Warm Welcome

To all students taking ECNF01 of July 2008 Intake,

Welcome to my Economics blog.

Many a times, economics both Micro and Macro had not a good reputation with students as it had been (unfairly) labelled as a subject which is difficult to understand, impossible to master and generally uninteresting to explore.

Well, I am here to debunk the so called 'myths'..To me, Economics is a subject that helps us to basically understand the workings of the world we live in, combining the elements of sciences like business related studies as in accounting and finance, banking, human behaviour sciences as in sociology, psychology, mathematics and so.

It drills into us some sense as in how the markets function, how human beings react to various stimulations based on their self-interest, how firms/industries make strategic decisions and how government making important economic decisions like the hike in interest rates, monetary policy, change sin the taxation rates.By working together, it gives us an explanation that any changes in one market might cause ripples in others. It is an interwoven fabric that binds the elements.

Articles from various sources (print and internet media) will be included, and you are most welcome to query, question, discuss, analyse and offer a critique as a part and parcel of our learning process.

Please feel free to participate.

In the end , we learn.

Governor of The Central Bank

Despite her regular appearances in the mass media, most of the students are oblivous of who she really is.

In fact, her signature graces every ringgit note or notes of every denomination found in our wallets, purses or pockets.

She is our very own Governor of Bank Negara Malaysia (the Central Bank of Malaysia). Her name is Tan Sri Dato' Zeti Akhtar Aziz.

She was appointed as the Acting Governor of Bank Negara on 1 September 1998 after the resignation of her predecessor, Datuk Ahmad Mohd Don. On 1 May 2000, she was officially appointed as the 7th Governor of the Bank Negara Malaysia, the first woman to hold the post.

She holds the post until today.

Dr. Zeti received B.Sc in Economics from the University of Malaya and Ph.D from the University of Pennsylvania, United States specialising in monetary and international economics.

Anyone have any idea what role she is playing in charting the economic fortunes of this country?

Truth About Economic System In North Korea

We learnt about the difference between the Capitalist (Laissez-Faire) economic system and the centrally-command economic system in North Korea.
Found this article about the actual situation in North Korea at which the Government plays the role of resource allocator, wealth distibutor, sole employer of the labour, welfare guardian of the the people.
The excerpts of the article

The economic destruction of North Korea's economy by a result of decades of socialism. By turning all property over to the state, for over 50 years, the inhabitants have been suffering from extreme poverty.

Price increases by government typified the policies.
In order to increase the productivity of workers, wages were arbitrarily raised by 900 to 2,000 percent.
The government printed more money, and on one day this past summer, every North Korean worker received a 2,000 percent raise."

Also occurring with the wage increases was a rise in prices for almost every commodity. The price of rice, the staple of most Asian diets, rocketed by 4,000 percent, while the price of electricity rocketed 5,900 percent.


For further reading this is the URL:
http://www.mises.org/freemarket_detail.asp?control=440&sortorder=articledate


The article gave us an impression how life is like in a centrally command economy where the

state made all the economic decisions.
Is it a justification why we should turn to the capitalist economy? Well..it depends..

Future Career Path Quiz

For those of you who are still unsure of what course to go for your degree. YOu might want try out the quiz.
It might not be perfect but it sure does offer some insights into your interests and aptitude in different types of profession.
It takes less than 2 minutes, go try it!!

The link
http://quizfarm.com/test.php?q_id=164749

Nobel Prize for Economic Sciences

The winner of the Nobel Prize for significant contribution to the field of Economic Sciences will be announced tomorrow. Winners of the Nobel Prizes in Medicine, Physics, Chemistry have been announced.
Left with prizes for Literature, and the prestigious Nobel Peace Prize to be announced on Friday.

To update tomorrow

Trying to tame a Chinese tiger

The world's fastest growing economy, China's real GDP is increaing at a breakneck speed.
China's exports this year are expected to soar by 20.8% while imports rise by 18.4%.

Two features of China's economic story compel immediate attention.
The real GDP growth rate reached 11.3% in the second quarter this year, the fastest pace in a decade.
This rate has been driven by heavy spending on new factories and other fixed assets.(Investment)

Earlier last week the World Bank forecast that it expected China's economy to grow this year by 10.4%.

Investment in some industries such as car manufacture exploded by 44.5% in the first six months of this year.

While it seems to be great having such fantastic figures. However, there are also dangers or risks of having such high growth rates.

The dangers/risks will be:
1) High inflation
2) High bad debts
3) Too much short-term spending without sound fundamentals
4) High gearing ratio (too much debts to finance investment)




http://business.scotsman.com/index.cfm?id=1222302006

Excess Capacity at Proton

We have learnt about excess capacity in monopolistic competition and other imperfectly competitive market structures.

What is excess capacity then?? Revision

In this article, it was mentioned that Proton, our national car maker is running on 40% spare or excess capacity, meaning that Proton is operating at 40% less than the optimum (ideal) capacity. A cause for concern no doubt.

"Some of the trucks load to just to 60%," he says, "compared with 90% at Toyota. We're paying for air." Zainal admits that Proton's three assembly lines have about 40% spare capacity.

What could be the reason(s) for the fall in sales of Proton cars??