Lapis thoughts

Cost of Gang wars

2009-03-06T16:54:00.001-08:00

I havn't have the time to write a full post for a while, as I am still deeply addicted to my online fictions and busy with work, but I just thought of this. What is the cost of a gang war? How to accont for it?

C = Cost of getting caught +Man power + tools + losses + misc.

I am just going to throw in some random ideas, i don't think I have time to fully analyse this.

1. Increase risk of conducting illegal activity.

I would expect that during a gang war, there will be more visible criminal retaliation activities, such as shootings that we see reported frequently in the Vancouaver area. This will definietly raise public concerns, pushing the RCMPS to react to criminal activities. The public will be more concious about criminal activities around them, and will probably be more informative to the police.

2. Increse demand of tools.

I expect the parties involved in the gang war to have higher demand for tools used to participate in a gang war (ie. Guns, cars, bullets, etc) This will raise the market demand for the tools.

3.Loses

In a war, there will be winners and losers. To the loss might be vaulable goods or invaluable goods. It's easy to calculate the loss of vaulabe goods such as drugs or cars, but more difficult to calculate the loss of an arm, a leg, or the life of someone.

4.Cost of getting caught.
Typically, when you get caught by the authorities, you will wait for your trial, assuming the police have a case on you. The cost of getting caught could include the cost of doing time (loss of income from participating in illegal activity), legal costs, and other associated costs.

Just some random ideas....

There's also a public cost to this. I'll ellaborate next time.

Political Drama

2008-12-04T22:52:00.000-08:00

Canadian politics is getting intersting.
It can be both good or bad.
It's good, because more people are talking about the developments, more people are thinking about what they believe in, and many people are expressing their views.
This is good for Canada. More Canadian care about our country will make our country better.

This can also be bad, because we are undergoing a financial crisis.
In the mid of a crisis, not only do we have to suffer through the economic pressure, you also have to endure a dysfunctinoal government. This will delay the process of reviving the market and creat more problems. It also increase our stress level.

It'll be interesting how this draba plays out.

Coalition? We will be doomed! ( more than now)

2008-11-29T21:54:00.000-08:00

I will be frank. I think the coalition between the 3 parties, Liberal, NDP and Bloc Q., is a very very stupid and scary idea.

First, they are pissed that the government want to take away their funding in an economic crisis. Second, they want to overthrow the current conservative government.
Third, they have no plans on how to function with each other once in power. Who's gonna be PM? Dion? Layton? Duceppe? or would it be one of the previous Liberal PMs? This is completely outrageous. With Dion back, are they going to add that stupid carbon tax that they were pushing during the last election a few weeks ago? What about Layton? Is he going to start increasing spending to fund social programs and run a bigger deficit? What abut Duceppe? Is going to save the auto/forestry/manufacturing industry in Ontario, and make the rest of us pay for it?

This is so stupid. We don't want another 300 million dollar election in 2009 just because the political parties can't get off their high chairs and go ask their supporters for some money to pay off debts. It's not like they never need to do so before, as the public funding was only brought in 6 years ago. Are they that lazy? How is this a democratic process to take power? It's going to turn nasty in the end and taking our economy down with it, if they really do it, and I am so going to say I told you so in their and their supporter's face.

I sort of understand why no stimulus plans was included in the update, as our economy pretty much follows the US's, and we should wait for Obama and his people to announce their plan to avoid wasting efforts and resources. However, I think it would be a good idea to lay out some ideas so that people understand that the government is planning to release funds to start stumulation the economy anytime, instead of sitting on their big chairs and contemplate political moves. Really, I think they need new economic policy advisors who are competent and knows what's going on.

The Fisical Update

2008-11-26T20:21:00.000-08:00

I just read the Story on CBC News regarding the various cuts that we should be expected to see to help the Canadian government to cut down spending and solve the deficit problem.
The first thing I saw people complaining about is the loss of the subsidy that the political parties receive based on the number of votes each party got from the last election. Each vote worth $1.95 of our tax dollars.

Party - Subsidy expected from last election (Percentage of Revenue)
Conservative -$10 million (37%)
Liberal - $7.7 million (63%)
NDP - $4.9 million (57%)
Bloc Québécois- $2.6 (86%)
Green - $1.8 million (65%)

So the Conservatives will lose the most in terms of dollar values, but will still be better off than the other parties since they have such a strong fundrasing base.

However, people are commenting about this loss of subsidy to the political party they support will cripple them and demise democracy by giving those who have the means more political power than the others.
It didn't make sense to me why they weren't complaining about why we must spend our tax dollars on such matters. If people are really supportive of their political party, why just go vote on voting day and give them nearly a twoonie to spend, instead of going to vote and make the effort to send them the money? I think they would be more than happy to get a $5 bill instead of just a buck and ninety five cents from their supporters.
Political parties do not need the taxpayer's money to raise money. Given enough pressure, I am sure they can find better ways to finance themselves and fend for themselves. Let's spend the money elsewhere. That amount of tax money is good enough to support other plans to make our lives better.
Also, I do like the cutting or freezing salaries of MPs, ministers, and other civil servants. Cutting down the perks and benefits that goes with the job is good too, show that when the general public suffer, they should feel our pain as well.

However, I do think that all these probable cuts that has been leaked to the media seemed a little too small to be of any real help to offset the deficit that would probably appear on the budget. I hope the Ministry of finance will be able to come up with better plans to control spending, like economize daily operations, and produce a better balanced budget.

I don't know why people are so freaked out about running a temporary deficit, because the way I see it, we will be back on the surplus again, so it will be balanced, eventually.

Citi Rescue

2008-11-24T19:24:00.000-08:00

As expected, the US government bailed out Citi bank. Big surprise anyone? No I don't think so. Since the government had bailed out other banks and financial groups already, letting one of the big banks fall is highly unlikely, if said bank is one that have various branches all over the world and would cause global chaos if it did fell. After all, bank do have their uses, such as increasing the supply of credits, and mediate people's finances. Plus, the bail out plan up lifted the stock market, and I am very happy to see the finance stocks in the green again. Hopefully the series of quarter result reports will not hamper stocks in the following weeks. It does make the trend a bit difficult to predict.

No help from the government for the auto sector, as no bail out plans can be seen for the big auto makers that's breaking down. Well, that's kinda expected, since their competitiveness in the world market is not very high, and we are expecting a decrease in demand for new cars due to the financial crisis. It also didn't help when the company isn't really doing so well these couple of years. I suppose the government won't really let GM fall, because it's one of the root American companies, and to think some foreign company will come in and buy it up and turn it into a non-American brand? I think not.

On a side note, I just read an article about beer company increasing production, and I suddenly remembered a professor of mine talking about the depression period. I am going to assume that I am expecting people to consume more alcohol as a side effect of economic down turn. Dunno where I can go look up for data to prove this theory though. I am not sure if Stats Canada would have statistics on alcohol consumption for the depression periods.

The Big Dip, again, why am I not surprised?

2008-11-20T23:54:00.000-08:00

So the news of the day is again the drop of the TSX. It had plunged 500 pts since it opened, and although the market had reduced the drop some what in the middle, it had closed with more than 750 pt. drop. The dip was blamed on the falling price of oil, and bad financial news as TD had reported big losses.
Is it just me, or did anyone think that investors are being over reactive about the recovery of the economy from the financial disaster? Well, more reactive than they should be, because if they had taken into account the events that happened the last year or so, they should not have panic and sold their way out of the market like today. I mean, yeah, sure, TD lost some money, like you didn't expect them to? I understand that TD had been lucky to not be part of the sub-prime mess, but it'll be very unlikely that it won't be effected in the financial crisis that's going on now.

As for the decline in crude oil prices, I think it's just a panic period that people are going through. There is only a limited supply of oil on this planet, and a very large demand that's growing at a rate much higher than the growth rate of the oil supply. Logically, the price should be going up, and up, and up, until enough people can't afford to drive their cars, and really start to look for a replacement for crude oil. This short term panic thing will certainly blow over, and people will be kicking themselves when the price of oil is back at $90+, and they had not bought the energy stocks.

The above bad news should benefit short term investors very much, because if they are logical, they would understand that the dip is just temporary, and if they didn't get in now, they'll miss out on making some pocket change for Christmas.

Financial Disaster: What to do if you have spare change?

2008-11-19T02:22:00.000-08:00

There is no doubt that we are stuck in a financial disaster, and no one is certain if we've reached the bottom yet. With the development of economic policies after the last economic disaster caused by the financial system, I really hope our government and ministry of Finance will be able to come up with better solutions and get us through this faster.
The impact of this disaster differs for everyone. However, for those who doesn't suffer greatly from the stock down turn and still have some spare change left in their bank accounts, I would advise them to invest.

Not trying to take pleasure in other people's misery, but right now is a really good time to invest. Good company's stocks are devalued due to the decrease of investor confidence, meaning that you can buy stocks at a discount. But you do have to realize that patience is the key to be able to gain from this. For those who enjoy a little more risk, you can try observing a few reliable stocks, get to know how investors are buying and selling these stocks, the low point, the temporary increases, etc, and play it. You buy low and sell when it goes up a little, making a modest gain in a short period. Due unstable market we are facing now, I believe that if you are not too greedy, you can make some pocket change for Christmas.

As I wrote the above content at 3 in the morning, I'm probably not as coherent/logical as I normally am. I will be going to bed now...

How to Profit From a Disaster?

2008-05-14T13:46:00.000-07:00

How do you make a profit when disaster struck ? First, define disaster. Disaster can be defined as a state of extreme ruin and misfortune, or an irremediable event resulting in great loss and misfortune. What I mean by disaster is natural disasters that often result in destruction of infrastructure, loss of human lives, and disruption to general daily operations.

As mentioned above, Natural disasters often cause damage or destructions of infrastructure, thus, it is logical that some profits can be made from construction materials such as steel, lumber, concrete, etc. Also, demand for disaster proof buildings will increase.

Another industry that will gain some profit is the medical industry, as disasters cause loss of human lives and decreases living standards for a period of time. Those who sustained injuries will need medical attention, increase the demand for doctors, nurses, as well as medical supplies and medicine. Those who suffered no harm but suffered loss of property in the disaster will be forced to live a lower standard of living as government relief and other forms of financial assistance often have a long period of process time. Thus, the majority of the surviving population will be less immune to diseases and demand more medical resources.

Another less mentioned industry that would profit from a disaster is the funeral services industry. Most cultures treat the subject of death with respect and views it as an important matter in life. With lives lost in disasters, it is natural that business for funeral services and associated products will grow.

An indirect effect of the occurrence of a disaster is the increase in consumer's awareness of disasters. Those who was not directly effected by the disaster will observe the effect of the disaster and learn to take action to prevent or prepare for such a scenario, should it happen to them. Thus, it is conceivable to see an increase in demand for insurance, and such related products.

Also, due to destruction of property, there will be an increase in demand for capital. Thus, I would expect the sales for capital goods to increase. However, because of reduction in wealth, these consumers will spend less on normal goods and might start consuming inferior goods.

The occurrence of a natural disaster is sort of like the unexpected break down of your computer. You try to find the reason, you try to understand why it happened, but you can't fix it yourself. Therefore, you hire the technicians to fix it for you. Who makes money? The technicians, the computer parts manufactures, the car companies and gas companies ( because you need to take the computer and drive to the technician's place, or the technicians have to come to you, and manufacture companies of computer parts will need to send the parts to the technician, etc), the software companies, etc.

Basically, I would expect several companies in the industries mentioned above to have an increase in profits due to the events that has occurred.

Why not switch to GOLD?

2008-05-07T19:50:00.000-07:00

Disclaimer: I am not an agent for buying/selling commodities or any kinds of monetary investments. These are just my opinions.

You can replace paper money immediately, because its value is dependent on people's confidence in it. Paper money, or fiet money, is just a piece of paper with fancy printings on it stating how much that piece of paper worth. It has no real value. Paper money only has value because people believe that it has value. If no one believes the US dollar has any value tomorrow, no one is going to keep any US dollar. People are going to trade their money for something that they believe has value, which is GOLD.

Why switch?

Lots of analysts think that the worst of the financial crisis is not over yet, and is going to happen soon. This will effect the US economy even more, and US dollar might face another wave of depreciation. Thus, why not jump into the gold market now? When people loose their confidence in US dollar, they will want to change it into something else. It might be another country's currency such as the Canadian dollar or Euro, but Gold is a good option as well. Gold will not loose its value. It has been the main form of currency for thousands of years, until everyone went off the gold standard in the beginning of the 20th century. I would anticipate that when that predicted financial crisis hits, everyone will start to buy gold again, which will push up the price of gold again(the price has dropped already from the peak price of a little over 1000 USD to 871 USD, price obtained May 7th 2008 from CNN money).

Why not?

There is always a risk to every investment. A greater risk usually means a greater rate of return. Gold prices fluctuate constantly. If that financial crisis that was predicted by the analysts and experts did not happen, you are stuck with gold, and the rate of return might not be so great. Also, Gold is a lot less liquid than dollar. If you might need the cash and can't afford to wait for the return, Gold is probably not the ideal investment for you.

Who gains?

2008-03-17T19:08:00.000-07:00

So everyone is talking about the sub prime problem and how it effects the economy. The other day, I read an article on Globe and mail about how to pick what stocks to invest in that would not hurt you during this problematic period. It presented a few luxurious brand names stocks such as Coach and Tiffani, because only sales on affordable high end products suffered. This got me thinking. The whole sub prime things really only effected the middle class people. The upper class people doesn't need to take out mortgages to buy houses and they would still have enough capital to support themselves even if they have been affected by the sub prime problem. ( I am assuming that those with more than 1.5 million in net capital are in upper class). And all people demand the same goods, normal good, inferior good, and luxury good. For the rich people, luxury good is like normal good to them. Their wealth is not effected by the sub prime problem, thus no change in demand and supply.
For the rest of us though, because some of our capital had decreased, we would shy away from the once desired 'affordable' luxury goods, acquire more normal and inferior good. Some people would probably desire inferior good only. Thus, the shift in demand for normal good is ambiguous, but the demand for inferior good would probably be higher. Therefore, it seems like discount stores like wall mart would be expecting more customers looking to save some money.

So luxury brands would probably be as well off as they were before, and sales for franchised discount stores would probably be better than ever. Thus, making both good criteria when choosing which stock to invest in.

GST tax cut: Good or bad for the retailers?

2007-11-04T21:04:00.001-08:00

It seems that people who are going to purchase luxury items (value over $10,000) will stay put until the GST cut is in effect on January 1, 2008.
Don't know if it's good or bad for the retailers who are hoping for the usual season of Christmas shopping spree. The number of sales would probably decrease due to the appreciation of the Canadian dollar, and the value of sales items would probably decrease as well, since people can save a bit more on tax if they purchase the high price items after New Years. Maybe they should organize an event like 'New years sales' on that January 1 to drive up sales. Hey, that 1% tax cut can give me a bit of pocket money for gas, if I am going to get a new car in Canada.

Tax cut: Bribery to the Riches?

2007-11-01T12:50:00.001-07:00

CBC News : $60 billion dollar tax cut

So the Conservatives feel like giving back to the society, by throwing us a bone worth $60 billion in government revenue.
At first, it seemed like a good thing. What's not to love? Personal income exempting increased, income tax rate decreased, corporate tax rate decreased, GST decreased again, etc.
It will be a $60 Billion decrease in tax revenue for the federal government for the next 5 years. That's about $12 Billion decrease a year.

After some more thinking on this subject, something doesn't seem right to me. The $12 billion tax revenue a year could be spent on a lot of things, rather than giving each tax payer a small bone. For example, they could increase spending on health care. I'm sure the tax cut we receive individually can't buy us better health care package. Because of economies of scale, the more you produce, the less it will cost. It makes sense to spend a bit more on health care.
Another thing is the GST cut. How does that benefit us? Unless we are going to buy a house, car, boat, etc, one of the expensive goods, we are not going to save that much. GST tax cut just seems like a tax cut for the rich to me, since they are more likely to purchase expensive goods.
Also, it might be a good idea to spend some more money on Children, since they are the future. Canadians are getting old, and need more young people to support the economy in the future. Giving tax cuts to families with children would be a good idea, or give more benefits to those who have children, since the cost of raising a child is increasing.
Also, giving more grants to undergraduate and graduate students will sure reduce the pressure on the ridiculous tuition increase. An important concept I've learned from my Econ development class is that investment in education will increase future income. Future tax revenue comes from future income. So ensuring students have access to higher level education is important too.
The distribution of the benefit of the GST tax cut isn't really unilateral. GST tax cut just gives some provincial government a reason to increase PST. Why don't you focus on the real problem, Flaherty, and speed up the retail price reduction.

Coal: Black treasure or Black horror

2007-10-30T01:45:00.000-07:00

CBC article

Dependence on coal makes global warming harder to fight?

China is the biggest user and producer of coal. Because coal is abundant in quantity, and cheap to use, China's carbon emission from burning coal is enough to nullify the effort of the Kyoto protocol, rendering efforts toward reverting global warming useless.

Why isn't talks about reducing emission from China, India, African countries important? Because their argument is " You guys did it before, so we're going to do the same thing." It is true that most developed countries had gone through the coal burning phase. We had our own share of polluting the air. However, changes in modern technology and environment should be taken into account. The air is already polluted from previous century's use of coal burning generated electricity, water already polluted from factories. We've learned from our mistakes, and had set up regulations about pollution. Why isn't China taking in our experiences into account?
Because they are expensive. Setting up a manufacturing plant in accordance with pollution regulations is expensive due to the extra equipment to process the waste products properly. This would not attract companies and cooperates, so why do it?

A reason to re-think their pollution control policies may lie in the concerning number of new born babies with defects. Pollution causes health problems, which causes unhealthy people. I think in the near future, you can find more people with cancer, heart problems, metal poisoning, etc, in China. How can people be productive when they are not healthy.

Gap: Made for kids, Made by kids

2007-10-28T20:34:00.000-07:00

Globe and Mail article

Many are angered that Gap, a reputable clothing company uses child slave labour in India to produce it's clothes, probably stocking up for the Christmas season. Many suggested boycott Gap and other companies that uses this type of labour to produce their goods.

Yeah, like that's going to happen!

They say these corporations are corrupted, and only cares about profit and share prices. However, think about who are supporting these companies. It's us, the consumers!
You are wiling to pay more for clothes that's not made in countries that has slave labour or child laobur? Not likely.
Consumers think with their pocket, and want to maximize their own benefit. It might be ethically wrong to buy these slave made clothes, but in the end, even though people know about it, do they stop?
The answer is pretty obvious, since people still import from China, India, Mexico, etc. And we all know what the work conditions in these countries are like from various reports. Remember the kiln factory in China story back in this summer?

Also, let's not jump to conclusions so fast. Gap had claimed that they have unscheduled audits to various suppliers every year to check the production procedures to see if the suppliers violate their agreements, and they had stop doing business with 23 suppliers last year for violation of contract. Apparently they didn't know that this particular supplier had violated the terms, and had stopped the production of this supplier.
At least they tried to do something, instead of just covering it up.

Also, a few of the comments caught my attention. It's about what are the alternatives for these children, if they don't work in these factories. Someone suggested that these children's alternative is to have a 'normal' life like our children in Canada, going to school, play with friends, etc.
I was going to reply to that comment, but unfortunately the comments were closed.

Here's what my reply would've been like:

Yes, these children who were sold to the factory by their family could go to school, play with friends, and have a normal life. I think it will be a bit naive to suggest that they would have a 'normal' childhood similar to children in developed countries like US , UK, Canada, etc. Their parents sold them to the factory because they can't support them anymore. Rather than starving them to death, at least they would have a better chance to survive, 'learn' a skill, and support themselves in these factories. You can't judge their condition by our standards. As for education, I'm not sure about India's current policies regarding education, but if the parents have to resort to selling their children, I bet they can't afford paying the cost for school. So what do you expect them to do? I don't think playing is on the top of their priority list.

Why you care and why you don't care about investment fruad

2007-10-28T14:15:00.001-07:00

You care about investment fraud because it could happen to you.

You don't care about investment fraud because the chance of you being a victim of investment fraud is slime to none.

You care about investment fraud because if it happened to you, the chance of getting your money back is slime to none.

You don't care about investment fraud because you think the chance of other people getting their hands on your money is slime to none.

You care about investment fraud because the chance of you resisting a high return investment opportunity is dim.

You don't care about investment fraud because you are confident that you can tell what is and what isn't a scam.

You care about investment fraud because it's wrong, it's a crime.

You don't care about investment fraud because sometime you need to take a bit of risk in order to gain a lot.

You care about investment fraud because most victims lost their life savings.

You don't care about investment fraud because only greedy people fell for it.

You care about investment fraud because it's a form of theft, it's illegal.

You don't care about investment fraud because it's not life threatening.

You care about investment fraud because you are partially responsible for the crime because you trusted the guy.

You don't care about investment fraud, because you are sure that none of your friends are stupid and none of them would hurt you in anyway.

Apparently most of us trust our friends more than our financial advisers when it comes to investing.

Ramble: Shaw Cable is expecting to increase rates next year?

2007-10-27T21:04:00.001-07:00

Just read it on Globe and mail, apparently Shaw cable is going to charge us consumers more for cable and internet.
And there's another report about it increasing its dividends to shareholders by 9 percent. I would be happy if I am a shareholder, but I am pissed as a consumer.
Shaw cable is pretty much the only cable service provider in my area, so it pretty much means that I am a price taker, I am forced to pay what ever it feels like charging. This is ridiculous, they are clearly a monopoly, which I believe is illegal, but we can't do a thing about it because it's a Canadian company, protected by Canadian laws. I get that the price increase is to reflect the increase in salaries and costs, but really, you can't find some other ways to reduce the cost?
And you issue more dividends to shareholders? Couldn't you spend more on Research and Development, or on providing better service?
Shaw is practically a monopoly with the low competition, so it's profits are pretty much guaranteed positive. And it set a price that pretty much every other player in the market will follow, so we are guaranteed to fork out more for the same level of service.

They shouldn't be allowed to do that, CRTC should allow more competition in Canada so that we have a healthy market, and a decent price. Stop ripping us off !

Christmas shopping: New car anyone?

2007-10-25T00:31:00.001-07:00

When it comes to the expensive stuff, everyone cares. No one wants to pay more than the next guy. If you have bought a new car since last September in Canada, than chances are that you've been ripped off. If you have bought a new car since September this year in Canada, there's no doubt that you've been ripped off.

So every one has heard about the buzz regarding importing a brand new car from US to Canada right? If you haven't, here's the highlight:
Canadian prices are fixed at around $0.62 cents to a US dollar.
Now that Canadian dollar has appreciated to above par, the more you buy in Canada, the more money you are being ripped off.
Just go to a car manufacturer's website and compare US and Canadian prices. For example, I went to look at Lexus's 2008 RXh40 model (think green people), and the price difference?
US charge $41,180 for the standard model, and Canada charge $62,250 . See the difference? I bet you do. It's a straight $21,070 difference, enough to get a new Toyota. Don't you feel you are being ripped off? I can hear the evil laughs of the dealers and the manufactures.
Apparently the Auto industry has been secretly profiting from the raise of Canadian Dollar since last year, but people in general didn't know about it. Well, maybe not people, at least 1 person maybe. I didn't know about it.

So why aren't people rushing south to get their cars?

1. Manufacture warranty issues.
Apparently, not all of the auto makers honer their warranty if you bought the car in US. There's still issues going on with the warranty, since more people are planning to go south for their Christmas shopping. It seems like the manufactures are trying to deter Canadian shoppers from going south. But come on, if you really don't care about warranty, or if you can save over $10000 on a car, would you care?

2. It Costs a lot, I won't save much.
I think people have a misconception about how much it costs to import a car. If you did a little research, you would see that the amount of money you can save is simply much greater than the cost. But really, it depends on which brand you are buying. Some cars like Honda won't have such a huge price difference, but luxury cars would probably be priced very differently.
Also, where the car is made is also a determening factor in the cost of importing. If a car is made in North America, it's duty free courtesy of the NAFTA. But if it's made elsewhere, or parts of it is foreign made, you are subject to pay a duty at 6.1%. Also you need to pay GST and PST.

3. It takes a lot of time
Yes, requesting the information and filling out forms might take a bit of time, as well as going down to the US and getting the car. However, think of it as a mini vacation or weekend getaway. With the money you save on getting the car in US, you could probably get that new computer or new TV or whatever you want. It puts extra cash in your pockets, so don't be lazy about saving money.

Some concerns about importing from US is that some cars might no be allowed in Canada, but if you check out the RIV website below, you can find a list of admissible vehicles that are allowed in Canada. You probably just need to spend a little to modify the car.

Here's a website that lists out some of the warranty info in Canada regarding imported cars from US: http://www.apa.ca/template.asp?DocID=253

Here's the Registrar of Imported Vehicles website that tells you about the procedure, documents you need, what you need to do, etc.
http://www.riv.ca

Here's the forum discussion I found regarding importing and problems and people's experience with importing cars from the US:
http://www.redflagdeals.com/forums/showthread.php?t=307601&highlight=duty

Ramble: ISPs Discriminating BitTorrent Users is legal?

2007-10-20T22:31:00.000-07:00

Well, I learned something new today. Apparently Rogers cable and Bell have been 'throttling' the internet speed for high-bandwidth users and thus hampering Bit Torrent usage. Ok, I don't use their service, but even I felt being cheated. Are they allowed to use this? Isn't this discrimination? I mean, if I pay for their service, I should be able to do what ever I want with what the service provided. If I go over the bandwidth, they can charge me like what their website said, but they shouldn't be able to cap my internet speed. If they can get away from that, what's next? Blocking out certain websites or contents? This is ridiculous! They, a business cooperation, is censoring our usage of the service they provided, and they don't tell you that when they market their product. Doesn't that count as false advertisement, since they market their product with phrases such as "for downloading" and " file sharing", and than deny you of the means to do so when they are suppose to provide the service? And you paid for the service! Sounds like fraud doesn't it?

If you want to block out file sharing, why not block out other services, such as the various messengers (ie. Yahoo and MSN) , since we can use those to share files as well. And what about file storage websites? We can always use them to download and upload large files, why not block them out as well? And those private servers? Hey,what about streaming for videos? They take up a bit of bandwidth thus must be blocked. In the end, the only things to do online are to read news, view websites, and emails. There goes your entire market! And you probably pissed off a lot of people along the way. Oh well, at least people aren't sharing files!

If you can't make enough money out of providing internet service, get out or go with the flow, sink or swim, because that's what competition is about.

The loonie is doing great, but why aren’t prices falling?

2007-10-16T23:32:00.000-07:00

The Canadian dollar is still above par with the US dollar, but prices of retail goods haven't adjusted so that Canadian retail good prices are the same as US retail prices.
This was one of the concerns of Canadian consumers, and many feel like they are being cheated of their money. However, this is not entirely true. Retailers aren't trying to be scrooges, it is just that the effect of appreciating Canadian dollar doesn't show as quickly.
Business want to make a positive profit.

Profit = Revenue - Cost
Revenue = Price x Quantity
and Price > marginal cost, for firms to earn a positive profit

Marginal cost is the cost of selling one more unit of good, which is the cost of purchasing one more unit of the good for the retailers from the suppliers.
Either increase in revenue or decrease in cost will increase profit.
However, the cost cannot be determined by the current market value of the goods, because most retailers practice "first in first out" to manage their inventory. First in first out means that the first good that is in the inventory will be sold first. If the good is purchased before the loonie value appreciated, the cost of the good still remain the same when the good was purchased from the supplier. The decrease in cost only shows up on goods that are bought recently. Thus, until the older inventories are sold, the price of the goods will not adjust to reflect the current appreciation of the Canadian dollar.
Another explanation is that Canadian firms have very different cost from an identical American firm. We have a minimum wage of $8, they have a minimum wage of $6.50. That along makes a big difference in labour cost. Also, our tax structure and rate are different, so US firms might be able to cut down the price more to make the same amount of profit.

Therefore, the price of goods should fall, but it won't be for a while. Too bad for the retailers! Most consumers are not opposed to the idea of going south for their Christmas shopping.

Kazaa user sued by record companies

2007-10-06T12:15:00.000-07:00

I found this news article on Globe and mail.
A Kazaa user is being sued by record companies for downloading and sharing music files with other Kazaa users. This downloader happens to be a single mother of 2 children and makes $36000 a year, and might be fined $220,000 up to 0.5 million by court to the record companies.

I thought that the record companies are being a bit unreasonable, because they really think that by suing downloaders and taking them to court, it will deter other people from downloading? That is very naive, I think. Sure, you can deter people from using Kazaa to share their music, but there will always be people elsewhere who are willing to share. Sharing music files online and downloading them for private use isn't illegal in some countries, can record companies really block out consumers from those countries?

How much do you pay for a CD?
I think the record companies are ripping off the consumers, because the price of CD doesn't seem to be decreasing, but the cost of a single blank CD has, since it came out so many years ago. Assume a new album sales for $20 dollars (without tax). How much does it cost to produce it? What is the marginal cost?
The cost of making the CD is not even a dollar, and the cost diminishes if quantity increases. So if the cost of a single music CD is only a dime, why do we, the consumers, pay so much for them?
The high cost of a 'real' music CD created the black market for 'fakes'. Given that the 'real' and 'fake' has the same quality, but different packaging, and both gives you the same amount of pleasure, if the real' which one would you buy as a consumer?

How much should you pay for a music CD?

What do you consider when buying a music CD? What are the factors that make buying a music CD attractive?Is it the artist, the quality of the songs, the packaging, or something else?
What do you really care about? Probably the price and the quality of the songs. No one will spend $20 on a CD full of crappy songs. Nowadays, can you honestly say that every song in the music CD you bought is worth the money? From a utilities point of view, assume that good songs give you positive utility, and crappy songs give you no or negative utility, thus consumers will not want to consume crappy songs. To maximize utility, they would only consume good songs.
If it is not worth it, why is it on the CD and why is consumers being charged for crappy songs? If the record companies can't produce quality works, why should we buy the package when we really think only 1 or 2 songs in the package is worth it? It is a form of price discrimination, where firms package the good product that has high demand with the crappy products that few would want together, so that people will buy the package for the good product and they make a positive profit on both products.
Now that with internet, we can pick and choose which songs we want to listen to, and not being forced to purchase the other songs that we don't want, how much are you willing to pay, if there is no set price for a good song?
According to Radiohead fans, who can decide how much they are willing to pay, their songs worth about $1.18 per song. They also offer disc sets containing 2 CDs, fancy packaging, online download, artwork, photos, etc in a hard cover book for $40 euros or about $56 CDN. They are pretty much offering their music for free, if you don't wish to pay. But people paid for their music. The 2 CDs contain about 20 songs. If you pay a dollar for each song, it will cost you $20, without the physical CD and other things that comes with the disc set.

Why don't people buy CDs now?

This is easy, and many people would agree with me that the reason is because the CDs are full of crappy songs. The music industry seems to be more focused on maximizing profit, not on the quality of the product. The price of a CD isn't worth it's content, when we only wanted 1 or 2 songs from a single disc. Frankly, people don't see the incentive to buy CDs, and with internet, it is almost free. Those who care about intellectual property rights would pay to download. Those who feel buying a physical copy would purchase a CD, but for those of us who's really indifferent between listening and not listening to the songs, we won't pay anything.
If people really like it, they will buy it. I have paid for many things that I can view/listen to online for free, but I bought them, because I like what I saw/heard. If record companies want people to buy their product, they should not cram garbage music down our throat as often as they can produce them. They should really just make good quality stuff that people are willing to pay the price for.

The actions of the record companies just puts people off of their music. They hope to scare off the downloaders with legal actions which lead to unreasonable fines just doesn't make things better. If they had just ask the women to pay a small amount of fine or buy the CDs, it wouldn't be so much of a controversy. All this just makes the big corporations seem too eager to get their hands on the money they feel they deserve. This issue isn't about the artists, it's about the profits.

Organized Crime and Fraud Part 1

2007-10-03T10:41:00.001-07:00

1. What is it?

Canada Criminal Code:
380. (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,

The idea is that if you mislead people into buying things, investing, or donating, it violates the criminal code.

This actually happens more often than you think. Excluding the spams that we receive everyday about investment opportunities, insider information, Nigerian crisis, business ventures, or any other bizarre e-mails, we can be cheated easily. Have you ever donated money over telephone? This would be the easiest way to get your money, because most of the time we won't suspect that the person talking about a sick child needing money for surgery is just trying to get your money.
There are recent news reports about this issue this week. ( CBC News )

2.Why is it Important?

Fraud and scams are commonly believed to be a source of income for organized crime groups, according to RCMP and Canada Security Intelligence Service. The illegal generated from this activity might be used to fund terrorist activities, purchase firearms, or support other illegal activities.
Most of BC's organized crime groups would generate more income from the drug trade (marijuana) and auto theft, and that is probably why police focus their resources more on those areas. However, a recent survey shows that approximately 1 in 20 Canadians have been victims of investment fraud, and of the victims, only 1 in four reported the crime.
Given that some of the 'investment frauds' might not be really a criminal offense according to the Criminal code, however, the reporting rate is surprisingly low. People don't usually invest small amount of money, like $10, $20 dollars, but they tend to invest thousands of dollars if they think the investment is credible. Assume that everyone of the reported victims invested 1 thousand dollars each, and that only half of the investment frauds are 'real' in the sense that they violates the criminal code, the sum of the fraudulent money collected from victims are around 500,000,000 or 500 million. (0.5 million people x $1000)
According to the survey, approximately 0.3~ 0.4 % of Canadians were victims of investment fraud the last 12 months. Assume that is about 0.05 million people each got scammed for a thousand dollars each. That is approximately 50 million dollars of Canadians' savings that was defraud a year. Also, the survey shows that only 1 in 4 or 24% of the victims reported the fraud. But the probability of catching the frauds and charge them with fraud is difficult, since not all cases of reported investment fraud are credible, have enough evidence, or lack sufficient information to conduct the search. Also, these fraudulent activities can take place overseas, thanks to modern technology and internet, making them harder to track and prevent.

What I am trying to say is, because investment frauds are difficult to track and prevent, often the police efforts are useless. Maybe that is why the police doesn't put to much resources into this kind of crime, because with the same amount of resources, they can solve a murder ( I assume , I don't have much evidence to support this point) , bust a marijuana grow up , or catch a car thief. The results are more satisfying than accomplishing nothing. However, isn't this promoting the fraudulent to invent new kinds of frauds to trick people? Because the reporting rate is low, and the charge rate which I assume would be low as well, reduces the risk of this type of crime against other types of crime. The deterrence factors such as being caught and going to jail doesn't serve a purpose.

Interesting Economic History: Revolutionary war, was it worth it?

2007-10-02T21:15:00.000-07:00

History is quite interesting when you analyze the events with economic causes. This is what I learned in one of my classes recently.

Did you know that the supporters of The revolutionary war of US in 1775 was mostly tobacco plantation owners?

At that time, when Britain still owns the US colonies, the colonies were subject to something called the Navigation act. Within this act, there was one rule states that all imports and exports need to go through England and handled by English merchants. Tobacco was the major export for the colonies, and the colonies consumed very little tobacco. At that time, only the colonies produced tobacco, but they are not able to make more profit because of the Navigation act, even though the price for tobacco was pretty high in Europe. Because of the Navigation act, the producers of tobacco cannot sell their product directly to the major European product, instead, they have to sell it to English merchants, who would only pay low prices, and export the tobacco from England to the European market. This transfers the producer surplus that the domestic producers deserves, if they charge monopoly price, to the English merchants.

The tobacco producers felt that they were being exploited by the Britain government, and that they can make more money if there's no Navigation act. They could not abolish the Navigation act through the government because the English merchants would lose their profits, so they supported the revolution. Originally, they thought the war would be fast and cheap, because Britain had a bigger army and a better chance of winning, but the colonies got their freedom paying a very high cost.

Cost:
1. Losing Britain's protection.
2. Lose proper government and legal system.
3. Lose of productivity due to lose of labour force in war. (People who died and people who escaped to Canada)
4. Capital (land and equipment) destroyed due to war.
5. Increase trade barrier with other European countries. (Because they are not part of England anymore)

Gain:
1. Freedom to export directly to European markets. ( But the gain was not shared with everyone in the society)
2. Right to Manufacture. ( Because colonies were not allowed to have factories, due to Navigation act)
3. Able to purchase goods from other countries without paying tariff to Britain. ( Decreases transaction cost)
4. More future growth through manufacturing and open export
5. Able to develop according to the colonies' wants, instead of Britain's wants.
6. Able to develop into a full functioning nation, instead of remaining as resource intensive colonies.

I might be wrong, or miss a few things, but the basic idea is that if you don't include the future growth and development, the cost outweigh the benefits. In the short run, fighting the war was a bad idea, but in the long run, the US colonies would gain more, compared to Canada, which was still a colony of England at that time.

Feel free to correct me or comment.

PS. Guess who was a tobacco plantation owner at that time and supported the war?

Organized crime and economics 1

2007-09-29T22:35:00.000-07:00

As I stated in my first entry, this blog is a place for me to practice my writing and criticizing skills in preparation for my essay that I need to write for my economics of crime course. I've chose the topic "organized crime", thinking that it would be interesting, and started searching for data about it. However, I didn't realize that there wasn't sufficiently organized data that will give me nice looking numbers which I can run charts. Instead, I just found police reports about what organized crime groups do and why they are bad. Also I found a few clips of different organized crime groups in the world, such as the Italian Mafia, the Russian Red Mafia, the Triad, etc. that are quite interesting.
I have narrowed down on my topic, it will be something to do with fraud/scams related to organized crime. If I have difficulties finding good data, than my backup topic would be counterfeit bills and organized crimes. Sounds interesting?

I'll post my progresses later on when I find more data about this topic.

Canadian Dollar appreciation, good or bad?

2007-09-28T20:49:00.000-07:00

As every newspaper is buzzing with this news, the Canadian dollar closed above the us dollar. I have read various comments about this and what its impact would be. Here's what I've gathered so far:

Good:
- Shopping spree across the border!
- Finally a dollar for a dollar
- Did I mention shopping spree?
- More imports
- Attract more foreign investors

Bad:
- lowers export, even for marijuanas !
- Appreciation is due to the weak US dollar, not about the strength of Canadian dollar. ( meaning we are not as stable as we think we are)
- Maybe some American labours would prefer to work in Canada now, increasing labour supply, may decrease wage
- Canada is more attractive to illegal immigrants.
- Decrease in tourist activity in Canada
- Increased operation cost for businesses.
- Prices are sticky, they don't adjust that fast

Uncertain:
- Some talks about the Amero started again. ( Amero, similar to the Euro, will be the universal currency which would be used in North America and replace the Canadian dollar, US dollar, and Mexican peso.)

Personally, I'm glad the Canadian dollar is doing well, because I buy from eBay, and have to convert Canadian dollar to US dollar. Also, If I ever plan to invest in US securities, now would be a good time to buy. US real estate prices are falling due to the sub-prime mortgage thing, it's a good time to buy as well, if you plan to own some US properties. This is a good time for importers to do business.

The Smoking ban in BC

2007-09-27T01:09:00.000-07:00

There is a debate right now in BC about banning smoking in places. Right now, smoking is banned at public places such as restaurants and bars, schools, and hospitals. I support this ban. Personally, I hate smokers who just smoke without considering the effects of his/her action to other people. Why should the non-smokers get cancer from second-hand smoke? If the smokers want to kill themselves slowly, do it to themselves, don't effect other people. I understand that people have the right to smoke, but that right should not violate other people's rights. As an economists or a economic student ( I don't think I'm that knowledgeable to be an economist yet, maybe someday....), we know that there are externalities to consumption, and externalities can be positive or negative.
Consumption of cigarette or smoking creates negative externalities to society, because not only the smoker will get affected, other people around the smoker will be harmed by the smoke. This causes an increase of medical or health expense to the society, causing a higher level of social cost for smoking. Demand for cigarettes is believed to be inelastic, so the quantity demanded will not change much when price increase.

With the ban to public smoking, I think you can increase the marginal cost of smoking, or shift the supply curve of cigarettes up, because smokers are deterred from consuming as much cigarettes as they would like. They are forced to pay some time cost to find a place to smoke. Also, demand of cigarettes would be affected, since some smokers would not be able to enjoy their activity freely, meaning the demand curve for cigarettes would shift left, decreasing the quantity demanded.

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Anyways, the point about this issue is that I read someone's comment about the freedom of smoking and how it is like gas emissions from cars.
I must disagree with that comment due to simply logic.
First of all, we can live in a world without cigarettes, but we can't really live in a world without cars. Car, or in this case any mode transportation that uses fuel powered engine, is a cost efficient, time efficient means of transportation, more like a normal good. Cigarette is more of a luxury good. We gain the decrease in cost of time from consuming more cars, although there is a cost of the gas emissions which contributes to global warming. We don't really gain anything positive from consuming cigarettes. We can't really compare the consumption of cigarettes and cars.