If Canada found itself in a situation where it was no longer competitive with the US we would need to take action to solve this problem. “No longer competitive” means that someone could get the same products made elsewhere for cheaper or more efficiently. They could hire workers in the US for the same or lower amount of money and get their goods produced. Any goods that are produced in this uncompetitive version of Canada are done so at high cost and so must be resold at higher cost. This is obviously not good.
As discussed previously Canada has a floating exchange rate. So if this situation arose one possible solution would be to devalue our currency. This means getting more Canadian dollars on the market so that they are worth less. This means that the average Canadian worker does not see a change in the amount of money that appears on their paycheck(nominal wage) but the value of that money is actually less(real wage). So as the real value of Canadian dollars gets lower, Canadian goods become cheaper and people buy our stuff.
With a fixed currency like the Euro this is not an option. Greece cannot devalue its currency because it does not control it. So as Greece tries to recover from its problems it must find a way to become competitive in the Euro and world markets. They need to grow their GDP but they have no way to reduce the real wages in the country. This of course means that they are going to have to reduce real and nominal wages. This means that people have to take actual pay cuts. As you can imagine it is alot easier for a government to devalue a currency than to tell people they are all taking a pay cut. People are not too happy about it, obviously.
I am sure there will be much more to say. The EU has recently decided to setup a massive a financial safety net, I have not read all the details so that will maybe be discussed in the future.
I am pretty sure that is an ad for Ironman 2: The movie, Ironman 2: The movie: The Game, Xbox 360 and Norton Internet Security all rolled into one. This kind of blew my mind. Please notice that the Ironman in the ad has a different hand laser thing. I am guessing they customized this to match the norton colour scheme. So very sweet.
Kafkaesque. You may have read this term from time to time and wondered what it meant. In most cases it means whoever is using it is trying to sound smart but in some cases it is totally appropriate. Franz Kafka is a German/Czech writer from the late 1800/early 1900s. He was known for his plain language description of surreal and confusing situations. He wrote a story about a man that was accused of a crime in a story called The Trial. For the entire story the man tries to work his way through the insanely elaborate and confusing legal system. In the end he does not find out what he is accused of, only that he is guilty and is sentenced to death. (Spoilers are allowed for stories written in 1925, sorry.) Sometimes I feel like Kafka’s stories were prophetic rather than stylistic.
What is going on in Greece? Lots of things. There are so many articles on the situation in Greece that I thought it would be a good idea to add to the noise with my own little bits of information. Before we can ask what is happening in Greece I think we need to understand what the Euro is exactly. Yes, it’s the EU’s currency. That is easily understandable. What is not clear to many is people is why the EU members chose to adopt a common currency in the first place. There are advantages and disadvantages to doing this and when the Euro was adopted all the members obviously decided that the benefits outweighed the shortcomings and the world got the Euro. A common currency has:
– Resources that are normally used to convert currency between countries that do a lot of trade can be used in more productive ways. This saves all the currency conversions that would need to take place everyday as goods/services moved from country to country. Trade goes up!
– Stable monetary policy. In Canada since 1991 we have enjoyed very stable monetary policy. Our central bank shoots for a 2% inflation target and has been able to keep it close. Smaller countries with less stable governments or central banks do not enjoy this same privilege. High inflation or unstable monetary policy in general leads to an unpredictable market. Investors don’t like unpredictable and so they stay away. With one central bank to control policy for all EU countries the idea was that it would bring stability.
– Purchasing power. Since the market using the currency is larger it creates a larger market for goods/services to be sold in. This is supposed to lower prices.
– No floating exchange rate. Floating exchange rate is what Canada has. Our dollar can move against the US dollar and all other currencies in the world as people feel our country is more or less desirable for investment or they want more/less of our goods.
– No national monetary policy. In Canada, the bank of Canada decides how much money to print. Meaning that they control inflation. With a common currency like the Euro all members of the union must agree that they want the same level of inflation. Imagine if Canada and the US started using some new common currency, let’s call it the Loonback. A bank would be set up to give out the Loonback at a certain rate. Right now Canada sets a 2% inflation goal, the US has no official target other than to keep prices stables. The Loonback bank would need to have some policy that makes both countries happy. This can be a good thing but if one country finds itself in a situation where it needs to devalue its currency and can’t, bad things can happen.
More on this in the near future. I promise not all posts on this site will be this boring.
Yes, I could. But then Facebook would know way too much about me. My friends, all their hobbies, their likes, what they had for breakfast… Way too much information for a company that has admitted that they have no problem sharing all your information with whatever other company wants it. Instead I choose to use a personal website. Not as social I know. I will not accumulate a list of 500 people I kind of know and once a year I will not get 50 people I have met once in my life wishing me a happy birthday.
I would like to think that because I have to put the extra effort(not alot, WordPress makes it really easy) of running this site myself that maybe content will be a little more meaningful than letting people know that I am kind of thirsty right now and my left foot is kind of sore. I am hoping that if I try to produce decent content that maybe I can get some decent responses.
If Facebook ever senses that the end is near and begins to release all the photos and personal information people thought were private, it’s going to be a pretty crazy time.
Remember that you can be friends with someone without knowing what they are doing every single moment of every single day. Maybe you will have something to talk about when you actually meet them in real life.