surprised me.  3.27 million in the first quarter is a huge amount of revenue.  I found this so surprising because other companies have produced similar sized products long before apple decided to produce the ipad.  The fact that apple was able to sell so many suggests that their customers have an overwhelming since of brand loyalty.  Not only was apple able to create an entirely different market focused around the portable tablet, they were able to create demand from their current Apple computer and smartphone customers.  While their closest competitor, Google, may have recently sold more units of Smartphones than apple, no one has come close in the portable tablet market.

AUSTEN, IAN. "RIM Profit Falls Below Estimates - NYTimes.com." NY Times Advertisement. N.p., n.d. Web. 28 June 2011. <http://www.nytimes.com/2011/06/17/technology/17rimm.html?_r=1&ref=business>.

Critique: In Sickness and in Wealth

The article I chose to critique talks about the euro and how it will remain the main form of currency in the European Union. The European Union consists of 27 countries and all but Great Britain use the Euro. I agree with the author and his point that the Euro will not and should not change. Many countries have recently converted to the Euro, such as Spain, who changed their currency from the Peseta to the Euro between 1999 and 2002. Also, the European Union will be expanding within the next few years, and will then include countries such as Croatia and Turkey. I have personally dealt with the exchange rate of the Euro to the US Dollar, for the past year I have been studying and Spain, and along with Greece, their economy has experienced a downfall due to the change of currency. For example; in 1998 a loaf of bread in Spain would cost about 35 pesetas, once it changed to the euro, companies were not properly converting their prices, and they would charge what they felt sounded right. Once the Euro was the primary currency a loaf of bread would cost at least €1, which is equivalent to 166.38 pesetas, which meant people were paying four times more than they were and this did not just happen with bread but many other necessary goods. The citizens of Spain are just now getting adjusted to the Euro as well as many other countries, it would not be wise to change the currency again, I feel that it would lead to another economic downfall, because once again prices would change, and would not correspond with what they should be. Just because one country is struggling with the Euro does not mean that the currency for all the other members of the European Union should have to change. The Euro is a very convenient currency, especially because so many countries use or accept it. If the European Union changed the currency, it would be a hassle; it is not uncommon for Europeans to travel just as Americans do for work and if they had a different currency in each country, that would be terrible, it would be like having a different currency for each state in the US. The value of the Euro has also risen, when I first moved to Spain last August, the exchange rate was $1.356 for every Euro and it has now risen to $1.44 for every Euro. It seems that the Euro is doing just fine for the majority of Europe; it would not be wise to change it now.

Critique "Outsourcing in America"

The post “outsourcing in America” discusses a small town near San Francisco and how their local government has been outsourcing the labor done by the city, including its public works, engineering, lawyers, building inspection, and code enforcement. The author of this post feels “as if once again people are looking to take the easy way out instead of making the proper changes to the way the actual city is ran. It also shows no loyalty at all to the citizens of the town and could lead to a mass exodus because people do not agree with the actions of the city. Although they save money by just contracting out the jobs, they also save money by not having to pay as many pensions. This kind of behavior is unethical and is not the way to treat employees and citizens of the city.” I agree with several things the author has said. The first thing I agree with is the fact that this idea of outsourcing the public sector jobs of this city is probably not the best way of treating your citizens that work those jobs. You would somewhat expect the city to employ its own citizens for city jobs. The other thing I agree with is the fact that by instituting this strategy the city has an opportunity to save money to help reduce their deficit, in the short run. By outsourcing these jobs in their community, the city may be saving money in salaries and pensions but a lot of money will be lost from lack of consumption, taxes collected on that consumption as well as the unemployment benefits that will need to be paid out to the people who have become unemployed due to the outsourcing of these jobs. The one thing I disagree with is that this strategy could lead to mass exodus. With the resulting unemployment, current economic climate and state of the housing market, it would most likely be very difficult for a large portion of the city’s population to leave.

Critique of Netflix and Cable battle

I enjoyed reading the post about the battle going on between cable companies and internet video service providers. In the changing technology market consumers are requesting to have access to more and more types of media at their immediate disposal. The competition between internet service providers and cable companies is a perfect competition because they are substitute goods for each other. You can easily replace one with the other and with the quality that you get from internet video services like Netflix and Hulu for the price you pay it is easy to see why a person would switch. I personally have thought about switching to only a Netflix or other provider and currently do use Netflix and also have cable. With such easy access to such a large variety of media content it is easy to see why demand for cable is shifting.
You can see also with the new features that cable has that they are having to add new features to be able to keep the price at what is a sustainable level for them while battling the shift in demand for cable to internet video service providers. The most blatant new adaptation to cable to try and directly compete with such services as Netflix and Hulu is the creation of Ondemand. With Ondemand you are mimicking the services provided by Hulu and Netflix by giving users the direct access to their favorite T.V shows and movies from movie channels they currently subscribe to at any time. They went after the convenience market segment to try and draw them back in and made it easy by simply adding the feature to what already existed without having to install anything or do anything major. This feature worked for a while but then people became complacent with that technology and so the internet video service providers countered back by adding their service to existing products. You can now buy televisions sets and blu- ray players and even all the current gaming systems support some type of online streaming internet video service.
This transition occurred nearly 3-4 years ago and is steadily increasing with every new device that is coming out. However, not to be outdone the cable companies are counteracting this by having specific channels open up their own streaming sites to watch free episodes or like in the case of HBO their entire library of series and movies if you currently have a subscription to the service through an approved cable company.
This is the next strike in the current war for our attention spans. Without consumer demand driving the need for quicker access to digital media this price war would not be occurring.

Critique on "In SIckness and Wealth"

Over all, I believe this article is well stated. I agree with the author in the fact that there is no logical reason to change the euro now. Changing the euro would just cause confusion amongst its users and the people. The real value behind money, whether it be the euro or the dollar or any other currency, will always change based off of the economy. Like the writer states, "...there will be ups and downs in the value of the euro...” I agree with what the author states that there is no true reason to change the euro to any other currency because it has not come to a major failing point in Europe. If catastrophe strikes or if something occurs in Europe that calls for a drastic change in currency, then so be it, however, this is not happening currently. This form of currency the Europeans are using is working perfectly fine. Although there is some economic problems and recessions occurring now that does not mean the Europeans need to change the currency that people have been using all along. If there is an increasingly strong connection between the Euro and recessions or major economic problems, then the time will come where the currency will have to change.

A problem I had with this article is how the author did not state that unlike the dollar the euro supports the economies of many different nations. To change Europe’s currency would mean many nations would need to switch over to the new currency or switch back to its original currency. The reason so many nations have faith in the Euro is because of how many nations the Euro supports. This means that if one nation has a catastrophe or economic meltdown it does not mean the euro will crumble. The thought that Europe would switch away from the euro is insane. It supports and is used by so many nations that changing it would take all credibility behind the idea of the euro. The euro has been sold across Europe as the foundation and currency of all of Europe. Many nations have not bought into the idea of the euro until recently. To change the currency of Europe would not work and it would only result into many different currencies all through out Europe.

Critique on gas prices

Response to the rise in gas prices:

I agree there has been a dramatic rise in gas prices over the past few years. Gas it a vital tool that the American society has become accustomed to in order to function and OPEC can use to their advantage. Because not only is gas used to get people to and from work, it is used to operate machines and generators to make electricity and transport goods from point A to point B.

As describes in blog post, the gas prices are affecting our economy as a whole because the average American family is spending more and more money on not only gas but other goods. Just because the gas prices rise does not mean that clothing or food prices remained static. American families are spending more and more of their paychecks on gas for their cars and food and clothes for their family. The food and clothing cost are rising as well as gas cost because it takes gas to produce clothing and food. For example, take a simple food element like corn. It takes diesel fuel to plant the corn in the field, and much more fuel for the upkeep of the corn. Then, more fuel is needed to harvest and transport the corn to its desired locations. If the good was something such as a cereal, there would be all these things plus the additional cost of running the machines to produce the cereal. Rising gas prices effects the average American family more than one thinks.

In the conclusion of this blog post, attention was brought to the fact that the gas price will continue to rise and a substitute will be needed. I don’t agree that a substitute will be needed, but rather a compromise between the American people and their consumption of gas. In essence, I’m saying that we can’t afford to live the grand lifestyle anymore. America isn’t a super power anymore. Cutting back consumption greatly would be helpful in the price of gas. I understand there’s only so much you can cut back because you might have to take your car to work or school every day. But, it’s time America thought of a public transportation system. Not just on a small scale like in New York, Washington DC or San Francisco, but a large, nationwide transportation system. Until recently, I thought public transportation was probably the worst idea ever thought of, but after spending close to a month in Paris and relying on the bus, metro, RER’s and trains to get me almost everywhere, I began to realize that the more I used them, the better idea they were. Overall, the Parisian government encouraged use of the public transportation system by connecting it to many important places, airports, and Euro train stations across France. Not only did it reduce gas consumption, the environmentalist went crazy for it because it also reduced carbon footprints significantly. If the Americans had the resources and finances for the investment of a similar mass transport system such as a Euro train and an intricate metro system, the need for gas would decrease and there would be no need for a substitute. (Because, let’s face it, gas will be almost impossible to substitute for.)

Critique of "Businesses That Will Be History"

I found this article very interesting to read, especially to see what many of today's economic experts are predicting in terms of big name companies and business that will fold in the next year or two. One company that I was not surprised to see on the list was Blockbuster since I used to frequently rent movies and games from them myself. With the emerging of much cheaper and more convenient options like Redbox, companies like Blockbuster which require memberships and limited locations for rentals and returns are quickly becoming obsolete. This alone is a great example how technology can shift a demand curve and can completely change a market.

Another great example was on the cereal industry and the new mindset of consumers to provide healthier food for their families, especially their children. Healthier cereals like Cheerios and and Corn Flakes are selling more and more, while the "junk food" types of cereal like Corn Pops are less popular than before. I find this interesting because even in my own home my family has shied away from the sugar-filled cereals we used to have when I was growing up. Now our shelves have Cheerios and Raisin Bran instead of Lucky Charms and Coco Pebbles. The health industry has exploded in the past few years with new diets, workout programs, and healthier foods to help combat the growing problem of obesity in our country and it's craze shows no signs of slowing down anytime soon.

One company listed that surprised me a little was myspace. I used to use myspace all the time before Facebook became so popular, but I always assumed that there were still plenty of people using the site, or at least used both Facebook and Myspace at the same time. However I can certainly see that technology also played a huge role in this shift of interest for users, since Facebook has more features, games, and easier ways to find people that you know. It also has found ways to connect to more sites like Skype, another social network that continues to grow in popularity. Even websites for Walgreens and CVS can connect to Facebook when you want to order photo prints by connecting to your albums and allowing you to select photos through Facebook instead of uploading them off of your computer. Facebook continues to find new ways to innovate and improve it's site to help ensure users keep coming back for more.

Critique of Cable and Intranet Market

I am responding the article of Intranet and Cable companies fighting for the television market. The world has advanced and now everytjhing is assessable from the intranet including television. While so many people are still with the cable companies the intranet companies are finding ways to have movies and television shows at the click of the button. With the amount of television and movies that are available to consumers the challenge is getting these shows available to the public in a legal ways. the company Netflix is now avaible on the intranet streaming movies of all kinds. Its also at avery afforadable price of only eight dollars a month. Its hard for cable companies to raise prices with this downward push of the demand for price of cable. More and more people are finding how easy the intranet can access your favorite shows for half the price of cable. The cable comapnies are feeling this pressure by the intranet therfore offering new adcentives with sigining a aggreement with the company. I know DirecTV has promotion if you sign up and get a friend to sign up with their cable both creditied a hundrted dollars on the next bill. Intranet has allowed viewers the felxibility to watch shows and pause them, avoding commercials, and instant access to the remainder of the season. Intranet is already making its way into the televisons sets. Samsung has introduced a new tv with intenetr connection connecting the family to netflix,hulu, and social media networks from your living room. Intranet and cable are subsitutes for eachother, but soon enough with the advances in the new tecnology cable companies could be short lived.

Oil Prices Plunge

            To put in simple words, this article mainly explains the surprising decrease in price when 60 million barrels of crude oil were released from Libya. The whole point of releasing a great amount of crude oil to the world was to decrease the high prices that were being distributed for gasoline to avoid a recession. As consumers are using gasoline in their car daily, the amount of gasoline available is slowly decreasing. When too much is used, the supply of gas will also decrease, which caused an inward shift in the supply curve. With supply shifting inward, demand remains the same and according to the law of equilibrium, the market will adjust itself to meet the equilibrium price which is higher than it was before.

            The same also occurred when the US and their allies decided to release 60 million barrels of crude oil. It is mentioned that we consumed more than that amount in a day but the amount released was enough to cause a decrease in the pricing. This is the total opposite of the earlier case. Because supplies have increased, the supply curve will have an outward shift causing the equilibrium point to be at a lower price, and in this case, the lowest price has been since the four months prior, and according the International Energy Agency, this new price level will help the economy from going into a second recession.

            As we learned in our more recent classes, the price of oil is determined largely by the group OPEC. Only in an oligopoly where everyone can trust one another can they set the price, even though it based on demand. Assuming that the members of OPEC all got together to decide the amount of oil to release and the price to set, this well trusted oligopoly strategized their whole market to ensure that everyone is charging the same amount, therefore; no one will be able to gather all the consumers because of cheaper prices.

            Demand is generally very inelastic with gasoline due to its necessity in people’s lives. Therefore in order to change the price of crude oil, or gasoline, a shift in the supply curve must occur, whether it is inwards of outwards. Also because a second recession is extremely unwanted among the nations, the US and their Allies have decided the best way to decrease the chance of a recession is by increasing the amount of oil being released.

http://www.washingtonpost.com/business/economy/oil-prices-plunge-after-us-allies-announce-release-of-reserves/2011/06/23/AGsANYhH_story.html

-Tien Nguyen

critique on gas prices

First of all the economic relevance of this article is almost perfect for the purpose of this assignment, so listed by Dr. Kassens’ purpose for the assignment instructions. “It is crucial that you are able to apply the concepts covered in the principles course to the world around you.” The reason it is so appropriate is that gas prices affect just about everyone. Especially poor college students who are learning about economics. But commercial drivers and commuters to work and school are affected just as much as these college kids and this blog post makes a not of that and does well to point that out. However there are plenty of alternate energy sources to be used. The problem isn’t scarcity because there are plenty of alternate energy sources, but that oil is such a money making machine that no one will willingly invest in these other sources. I am no expert whatsoever so I read this and am inclined to agree with most of it because I would not know how to contradict it. Explaining about how the prices for gas affect elasticity of supply and demand is very informative and useful information in proving a point about the crude oil market. “I think that if a substitute was found for gas, the overall economy at the micro and macro level would face much less hardship. Businesses would be able to produce more at less cost and households would be able to spend more money on necessities and even leisure items.” I really hope so. I like buying what I want instead of pouring my wallet into my gas tank all the time. This blog post makes very good use of many of the ideas terminology, and concepts that we have been learning about at 8:30 every morning for the past month. I’m sold by reading this article and if someone who read this knew nothing about econ they could probably learn a thing or two. If I had to grade this I would say A to the writer and anyone who read it critically.

Rise In Gas Prices Critique

The rise in gas prices has been an ongoing problem for the past several years. In most working peoples lives, gas is an absolute necessity. I thought that this blog post about the article, Gas Prices Shift by Kris Maher in the Wall Street journal was very interesting and informative because much of what the article is describing relates to topics we have discussed in class. There are no true substitutes for gas, so people are beginning to make budget cuts on other things.
This blog tells that because gas prices are rising, it is ultimately affecting the overall economy and society. The author makes a strong point that because prices are rising, there has been a shift in demand for gas. This relates to what we have most recently learned in class concerning oligopolies and collusion. With perfectly inelastic supply, as demand shifts outward, prices will rise. The same holds true if supply decreases. As supply decreases, the price will increase. Gas companies can ultimately control consumer behavior in order to maximize their profits.
Though I thought this blog was very well done in relation to the newspaper article, I found one strong point in the article that was not discussed in this blog. The newspaper article author makes the point that higher gas prices could affect people that don't drive. Because of the rise in gas prices, The Meals on Wheels program in Canton, Ohio lost 12 volunteers because they couldn't afford to drive. The program that usually serves 2,000 people now can only give one meal a day to some senior citizens who usually are given two meals a day.
This idea that one person's own economic decisions, such as cuts in driving, can affect the overall economy. This idea was learned with Adam Smith's idea of the invisible hand. The invisible hand is the idea that one's private interest can lead to public gain, or in this case with rising gas prices, a loss.
The closing idea in this blog article is that as gas prices continuously rise, there is going to be a demand in a substitute for gas. I think that if a substitute was found for gas, the overall economy at the micro and macro level would face much less hardship. Businesses would be able to produce more at less cost and households would be able to spend more money on necessities and even leisure items.

Can Gold Investors Profit from Apocalypse 2012?

http://www.cnbc.com/id/42253645

Gold has been used as a form of currency for over 6,500 years.  In recent events gold prices have increased dramatically, mostly due to the the economic crisis of 2008.  The price for an ounce of gold has doubled in the past four years.   In July of 2007 the price for one ounce was around $700, today gold prices closed at $1,523 per ounce.  Analysts are predicting that demand will continue to increase causing prices to rise to $2000 per ounce by the end of the year.  Many people invest in gold when the future of the economy is uncertain.  Gold offers protection that the dollar cannot, if the economy were to collapse, the dollar would be about as useful as toilet paper while gold could be used to trade for necessary resources. 

“The current fears of 2012 disaster scenarios are not the only time gold has risen in price. Historically gold has gone up in times of great economic uncertainly, notably during the Great Depression, and more recently with Y2K fears a dozen years ago.”(Suciu)  With fears of the apocalypse coming on December 21^st 2012, now could be the perfect time for investors to buy.  If prices rise to $2000 before 2012, investors can experience a 33% increase in asset value from current prices.  As we approach December 2012, media will spread news of the Mayan prediction causing citizens to fear the possibilities of an apocalypse.  Those who believe, or even fear its possibility, will begin to hoard all the gold they can get.  This hoarding will greatly diminish the supply of gold, and as we know, once the supply curve shifts left, the demand curve and prices rise.  The investor, who purchased their gold with the intent to sell, is now faced with the issue of when to sell in order to maximize profits. 

Without a doubt, the gold investment should be sold before December 21^st, 2012.  Why? When everyone wakes up on December 22^nd and realizes that the sun did indeed rise, they will be eager to sell their excess gold.  This will cause the supply of gold to shift to the right and prices per ounce will plummet.  Even if you believe the world is ending, you should still sell your gold and you can use the profits you made to buy things that may matter during an apocalypse such as extra food, water, and survival gear.  If you don’t believe, you will most likely get a good laugh when you wake up on the 22^nd knowing you just made bank. 

Work Cited

Suciu, Peter. "Apocalypse 2012 — Special Report — What It Is And How People Are Profiting From It - CNBC." Stock Market News, Business News, Financial, Earnings, World Market News and Information - CNBC. N.p., n.d. Web. 23 June 2011. <http://www.cnbc.com/id/42253645>. 

In sickness and wealth

The article explains how the euro is still working and will remain the currency in Europe. The article stated that the value is staying at $1.44 and either staying the same, or increasing. In the month of June the value of the euro, which is $1.44, increased by 8%. If the euro remains popular and continues with increasing values then there is no reason change the form of currency. The euro has been steady and stable for all these years, so it wouldn’t make much sense to change the currency when encountering some troubled times. There will be ups and downs in the value of the euro, but overall in the long term run, the euro will be productive. There is also incentive to continue using the euro when the ECB offers yield advantages to investors who use the euro as currency. The title of the article is, Why the currency markets have not yet lost faith in the euro, and I believe that no body is questioning the euro until it begins to under achieve and come close to its shutdown point. The euro has been the traditional European form of currency and to just up and change Europe’s currency now is just stupid. Just because the world is in a recession doesn’t mean that we leave and change what has been working in the past. Continue to use the euro it has gotten you this far and is a stable and steady value. The form of currency you use is extremely important in life and people need to take pride in the consistency that the value of the euro possesses. I disagree and think that the euro will devalue because of the increase in money supply due to the bailouts. The euro can very easily lead to inflation.

http://www.economist.com/node/18866841

Outsourcing in America

In a small city near San Fransisco, the economic downturn has lead to outsourcing of public jobs within the city. The city of Half Moon Bay decided a few years earlier that outsourcing its public jobs would be an efficient way to cut costs. They first starting with contracting out the cities public works, engineering, lawyers, building inspection, and code enforcement. Recently they decided to contract out for a police department and the recreation department. The police department caused a bigger stir within the community than previous outsourcing. the city first fell into monetary problems in 2007 because of an 18 million dollar settlement over a blocked 83 house development. they needed to cut costs and they realized that the easiest way would be to outsource the cities public employees. Residents and former employees of the city have been hit hard by the news of the loss of their jobs and the outsourcing of those jobs to people who do not even live in the city. however this contracting is a growing trend in cities that are in debt. its an easy fix but doesnt not ultimately solve the problem that is causing the city to be in debt. I feel as if once again people are looking to take the easy way out instead of making the proper changes to the way the actual city is ran. it also shows no loyalty at all to the citizens of the town and could lead to a mass exodus because people do not agree with the actions of the city. although they save money by just contracting out the jobs, they also save money by not having to pay as many pensions. this kind of behavior is unethical and is not the way to treat employees and citizens of the city.

Businesses That Will Be History by 2012

America lives and dies by its competitive market. Each year businesses sprout up and die out as if it were by natural selection. Some companies have the right product at the right price to spark a public interest and others do not. In 2010, the biggest loser of them all seemed to be Blockbuster when the once superpower of the VHS and DVD world filed for chapter 11. Substitutes like Netflix and "public goods" like free viewing of movies and TV shows on the internet drove the powerful chain into the ground. In this globally struggling economy, expert economists have looked at businesses that are showing signs of trouble. It looks as though a few previously thriving businesses may have their number called in 2012.

Saab: The Swedish automotive company showed a budding growth from the 60's to the 90's which attracted GM to buy have its stock in 1989. What has slowed Saab's growth in the European car market was a lack of identity status. Saab does not make very inexpensive, practical, gas efficient cars like Volks Wagon. Nor does it make flashy, fast, luxurious cars like Porshe. Its potential buyers don't see the use in paying plenty for a middle of the pack Swedish car. Cadillac and Chevrolet also stole show as GM's largest players which made it difficult for Saab to develop as a brand.

Myspace: Once the world's largest social network that paved the way for Facebook has been surpassed by its pupil. In 2005 NewsCorp bought the site for $580 million which was considered a steal at the time based on its growth potential. Myspace currently has less than 20 million users whereas Facebook has just over 700 million. Facebook seemed to have more attractive features to a younger hipper group with better online security from unwanted viewers. While Facebook grew Myspace had no answer and now it seems to be a thing of the past.

Kellog's Corn Pops: Moms today are becoming more conscious about what they serve their kids. Kellog's describes this product on the box as "crispy, glazed, crunchy and sweet." It also has high counts of saturated fat and artificial sweeteners that substitutes like Cheerios and Frosted Flakes don't. But what may be hurting this product more than its contents is the high rise of the price of corn. Because corn and Corn Pops are compliments of one another, the price of the Pops rise with the price of corn.

http://finance.yahoo.com/family-home/article/112989/brands-disappear-2012-247

By Mark Manthe

The end of cheap goods?

The article I read was from The Economist and it was titled “The end of cheap goods? Some are predicting the end of the cheap “China price”; others are more sanguine”. This article is about the prices of goods and labor in China. Li & Fung is a large exporter of goods to the United States and Europe; about four percent of China’s exports to the United States are through Li & Fung. The CEO of Li & Fung, Bruce Rockowitz, feels as though the cheap prices associated with goods and labor in China is drawing to a close. He states that China was able to produce these commodities so cheaply was due to the death of former leader, Mao Zedong, and the unification of the country again. With the re-opening of southern China companies were able to come in and obtain land and labor at relatively no cost. Due to these low costs of production and close proximity to Hong Kong, a very large port for the exporting of goods around the world, production and exporting were made very simple. The article goes on to discuss an electronics fair and a graph on how the prices of electronics are falling. The article finishes with the quote “Chinese firms were curious about any product that lowered costs or made it easier to automate. When labor was cheap, Chinese firms used it inefficiently. Now they are learning how to get more from fewer hands.” My critique is that I would agree with the idea that the “cheap prices” in China are drawing to an end, of Mr. Rockowitz. Using what we learned in class we saw that a shift in demand causes a shift in prices. In the article they mention that there is “a wave of new demand, especially from China itself” and it “is feeding a surge in commodity prices”. Also they mention that the wages in China are increasing, which is most likely the cause of this increase in demand in China. Finally, with the increase in wages the Chinese will probably replace inferior goods with normal and even luxury goods.

http://www.economist.com/node/18805862

When In Rome

Everyone is well aware of the birth, rise, decline and eventual crash of the Roman Empire. The Roman Empire fell for many reasons such as military corruption, a decline in overall morality of the Roman citizens and a government that cannot function properly under the great expansion Rome was undergoing at the time. But, the most curtail reason why the government failed was due to lack of economic knowledge the Romans possessed. (http://www.angelfire.com/darkside/sjhscult/notes/unit1/fall_rome.htm)

Background: Towards the end of the Roman days, the Romans relied more and more on foreign goods and taxes were extremely high for some while some were not even taxed. Finally, one of the biggest things is the way Rome fell was the choice of the people by hording money. Although not mentioned in detail by the article, a look at this hoarding of money can easily destroy an economy based on the principles of the circular flow chart. (http://ancienthistory.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=ancienthistory&cdn=education&tm=11&gps=39_12_1280_705&f=11&tt=2&bt=1&bts=1&zu=http%3A//web.archive.org/web/20040411190830/http%3A//www.acs.ohio-state.edu/history/isthmia/teg/Hist111H/issues/rome1.html) (http://ancienthistory.about.com/cs/romefallarticles/a/fallofrome_3.htm)

So…What’s up?: Yeah, I know, what a great story about the Romans right? But how does that even apply to economics or even the United States today? Well, towards the end of the Roman Empire, Rome was expanding far too fast for the Roman economy to handle, so they began importing many goods. In my opinion, the excessive import of foreign goods can cripple and severely damage an economy. Think about it, the US is possibly the most insufficient country because we rely on food, clothing, housing materials and much more shipped from halfway across the world. At first it seemed like a cheap and easy answer to become the super power of the world, but today and in recent years, it has crippled the economy by sending jobs overseas. In Ancient Rome, I’m sure this is what happened slowly causing Rome to fall.

Another reason of why the Romans fell was the fact that the citizens were hoarding their gold coins in there house instead of spending, investing or paying taxes with them causing a hiccup in the circular flow. The circular flow chart is a chart of economic activity that looks at both houses and firms. (The producing and consuming units.) The circular flow chart can be in many different forms, but this basic structure is the same all around. On one side there are households and on the other there are firms. In between there are foreign markets, the government, and banks. The firms provide the households with wages, and the households many put them in the bank, pay taxes to the government, or buy goods and services from the firms. The flow of money keeps in the economy so it may grow and sustain itself. Any disturbance in this flow can throw this cycle off and cause depressions, recessions, inflation and disequilibrium. It seems almost too easy to keep this flow going. Just put your money in a bank, invest it, spend it or pay taxes with it. The best example to equate with today’s society is the fall of 2008 with all the toxic assets and the increased gas prices. People became scared and stopped spending money. This is also most likely what happened in Rome.

Based on what is known about the American and Roman economy, could America come crashing down just like the Romans did thousands of years ago?

Globalization effect of the Economy

Globalization is a mixture of interactions between people and the exchange of goods or integration of foreign ideas to bring everyone closer together. This is accomplished by people, companies and governments of different nations and is driven by international trade. Globalization affects everything. It affects the environment, different cultures, political agendas or ideas, economics and human rights and development on a global scale. While it seems like a modern idea and brand new phenomenon, globalization has been around for quite a while. While globalization seems like it is great and the solution to making the world run like a well oiled machine, it is extremely controversial. Some advocates of globalization argue that globalization allows underdeveloped countries to begin developing and vastly increase their standard of living and increase the country’s wealth. Opponents of globalization see it as a kind of scam coming out of the western world. They feel as if an international free market only benefits western superpowers and western corporations and exploits other governments, and cultures. Globalization is responsible for major increases in worldwide trade and exchanges. These increases are made possible by ever increasingly open and borderless international economies. There has been tremendous growth in trade and exchanges, not only in international trade in goods and services, but also in exchanges of national currency, in capital movements and investments, in technology transfer, people moving through international travel and migration, and in international flows of information and ideas. The rise of the modern world has probably had the largest impact on globalization. Never before has humanity been able to travel so quickly and freely to other countries. We don’t really even need to do that anymore. It used to be impossible to do business or make trades with other nation’s economies without having to travel there. With advancements in communications and technology, these transactions can take place instantly electronically without both parties even having to leave a building, much less cross international borders. It is for reason such as these that the world economy has expanded and will continue to expand due to globalization. As long as globalization continues with the extremely rapid spread of ideas and technology, national economies will continue to come closer together.

http://www.globalization101.org/What_is_Globalization.html