Well, the crisis was averted and the US was saved from defaulting on its finances, so what does that mean? In short, it means the US can now borrow more money to fix its problems. A rather backward way of thinking about getting out of debt if you ask anyone in finance. The easy way of saying this is that the US will borrow up to 4 trillion more dollars to cut 2 trillion from its deficit and eventually bring its debts down to a manageable level. The issue here is the root of the problem was borrowing and in order to right themselves they have to dig a bigger hole. As you might imagine, this has banks wondering how the US will go about fixing the many problems it has and had before the great debate about defaulting.
I won't lie and say I was surprised by the fact that the US voted on a plan before the deadline came. What I will tell you is that, if anything, the events that took place show just how badly a country can dig itself in and just how bad the world economy is right now. If you look a little further back into the news you'll find several stories about US expenditures that would lead you to think that almost every American citizen is on a non-stop shopping spree with Daddy’s credit card. The housing crisis, for example, saw the entire economy brought to its knees—and I don't mean just the American economy, I mean the world economy, with its borrowing against borrowing and playing a sort of shell game moving money around. The ripple effect around the globe was banks closing and merging in order to survive and even some raising rates in the hopes it would blow over. Take Britain as an example; the people of Britain were told their tax money would be used to bail out major banks and to stabilize the country's economy. The problem was that the banks ended up giving themselves pay raises and not stabilizing the economy fast enough. If you’re going to line your pockets with other people’s money, make sure no one knows. Let's face it, what they did was legal embezzlement.
So why should we care? Well, our economy is a global economy; nations are tied to each other and rely on each other for trading to exist. The major issue with Canada's economy is that it relies so much on our American friends. While recent efforts have been successful at establishing free trade with Europe, we are still not in any better shape to stabilize our economy. The fact is that some of those countries are in worse, or just as bad, shape as the United States; places like Spain where over-spending habits led to a decrease in their credit rating and in turn, a spike in interest rate,s as well as decreases in investments. Another country is Greece who has been overspending for so long they will have to sell off property to stabilize themselves. While Canada has been safe so far, we are not out of the woods yet.
Take the average Canadian in the 1960s for a moment and look at their spending: chances are, they often saved and bought very little. Granted they had fewer needs, but the lesson they kept in mind was "I don't care about keeping up with the Joneses". Now today's average Canadian is completely different and loves to spend money and use credit like money and saddle themselves with debt to meet and exceed the Joneses. We have taken a lesson from some of these debt ridden countries that spend and spend with no thought to the fact that at some point you have to pay back credit. The only upside to the fact that the average Canadian is saddled with debt is the fact it has kept interest rates low, because let's face it, if your interest rate on your credit card went up you might not even be able to pay off the interest, let alone the principal. This effect has also allowed housing rates to stay low as well so people will buy more housing and help stabilize the housing market. The problem is buying a house and paying month-to-month means you still have a huge debt to pay off and thus paying it off faster is always a good idea. People often get into the habit of saying "what does it matter if I have a mortgage payment? It's better than paying rent." Very true, but it's still debt. If it didn't work for Greece, why would it work for you?
So what does the future hold for the US, Canada, and possibly the world in terms of money? Well, the best we can do is hope that spending is kept to a minimum and paying down debt is a priority for many. The United States may have averted a depression, but still may lose its credit rating anyway because they didn't cut enough out of their spending habits to make anyone want to invest in them. Also, it sent shock waves around the globe that the world will not tolerate and even the American people won't tolerate anymore. The fact is we are all tied to the economy in some way or another, from the highest of government officials down to the lowest of beggars on the streets, and we'll all need to change our ways to improve life from here on out and make it easier for future generations to build. We'll need to reinstate values of saving that Canada was once known for, and we'll need to make sure that our American friends understand that they too must change and trim down their spending. The best way to help right now is to lead by example, show everyone that while that brand new car might be nice and that new government building may be shiny, it will cost money over time, and it will be money we can never get back.
Friday, August 5, 2011
Tuesday, April 19, 2011
The World in a hand basket
So it has been a long time since I had a chance to write about anything on here, it's been a busy time. So let's catch up a bit and go back to when we started to hear about Sudan. Before all the current stories you see there was a huge out cry in Sudan for voting to make a new country and split this country into two new nations. After the election everything there kinda went silent, a little odd if you ask me seeing that nothing has come of that situation in the news for some time. After that we moved to Egypt where in the news it was a similar state of affairs as Sudan in the sense that a new government was going to happen; in this case without the voting process and without George Clooney to back it.
The Egyptian government in the end was over thrown and now is busy piecing in self back together when another country decides it's government has been in power for far too long, about 30 years too long. The country is Lybia, and the leader Muammar Gaddafi who at one point was a military member. So, there is an uprising which ends up being very very bloody. The difference between Egypt and Lybia however is the fact that Egypt had a more peaceful uprising, but also the leader of that country wasn't brought into power through war. What you might not know about Muammar Gaddafi is that he has been a colonel in his country's military and that he staged a Cout D'etat against that government. The Cout removed the at the time king of Libya and began a 42 year rule that saw people jailed or killed for things like speaking another language or speaking out against the government.
Now when NATO is trying to enforce a now fly zone and stop protestors from being jailed or killed the world is shocked that this man has not given up power. The issue here is that Gaddafi came into power through war and will, as we have seen, leave through war so it is unlikely that he will simply hand back a government he has had for 42 years. Really what needs to happen here is to have NGO's go in and help where they can.
Now I know what your saying " isn't NATO doing that already?" the fact is that NATO is setting up no fly zones but nothing has stopped goods and services from leaving that country. Stopping goods and services and setting up screening areas around the country may seem drastic; however not that long ago it came out that Gadaffi was responsible for the PAM AM 103 bombing that happened over Lockerbie, Scotland in December of 1988. So it might be in the best interest of all concerned that we start making sure he doesn't get a bomb out of the country to "send a message" to the world.
Not that Gadaffi is the only worry right now but we have all seen what happens when you don't watch closely to a potential problem that may be brewing. I am referring of course to the problem of the Japan power plant that has gone from clean power generation to radioactive leaky kettle. The problem here was started naturally with a Tsunami off the coast of Japan which was sparked by an Earthquake somewhere between 8.9 and 9.1 in magnitude that shifted Japan 2.4 meters closer to the United States. So where do you start with the problems, the government of Japan that has insisted everything is fine and that the huge explosions are pressure releases so one of 6 or so cores doesn't explode? The same government that said everything was being done to make sure the people in the area where being taken care of? or should you blame aid workers for a lack of response to a critical situation that has lead to radio active water being leaked into the ocean?
The truth is that it's a combination of slow response from the government as well as organization that have been the issue here. The fact is the company that runs and maintains this plant is where the blame should start, and the blame could be spread as far out as NGO's that have moved slower than they should have to take care of people. Yes it sounds like the blame game, and it is really is, however this one has a point; most of the time when we send in NGO's they take care of things the government can't because there isn't a policy for it yet or the government lacks resources to implement such plans to protect it's citizens, hence NGO's are useful. When it came to the potential melt down, NGO's weren't prepared because this scenario happens so few times that really only one agency is suppose to know what happens...the power company. Seems kinda silly when you think about it but actually it is only the power plant that has scenario after scenario for this type of emergency.
So now comes the home front question, "what about our power plants?" Excellent question! If you know of the Pickering Ontario or Chalk River nuclear plants then you may have also heard of the CANDU reactor which has a number of safety systems that the Japanese plant did not and does not have. In short, if either of these plants had a failure the reactor is designed to deplete and drop power levels down to around 7% of it's total output. How does that help if the reactor fails? well it means that if the reactor starts to fail the system will not explode to the point that it would do much more than take out the plant, and even then that would be absolute worst case scenario, it also means that the plant is not likely to leak radio active material into an ocean or lake where nuclear plants are typically built. There is more technical breakdowns of this system, i am simplifying it a lot and any person who majors in this field may laugh a little at the explanation, however i am not an expert in the field so I can really only apply my laymens terms to such a detailed area.
So what does this all mean? is the whole 2012 scenario playing out? should we all build bunkers and run for our lives? First, the 2012 scenario is a whole other rant that at some point i'll get to but you should know that there isn't much to that myth. Also, if we all believe in doom and gloom to the point that we can't even see much more than the problems than most of us couldn't leave our beds in the morning. While there is a lot of things going on in the world we should also take what we see and learn from it. Humans are notorious for repeating history because we have boxed ourselves in and no longer, in a grand scale, posses the ability to critically think about the world around us. I am not saying this is true of everyone, or that we can't change that but i am saying we need to change it and now! If we are content to live in the box we have built for ourselves one day we will be jailed for speaking out against the things we see as wrong in the world. An entire nation stood up peacefully in Egypt and opened our eyes to all the wonder that could be, let's not waste that lesson and began a new day of discovery. Don't wait for someone else to tell you to ask, en quire, or change the way you think, do it now for yourself. If nothing else...try
The Egyptian government in the end was over thrown and now is busy piecing in self back together when another country decides it's government has been in power for far too long, about 30 years too long. The country is Lybia, and the leader Muammar Gaddafi who at one point was a military member. So, there is an uprising which ends up being very very bloody. The difference between Egypt and Lybia however is the fact that Egypt had a more peaceful uprising, but also the leader of that country wasn't brought into power through war. What you might not know about Muammar Gaddafi is that he has been a colonel in his country's military and that he staged a Cout D'etat against that government. The Cout removed the at the time king of Libya and began a 42 year rule that saw people jailed or killed for things like speaking another language or speaking out against the government.
Now when NATO is trying to enforce a now fly zone and stop protestors from being jailed or killed the world is shocked that this man has not given up power. The issue here is that Gaddafi came into power through war and will, as we have seen, leave through war so it is unlikely that he will simply hand back a government he has had for 42 years. Really what needs to happen here is to have NGO's go in and help where they can.
Now I know what your saying " isn't NATO doing that already?" the fact is that NATO is setting up no fly zones but nothing has stopped goods and services from leaving that country. Stopping goods and services and setting up screening areas around the country may seem drastic; however not that long ago it came out that Gadaffi was responsible for the PAM AM 103 bombing that happened over Lockerbie, Scotland in December of 1988. So it might be in the best interest of all concerned that we start making sure he doesn't get a bomb out of the country to "send a message" to the world.
Not that Gadaffi is the only worry right now but we have all seen what happens when you don't watch closely to a potential problem that may be brewing. I am referring of course to the problem of the Japan power plant that has gone from clean power generation to radioactive leaky kettle. The problem here was started naturally with a Tsunami off the coast of Japan which was sparked by an Earthquake somewhere between 8.9 and 9.1 in magnitude that shifted Japan 2.4 meters closer to the United States. So where do you start with the problems, the government of Japan that has insisted everything is fine and that the huge explosions are pressure releases so one of 6 or so cores doesn't explode? The same government that said everything was being done to make sure the people in the area where being taken care of? or should you blame aid workers for a lack of response to a critical situation that has lead to radio active water being leaked into the ocean?
The truth is that it's a combination of slow response from the government as well as organization that have been the issue here. The fact is the company that runs and maintains this plant is where the blame should start, and the blame could be spread as far out as NGO's that have moved slower than they should have to take care of people. Yes it sounds like the blame game, and it is really is, however this one has a point; most of the time when we send in NGO's they take care of things the government can't because there isn't a policy for it yet or the government lacks resources to implement such plans to protect it's citizens, hence NGO's are useful. When it came to the potential melt down, NGO's weren't prepared because this scenario happens so few times that really only one agency is suppose to know what happens...the power company. Seems kinda silly when you think about it but actually it is only the power plant that has scenario after scenario for this type of emergency.
So now comes the home front question, "what about our power plants?" Excellent question! If you know of the Pickering Ontario or Chalk River nuclear plants then you may have also heard of the CANDU reactor which has a number of safety systems that the Japanese plant did not and does not have. In short, if either of these plants had a failure the reactor is designed to deplete and drop power levels down to around 7% of it's total output. How does that help if the reactor fails? well it means that if the reactor starts to fail the system will not explode to the point that it would do much more than take out the plant, and even then that would be absolute worst case scenario, it also means that the plant is not likely to leak radio active material into an ocean or lake where nuclear plants are typically built. There is more technical breakdowns of this system, i am simplifying it a lot and any person who majors in this field may laugh a little at the explanation, however i am not an expert in the field so I can really only apply my laymens terms to such a detailed area.
So what does this all mean? is the whole 2012 scenario playing out? should we all build bunkers and run for our lives? First, the 2012 scenario is a whole other rant that at some point i'll get to but you should know that there isn't much to that myth. Also, if we all believe in doom and gloom to the point that we can't even see much more than the problems than most of us couldn't leave our beds in the morning. While there is a lot of things going on in the world we should also take what we see and learn from it. Humans are notorious for repeating history because we have boxed ourselves in and no longer, in a grand scale, posses the ability to critically think about the world around us. I am not saying this is true of everyone, or that we can't change that but i am saying we need to change it and now! If we are content to live in the box we have built for ourselves one day we will be jailed for speaking out against the things we see as wrong in the world. An entire nation stood up peacefully in Egypt and opened our eyes to all the wonder that could be, let's not waste that lesson and began a new day of discovery. Don't wait for someone else to tell you to ask, en quire, or change the way you think, do it now for yourself. If nothing else...try
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