Ch, 12 Blog Canada's Housing Market is Cooling

http://www.financialpost.com/news/story.html?id=920010



Summary

The article is mainly about the prediction of house prices that is going back up next year, according to Canada Mortgage and Housing Corp (CMHC). The forecast showed that Canada's house prices have been dropping frequently where the largest housing markets were experiencing price decline for four months straight last year. The CMHC had a debate with the forecast of house prices recently whether the the price should go up or not. They expected the average price of a home sold from $305,707 to $306,500, however; next year it will increase to $306,700 ($200 difference). In 2007, there were 523,701 transactions for sales of homes. In addition, due to the rise in house prices the transactions in 2008 and 2009 were much lower.

Connection

The connections between the article and our textbook on Chapter 12 is the five-journal system. The companies who sells and records transactions for the sale of homes, will likely to discover a trend where an increase in price will lead to a decrease in profit. In the synoptic journal the account that is affected is the Sales Journals account where it will be decrease due to insufficient house prices.

Reflection

I personally think that the CMHC should not raise the value of houses for the upcoming years because it will strongly affect their earnings and profits. By Comparing the data between the previous years, I think people are starting to lose interests in houses because it is incredibly expensive. I think the CMHC should either lower or not change the price of houses at all because people will most likely not going to purchase houses, they'll rent instead.

Chapter 11 Merchandise Inventory Blog

http://www.canada.com/topics/news/story.html?id=20883b1d-f9b0-44b1-bc8c-f66e9c332639

Summary

The article i read is about the Finance Minister, Jim Flaherty who took action to ease the impact of the financial crisis managing countries worldwide. He recently met up with the G7 finance ministers in Washington to discuss about decrease in co-ordinate rate. Flaherty announced that the savings of Canadians are secured and he will not run a budget deficit because it will harm Canada's economy. Flaherty and the other banks, such as Bank of Canada said that they will be cutting interest rates due to the fallout of the financial crisis. Now the Bank of Canada's lending rate is cut by 50 points to 2.5%. Flaherty rejected the idea of increasing Canada's bank deposit insurance limit because it is already the highest among the world reaching $100,000. Overall, the Flaherty is satisfied with the banks of Canada because the savings are secured and will continue to ensure continual progress.

Connection

The connections between the article and the chapter on merchandise inventory are the prepaid insurance, bank and bank loan accounts. People whose income is a little under average will have difficulties paying up mortgages, however; the reduction in interest rate will make it easier. In COGS , this affects the expenses because the bank charges account will be reduced. This makes a slightly decrease in total expenses. The people who deposits or borrow money from the bank will pay up easier than before.

Reflection

I think that the financial minsters has made a great decision to help the financial crisis. This will encourage people to invest in the banks of Canada, due to the reduction in co-ordinate rate. This also helps the people in Canada manage their finances easier, such as insurances and mortgages. I think in the future the interest rate will keep decreasing until it reaches a certain amount. Then it will rise dramatically because the banks won't be able to keep this for long and their own money are depended on the interest charges. For now, I think this news will attract a lot of people to make investments in the banks of Canada.