Sunday, November 25, 2007
Tuesday, November 20, 2007
Shock Treatment
There have been two major oil spikes in history during 1973 and 1979. It was caused due to the Petroleum Exporting Countries limiting the oil shipments hoping to manipulate the price of world oil. Higher oil prices damaged the economy since it acted as a tax increase. With consumers paying an increased price for oil, people start demanding for higher wages. This causes businesses to lower their profit margins leading to people getting laid off. Although economists say this hasn’t been a problem in the present time. Oil is a portable form of energy used in most purposes, but now it is used less frequently. There are new and better methods of energy production, thus our dependency on oil has decreased immensely. This is the reason why an increase in oil prices will have a lower impact on the economy than if it would have fluctuated a few years ago.
Oil is a scarce resource that people need in order to do daily activities in their lives. Being the only fuel to power cars, it’s in great demand making it something valuable that the Petroleum Exporting Countries can manipulate the price of. The higher the price they cause it to be, the more people get deterred from buying a greater amount of it. As the price increases, the demand decreases. Also, this affects the choices of some people since the more money that they put into purchasing car fuel; the less they have to spend buying food, clothing, and other items. The rising oil prices changes the attitudes of people towards the way they spend there money on other products.
I think that the economists are correct saying that the demand for oil is less now a days; a reason the economy hasn’t been impacted greatly by the rapid increase in oil prices. With technological advancements, substitutes are created that are more energy efficient, reducing the necessity of oil. I can also see this happening as people are reducing their use of technology that requires oil to operate. Another thing happening is people conserving gas, by carpooling or reducing the amount of driving by shopping at nearby groceries. Overall, as long as gas is affordable for people to use for their cars, then the economy should be fine since there is technologically development in reducing our dependency on oil.
http://www.economist.com/finance/economicsfocus/displaystory.cfm?story_id=10130655
Oil is a scarce resource that people need in order to do daily activities in their lives. Being the only fuel to power cars, it’s in great demand making it something valuable that the Petroleum Exporting Countries can manipulate the price of. The higher the price they cause it to be, the more people get deterred from buying a greater amount of it. As the price increases, the demand decreases. Also, this affects the choices of some people since the more money that they put into purchasing car fuel; the less they have to spend buying food, clothing, and other items. The rising oil prices changes the attitudes of people towards the way they spend there money on other products.
I think that the economists are correct saying that the demand for oil is less now a days; a reason the economy hasn’t been impacted greatly by the rapid increase in oil prices. With technological advancements, substitutes are created that are more energy efficient, reducing the necessity of oil. I can also see this happening as people are reducing their use of technology that requires oil to operate. Another thing happening is people conserving gas, by carpooling or reducing the amount of driving by shopping at nearby groceries. Overall, as long as gas is affordable for people to use for their cars, then the economy should be fine since there is technologically development in reducing our dependency on oil.
http://www.economist.com/finance/economicsfocus/displaystory.cfm?story_id=10130655
Wednesday, October 3, 2007
TD Bank Buying Commerce Bancorp for $8.5B US
The rise of the Canadian dollar compared to the United States opened a great opportunity for the TD Bank Financial Group to make a move expanding across the border. They bought the Commerce Bancorp Inc. for $8.5 billion US. The company has over 460 branches and over 15,000 employees. TD Banknorth in New England is already owned by TD. This will be their second major acquisition outside of the nation. The acquisition of the Commerce Bancorp Inc. makes it the seventh largest bank in North America expanding the network to 2,000 branches. The contract will be officially agreed upon during next year March or April.
The acquisition made by TD Bank relates to quite a lot of things in Chapter 1. Opportunity cost is an important factor. $8.5 billion US is a lot of money which TD can invest in a variety of different areas yielding different results. Also, they sacrifice a lot of time in order to make this transaction possible. It isn’t something that is decided in a day, but something that takes several weeks or even months. The opportunity cost in this is that they can spend the time on other projects. TD Bank is a company of services; they require labour resource in order to function and with the acquisition of Commerce, they are going to acquire 15,000 more employees to help them be successful.
I think TD is making a good decision in expanding their branches across the nation. The easy accessibility of the banks may attract more people; for vacationers to travel anywhere across North America to easily withdraw money when required. It’s really misfortunate to have a lack of money during a road trip, but with TD Bank’s widespread it’s way easier. Not to mention that people won’t have to carry all of the cash with them. Overall, I think it was a good decision that has been carefully analyzed or else they wouldn’t have made the deal in the first place. In the future they will probably benefit greatly from this acquisition.
http://www.cbc.ca/money/story/2007/10/02/tdbankcommerce.html
The acquisition made by TD Bank relates to quite a lot of things in Chapter 1. Opportunity cost is an important factor. $8.5 billion US is a lot of money which TD can invest in a variety of different areas yielding different results. Also, they sacrifice a lot of time in order to make this transaction possible. It isn’t something that is decided in a day, but something that takes several weeks or even months. The opportunity cost in this is that they can spend the time on other projects. TD Bank is a company of services; they require labour resource in order to function and with the acquisition of Commerce, they are going to acquire 15,000 more employees to help them be successful.
I think TD is making a good decision in expanding their branches across the nation. The easy accessibility of the banks may attract more people; for vacationers to travel anywhere across North America to easily withdraw money when required. It’s really misfortunate to have a lack of money during a road trip, but with TD Bank’s widespread it’s way easier. Not to mention that people won’t have to carry all of the cash with them. Overall, I think it was a good decision that has been carefully analyzed or else they wouldn’t have made the deal in the first place. In the future they will probably benefit greatly from this acquisition.
http://www.cbc.ca/money/story/2007/10/02/tdbankcommerce.html
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