12% Rise Electric Shocker!!! Zapped !!

The announcement of the higher electricity tariffs would definitely strike fear in every consumer.
As if the rise in the petrol prices are not enough, now the consumers (especially the lower income group) will be feeling the pinch as far as their lifestyle is concerned.
The announcement did not come as a surprise as the Cabinet had deliberated on the matter for quite a while now.
Was wondering, what's next in the queue:

1) Water rates
2) Toll rates
3) Water treatment rates
4) Telephone bills
5) Business licenses
6) Other taxes


Further Increases in Costs of Production

The rise in these 'utilities' lead to an increase in the cost of production, the rise might shift the supply curve to the left, culminating in an increase in the market(equilibrium) prices of goods and services in the country.
As our nominal/money wages remain constant( or negligible increase in money wages), the households' purchasing power is deteriorating gradually.



Any chance of reversing this scenario?

The government's reaction/advice/pacification:
To have a smaller electricity bill, people should learn how to conserve energy and cut down the usage by minimising wastage.

“The new tariff structure encourages consumers to conserve energy instead of using electricity as if there is no tomorrow,” he said, giving an example that consumers need not set their air-conditioner at 16°C and that 24°C was good enough.

Each time there is an increase in prices of anything, this familiar quote will surface

"Even with the 12% tariff increase, he said, Malaysia still had the cheapest electricity in the region with the exception of Indonesia."

Does this sound familiar??? Hahahaha



My point is:
Well, the issue is ..should the 'wastage-reduction' mentality fall squarely on the shoulders on the people?
or shouldn't it be a responsibility of each and every person in the country, not just the households, as wastages can come in many 'forms'.

The Star reported:

http://www.thestar.com.my/news/story.asp?file=/2006/5/25/nation/14343755&sec=nation&focus=1

Petrol Prices Might Go Down (Yeah right!)

For a moment, i thought it was forthcoming. I was overjoyed!!!
However, having read the entire article
My hope of seeing petrol prices going back to RM1.30/liter during the good ol' days of 2002-2004 went up in smoke.

For prices to rise, it took only an announcement..
For prices to tumble, it is subject to many constraints.

According to the minister, prices will only fall if the world crude oil prices fell drastically...well, dream on.
Poor consumers.

Dr Awang, however, cautioned that while the price could drop to US$60 a barrel, it would be unreasonable to expect it to fall to US$30 a barrel.

http://www.nst.com.my/Current_News/nst/Wednesday/NewsBreak/20060524180907/Article/index_html

Even the Air Smells Expensive

Remember we discuss about luxury goods which are very price-elastic? Take a look at the example.

Fancy a handkerchief priced at RM1,300 or
a sweater at RM5,500 or
a shirt at RM9,000 or a belt that costs you as much as RM37,000! ( enough to buy a Proton Iswara)

These are the real items sold at Bijan at Beverly Hills, US.
Bijan, known as ‘the world’s most expensive menswear designer’ serves not the rich, but the super-rich.
He mentioned that a client’s income should be at least US$1mil (RM3.63mil) a month after taxes to afford to shop at his shop.
All the trasactions are done 'only by appointment' basis, he has no time to attend to window shoppers..How arrogant.., nevertheless with his stature, he can afford to.

His clients include:
two emperors,
five kings,
the presidents of 36 countries,
six prime ministers and
500 heads of states and captains of industry.
Familiar names like Prince Charles, Steven Spielberg, David Geffen, Larry King, Steve Wynn and this includes our very own Pahang Sultan “His Majesty Sultan Ahmad Shah”

If you are thinking of changing your wardrobe for a season, Bijan's price tag is US$1 million!!!
And the best thing is, if you are unable to come to Bijan, Bijan can come to you!! He has
his own plane
Twice a year, he and his team fly off to see his clients, either in their homes or the best hotel suite in town. Naturally, he flies in his private jet; God forbid he fly commercial and be subject to timetables!
Should you be left stranded in Kuala Lumpur because your wife has taken your plane to go shopping in Paris, he can send his jet to pick you up, too.

To read more, here is the article

http://thestar.com.my/lifestyle/story.asp?file=/2006/5/21/lifefocus/14003634&sec=lifefocus

Talking about luxury goods, this is the REAL thing.

We know price of gold is high , but....

Mining companies might rejoice at the rising gold prices, but they have a problem.
The supply of gold is inelastic, they are not able to increase the quantity supplied by 'producing' them.
Another factor is the cost of production as the process of gold mining is a costly process.
As such, they might not be able to capitalize on the current situation to maximise their total revenue and profits.

Gold mining companies in Senegal is facing this problem, read the article
With prices for gold hitting 26-year highs, mining companies are searching for new ways to extract every nugget from the ground. Yet they say they cannot substantially increase production - a limitation that could keep prices high for years.
Compared with oil, increasing the gold supply is a much more costly - and longer - process.

http://www.philly.com/mld/inquirer/business/14588798.htm

One question, ever thought of the reason behind the continuous rise in the price of gold?

Internet Economics - Google Advertising

I am sure you have heard of Google. It is the most famous search engine in the world.

Internet search engines are special sites on the Web that are designed to help people find information stored on other sites. They made our search for information easier

At Google, they provide an advertising function called "Adwords Pay per Click"

AdWords uses cost-per-click pricing, which means you pay only when people click on your ad. There is a nominal, one-time activation fee for Google AdWords.

The cost of per click starts from US$5 , that means if you have a website advertised in Google to sell something and someone clicks on your website, then Google will bill you according to the number of clicks per day.

Imagine people are clicking on your website, and before you start selling anything those people at Google will be laughing all the way to the bank.

One click..let's say US$10 per click ( and your website appears on Page 1 of Google search) , if there are 100 clicks per day, Google will be richer by US$1,000 in a few seconds...Imagine there are hundred of thousands websites advertised in Google..no wonder the founders of Google, Larry Page and Sergey Brin are billionaires.

Temporary Hiatus

Have not blogged for a few days now.
Too occupied with responsibliities...social, economic and emotional..haha..depends on how they are interpreted. :)
Did not even have the time to read newspapers or articles to contribute anything.
I'll be back soon.

I thank all of you for your comments and your participation in the poll. Really appreciate them to make this blog a vibrant and lively one!! Keep up the good work
Replies shall be given in due course.

Econster Polling Station

Free Web poll for your Web site - freepolls.com

Right at our doorstep, we are facing a sugar shortage.
Just as what we learnt in market equilibrium topic two weeks ago.

Because of the shortage, the sugar price rises to eliminate the shortages.
What could be the reason??

Too much demand or too little supply..??

This is Economics-in-action,

Our suppliers told us they had run out of stock as the factory was shut down for maintenance. If this continues, our operations will be affected and we will have to bear a higher cost of production if we want to remain open," he said.

The wholesale price of sugar, he said, had soared a fortnight ago from RM64 to RM69 for a 50kg sack.

http://www.nst.com.my/Current_News/nst/Monday/National/20060508073732/Article/index_html

Rule of 72

Have you heard of The Rule of 72?

There’s an easy rule you can use to work out how your savings or investments can grow with compound interest.

The result tells you how long it will take for your money to double without further savings.

How it works??

Just divide 72 by the interest rate (or average annual return).

For example, you have RM10,000, let's say you are earning 6% interest.

So, 72 divided by 6 = 12.

Every 12 years your RM10,000 will double, so:
After 12 years you have RM20,000
After 24 years you have RM40,000
After 36 years you have RM80,000

If the interest rate is 10%, then 72 divided by 10 equals 7.2.
Any amount of money will double itself in 7.2 years!!!

Just use any amount of money, and the prevailing interest rate.
You'll be amazed at the power of compounding interest!!


Haha..should you start saving now???

Plastic Goods are Price Inelastic..??!!

Due to the many usages of plastic in today's world,
they have become such a necessary and indispensable item.

However, I didn't expect then to become price inelastic
Until I read this article ...

As its products get more durable and versatile, they've become an indispensable part of construction, consumer packaging and countless other fields.
Building material in particular is driving growth for plastic makers.

According to the American Plastics Council, 30% of plastics go into bags, bottles and food containers.

Consumer goods, such as kitchen products, toys and sports equipment account for 22% of all products. Building materials account for 18%.

The use of plastics is intensive as substitutes for natural material, such as wood, glass, paper and metal.

Plastic is already a valuable commodity.

Link
http://www.investors.com/editorial/IBDArticles.asp?artsec=23&issue=20060407

Price Ceiling for Cement in Malaysia

Real life example of price ceiling

Other than prices of chickens, cooking oil, flour being controlled during festivals,

cement price in Malaysia, too , has a price ceiling , it is at RM198 per tonne.

The article mentioned
Cement, a controlled item, has an average government ceiling price of RM198 per tonne, which is deemed the normal level.

The price of the commodity is expected to average RM185 per tonne, which is 19% higher than last year's average of RM155 a tonne.

Analysts expect prices to rise further to RM192 and RM198 a tonne in 2007 and 2008 respectively, on better demand-supply balance. (greater demand in the market?, shift of demand curve to the right?)

Link to article

http://biz.thestar.com.my/news/story.asp?file=/2006/4/24/business/14005604&sec=business

Think: Why is demand cement important? In which industry it is relevant to?

Child Labour In India - Swarovski Crystal

One of the factors of production is labour.
Labour cost is extremely low in the underdeveloped countries, making the cost of production very low as well. For example, labour costs in China and India.

Do you know why labour costs in these countries is so low?

Because they employed child labour, work them so hard and pay them so little, and not even giving a decent place to sleep and proper food to eat.

Born into a life of extreme poverty, these poor children had no choice but to work to eke out a living doing jobs like this.


Have you heard of Swarovski Crystal? I won't look at them the same way again.

In India, child labour as young as eight-years old work for 16 hours a day, sewing the Swarovski crystals onto dresses. Some are paid pathetic sums like US1 per day.

Each night the boys bunk down on the roof of the building where they work 16-hour days, sleeping amid a filthy tangle of cables and pools of oily stagnant water. The factory owner's dogs also sleep up here, biting at the fleas infesting their mangy fur.

'We treat them well,' Krishnan (hahaha, yeah right !!!) says as I look around at the filthy matted bedding. A late lunch is brought in metal bowls: clumps of potato floating in murky curry, a few chapattis. The boys greedily slurp it down before carefully washing their hands and getting back to work.

read the artcle
http://observer.guardian.co.uk/world/story/0,,1764531,00.html?gusrc=rss

Who uses/wears Swarovski crystals?

Swarovski's has collaborated with fashion houses such as
Coco Chanel
Christian Dior
Yves Saint Laurent
Gianni Versace

to produce for the rich and famous!!!

In Britain, these crystals can be found on Camilla Parker Bowles's wedding hat and P Diddy's crystal-encrusted mobile phone.
In India - Swarovski has partnerships with nine of India's top fashion designers, including JJ Valaya and Tarun Tahiliani, whose clients include Jemima Khan, the Duchess of Kent and Bollywood stars Aishwarya Rai, Simi Garewal and Kabir Bedi

According to the report, Swarovski crystals can be found on iPods and mobile phones. (wizzerd:really?)

Guess what, for what what they paid the children, these crystals are sold for obsene sums of money.




ISN'T THIS EXPLOITATION??