http://www.reuters.com/article/idUS153876824720100526
Summary
Apple has been pressuring music labels to refrain from participating in Amazon’s MP3 Daily Deal promotion by lowering the market support in their iTunes store for any albums that are featured in Amazon’s promotion. This promotion features new music that is on sale on Amazon one day prior to the album’s official release. iTunes controls 28 percent of the market for digital and physical sales in music retail, while both Amazon and Wal-Mart controls 12 percent each. Apple controls 70 percent for digital downloads in the U.S. and Amazon controls only 11 percent of the market. With Apple dominating as being the top music store, the Justice Department may decide to put Apple out for regulatory oversight. The influence of Apple in the music industry questions whether it holds a monopoly in music retail.
Connection
In this chapter, the concept of monopoly is discussed. A monopoly is when there if only one seller or firm in an industry. Because there is only one seller, they have control over the price of the good or service provided. Since Apple have an immense influence over the music business, it could easily abuse its power in pressuring music labels to only use iTunes as a mean of market support. The textbook also mentions how a firm may still have competition even if it is a monopoly. As mentioned in the article Apple has competition such as Amazon and Wal-Mart. Government usually operate and oversee monopolies; however Apple is a corporation and is privately owned.
Reflection
I think how Apple Inc.’s strategy of lowering their market support for albums in their iTunes store in order to pressure music labels to not participate in Amazon’s MP3 Daily Deal is unfair since music labels are trying to promote the albums so consumers will purchase the albums when they are released. In the article it mentions how the Justice Department should force Apple to make iTunes and iPod be interoperable with other devices and software that are not by Apple. By doing that consumers would be able to purchase similar devices at cheaper prices and still be able to sync with their iTunes library. I doubt Apple would be willing to do this since several companies are competing for the consumer’s dollar. Hopefully Apple will stop their practices of restricting music labels to exclusively use Apple for market support; otherwise, the Federal Trade Commission may intervene.
Sunday, June 13, 2010
Tuesday, April 27, 2010
Chapter 8 Blog- IMF makes public debt warning
http://ca.news.finance.yahoo.com/s/20042010/24/f-afp-imf-makes-public-debt-warning.html
Summary
The stability of the global financial system is being threatened by the rising public debt. The International Monetary Fund said that the risks to global financial stability are limited as the economy began to recover. Concerns over the advanced sovereign risks could hurt the stability gains and cause the collapse of credit for a period of time. During the economic crisis, the debt grew since governments had to bail out some banks, pay for unemployment benefits and economic stimulus programs. Greece was on the verge of bankruptcy; therefore the government had to increase taxes and cut spending to decrease the state debt. Even though a full-blown depression has been avoided, there are still risks since the economy is still recovering.
Connection
In the text book, public debt is defined as the money owed by the government. Money had to be borrowed in order to help the country as what it said in the article when government needed money to pay for unemployment benefits. When Greece had to increase tax rate in order to finance government borrowing, then this will cause tax disincentives. Individuals will earn lower incomes and if they have lower incomes then they would be spending less, resulting in a lower level of GDP. If a large amount of money has been borrowed, it would take a long time for the money to be paid off. The burden of paying off the debt is shifted to future generations even though they did not borrow the money.
Reflection
With the rising public debt, I wonder how the government plans to pay off the debt. Even though it was used to bail out banks, pay for unemployment benefits and projects to help the economy, does it actually help in the long run? Since there are some negative effects to borrowing money such as not being able to pay it off and allowing future generations to deal with the issues, there are the citizens too. They would be concern over the amount of money that is being borrowed and with a large public debt they could lose confidence in the government. Hopefully the public debt will be paid off soon and the global financial system will be stable.
Summary
The stability of the global financial system is being threatened by the rising public debt. The International Monetary Fund said that the risks to global financial stability are limited as the economy began to recover. Concerns over the advanced sovereign risks could hurt the stability gains and cause the collapse of credit for a period of time. During the economic crisis, the debt grew since governments had to bail out some banks, pay for unemployment benefits and economic stimulus programs. Greece was on the verge of bankruptcy; therefore the government had to increase taxes and cut spending to decrease the state debt. Even though a full-blown depression has been avoided, there are still risks since the economy is still recovering.
Connection
In the text book, public debt is defined as the money owed by the government. Money had to be borrowed in order to help the country as what it said in the article when government needed money to pay for unemployment benefits. When Greece had to increase tax rate in order to finance government borrowing, then this will cause tax disincentives. Individuals will earn lower incomes and if they have lower incomes then they would be spending less, resulting in a lower level of GDP. If a large amount of money has been borrowed, it would take a long time for the money to be paid off. The burden of paying off the debt is shifted to future generations even though they did not borrow the money.
Reflection
With the rising public debt, I wonder how the government plans to pay off the debt. Even though it was used to bail out banks, pay for unemployment benefits and projects to help the economy, does it actually help in the long run? Since there are some negative effects to borrowing money such as not being able to pay it off and allowing future generations to deal with the issues, there are the citizens too. They would be concern over the amount of money that is being borrowed and with a large public debt they could lose confidence in the government. Hopefully the public debt will be paid off soon and the global financial system will be stable.
Thursday, April 8, 2010
Chapter 5 Blog- Bernanke: Housing, jobs biggest economic hurdles
http://www.google.com/hostednews/ap/article/ALeqM5gQ6iVGh2tkgdbkyaZBrqeP-BqpdwD9EUEIE81
Summary
Due to the recession, high unemployment and problems in the housing market is the main economic issue that the United States is facing. The economy seems like it has stabilized and is improving, but many Americans are still unemployed. Not a lot of people are being hired even if the number of people being layoff has decreased. Unemployment is at 9.7 percent. Federal Reserve Chairman Ben Bernanke said he has not seen a recovery in the housing market (foreclosures keeps increasing). Bernanke believes that record-low interest rates should help with the recovery of the economy, but it will not quickly increase the employment rate. He will have to decide when to increase the interest rates and if done too soon, it will disrupt the recovery of the economy. Inflation may occur if he waits too long.
Connection
Chapter 5 focuses on unemployment. It lists the many types of unemployment. Becuase of the recession, demand-deficient unemployment could be a possibility of the recession. Many people are spending less money on goods and services since there was a high rate of unemployment during the recession. Even though the economy seems to be stabilized, many Americans are still without jobs. When the consumers are not spending money on goods and services, then employers will not need as many employees to work because of the lack of demand for the goods and services, which leads to many people being layoff. This also causes sales in several businesses to be reduced.
Reflection
As the country recovers from the recession, businesses may improve and people will be able to find jobs. Then consumers will be able to spend more on goods and services which will increase the level of spending. This will allow an increase in the number of jobs available and the unemployed will be able to find jobs. I agree with the article when it said that Bernanke will need to consider when it would be a good time to increase the rate because if the rates were increased too soon, then those who were unemployed during the recession will not be able to find jobs quickly. If he waited too long to increase the rates, inflation may occur because the demand of the goods and services will increase which causes the prices to increase too. When the economy finally improves, people will be able to find jobs and spend in order to create the need for more workers in businesses.
Summary
Due to the recession, high unemployment and problems in the housing market is the main economic issue that the United States is facing. The economy seems like it has stabilized and is improving, but many Americans are still unemployed. Not a lot of people are being hired even if the number of people being layoff has decreased. Unemployment is at 9.7 percent. Federal Reserve Chairman Ben Bernanke said he has not seen a recovery in the housing market (foreclosures keeps increasing). Bernanke believes that record-low interest rates should help with the recovery of the economy, but it will not quickly increase the employment rate. He will have to decide when to increase the interest rates and if done too soon, it will disrupt the recovery of the economy. Inflation may occur if he waits too long.
Connection
Chapter 5 focuses on unemployment. It lists the many types of unemployment. Becuase of the recession, demand-deficient unemployment could be a possibility of the recession. Many people are spending less money on goods and services since there was a high rate of unemployment during the recession. Even though the economy seems to be stabilized, many Americans are still without jobs. When the consumers are not spending money on goods and services, then employers will not need as many employees to work because of the lack of demand for the goods and services, which leads to many people being layoff. This also causes sales in several businesses to be reduced.
Reflection
As the country recovers from the recession, businesses may improve and people will be able to find jobs. Then consumers will be able to spend more on goods and services which will increase the level of spending. This will allow an increase in the number of jobs available and the unemployed will be able to find jobs. I agree with the article when it said that Bernanke will need to consider when it would be a good time to increase the rate because if the rates were increased too soon, then those who were unemployed during the recession will not be able to find jobs quickly. If he waited too long to increase the rates, inflation may occur because the demand of the goods and services will increase which causes the prices to increase too. When the economy finally improves, people will be able to find jobs and spend in order to create the need for more workers in businesses.
Monday, March 1, 2010
Chapter 7 Blog- New Buying Power, Despite the Economy
http://www.nytimes.com/2009/11/29/us/29sfbarter.html
Summary
During the recession near the end of 2009, many people have lost their jobs, including Jeff Horwitz, a building contractor from Campbell. Because of the recession, Horwitz has decided to use the barter system to keep himself employed. For about a decade, he has been using the barter system for his services and since the recession, he estimated that 30 percent of his business consisted of bartering. Even though the barter system was a form of business exchange from a long time ago, the usage of it had increased. Websites such as Craigslist and groups like International Monetary Systems became more popular. Steven Tadelis had said "Because of our lack income and our inability to get long-term credit at reasonable rates, we can't use the normal market. By me offering a service that you accept, we are creating value." Internet has become the medium for bartering; many people are looking for swaps with others.
Connection
At the beginning of chapter 7, the textbook explains the problems associating with the barter system, even if it is used occasionally in this economy. It states that when one has an item to trade, they would have to find someone willing to trade with them which may not be easy to do. Even though the textbook said that the barter system would not work efficiently in our advanced economy, there would be exceptions when the economy is not doing very well as stated by Horwitz "Anything is better than nothing. I take my profit in trade." Another reason why the barter system might not work which is listed in the book is divisibility. It would be difficult for several people to determine the value of an item if they do not come to an agreement and someone may want the item to be divided up while the other party may not agree to it. Then how would they agree whether the trade is fair or not?
Reflection
I agree with the textbook that the barter system will only work in a less-industrialized economy since the workers are self-employed and many of the items are made by themselves. When one has an item of a greater value, it would not be easy for them to find something that is of equal value to be exchange with. Sometimes when you want an item, the other person may not have a desire for what you have to offer; therefore, limiting the exchange that may take place. Bartering would work when both parties come to an agreement to the trade, but in the end it would be money that is easily accepted for the value of the item and it generates wealth for the economy.
Summary
During the recession near the end of 2009, many people have lost their jobs, including Jeff Horwitz, a building contractor from Campbell. Because of the recession, Horwitz has decided to use the barter system to keep himself employed. For about a decade, he has been using the barter system for his services and since the recession, he estimated that 30 percent of his business consisted of bartering. Even though the barter system was a form of business exchange from a long time ago, the usage of it had increased. Websites such as Craigslist and groups like International Monetary Systems became more popular. Steven Tadelis had said "Because of our lack income and our inability to get long-term credit at reasonable rates, we can't use the normal market. By me offering a service that you accept, we are creating value." Internet has become the medium for bartering; many people are looking for swaps with others.
Connection
At the beginning of chapter 7, the textbook explains the problems associating with the barter system, even if it is used occasionally in this economy. It states that when one has an item to trade, they would have to find someone willing to trade with them which may not be easy to do. Even though the textbook said that the barter system would not work efficiently in our advanced economy, there would be exceptions when the economy is not doing very well as stated by Horwitz "Anything is better than nothing. I take my profit in trade." Another reason why the barter system might not work which is listed in the book is divisibility. It would be difficult for several people to determine the value of an item if they do not come to an agreement and someone may want the item to be divided up while the other party may not agree to it. Then how would they agree whether the trade is fair or not?
Reflection
I agree with the textbook that the barter system will only work in a less-industrialized economy since the workers are self-employed and many of the items are made by themselves. When one has an item of a greater value, it would not be easy for them to find something that is of equal value to be exchange with. Sometimes when you want an item, the other person may not have a desire for what you have to offer; therefore, limiting the exchange that may take place. Bartering would work when both parties come to an agreement to the trade, but in the end it would be money that is easily accepted for the value of the item and it generates wealth for the economy.
Thursday, January 21, 2010
Chapter 4 Blog- Trustees fear spending cutbacks
http://www.leaderpost.com/news/Trustees+fear+spending+cutbacks/2340806/story.html
Summary
The provincial government are being worn by the Saskatchewan school board to not cut the funding for education from kindergarten to grade 12 since the school board is not able to set property tax rates. In order to reduce Saskatchewan’s dependence on property taxpayers to fund education, the government set province wide property tax and carry on more cost for school through their general revenue. This increased the province’s share of school funding from 51% to 63%; however, it also caused an education property tax cut for 2009. By 2010, the province has plans to reduce the property tax rate so taxpayers could save $53 million. Both the provincial government and the school board are planning a long term funding formula in order to replace the grant system.
Connection
In chapter 4, it mentions some of the responsibilities of the provincial government, including education and how the provincial government is restricted to collect direct taxes. Education is now a large portion of government spending and many people feel that the government should spend more money on education. School boards are not able to impose or collect taxes which is why they would not be able to set tax rates but they would need to ask for a certain amount of money from the property tax that is collected. Because education is the second most important provincial program (according to the textbook), government is spending more to provide an education for students.
Reflection
I think that the provincial government providing more funding for education will definitely benefit the students for a better education. In the article, it said that if the school board does not receive adequate funding for the schools, they would have nowhere to receive funding. This made me consider whether or not the government should come up with other ways to provide more money for education. I agree that the government should increase the spending on education, but by doing that, it would cause higher tax rates for property tax. It’s confusing how the article mentions that they would plan to increase the province’s share of education funding and decrease the property tax rate at the same time. Would they increase other taxes to have enough money? If they did then tax payers may not be happy with paying more taxes for other services.
Summary
The provincial government are being worn by the Saskatchewan school board to not cut the funding for education from kindergarten to grade 12 since the school board is not able to set property tax rates. In order to reduce Saskatchewan’s dependence on property taxpayers to fund education, the government set province wide property tax and carry on more cost for school through their general revenue. This increased the province’s share of school funding from 51% to 63%; however, it also caused an education property tax cut for 2009. By 2010, the province has plans to reduce the property tax rate so taxpayers could save $53 million. Both the provincial government and the school board are planning a long term funding formula in order to replace the grant system.
Connection
In chapter 4, it mentions some of the responsibilities of the provincial government, including education and how the provincial government is restricted to collect direct taxes. Education is now a large portion of government spending and many people feel that the government should spend more money on education. School boards are not able to impose or collect taxes which is why they would not be able to set tax rates but they would need to ask for a certain amount of money from the property tax that is collected. Because education is the second most important provincial program (according to the textbook), government is spending more to provide an education for students.
Reflection
I think that the provincial government providing more funding for education will definitely benefit the students for a better education. In the article, it said that if the school board does not receive adequate funding for the schools, they would have nowhere to receive funding. This made me consider whether or not the government should come up with other ways to provide more money for education. I agree that the government should increase the spending on education, but by doing that, it would cause higher tax rates for property tax. It’s confusing how the article mentions that they would plan to increase the province’s share of education funding and decrease the property tax rate at the same time. Would they increase other taxes to have enough money? If they did then tax payers may not be happy with paying more taxes for other services.
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