Tuesday, July 24, 2007

Economoron

Does anyone know where I can get a good ultra-beginner's-level introduction to Canadian economics?
This is one area I find myself woefully deficient in. You name it, I don't understand it. For instance:

Today it was reported that the Toronto Stock exchange was down nearly 400 points, the steepest one-day decline in some seven years. A variety of reasons were given. Retail sales are sharply higher; the price of oil has dropped considerably; there is some fear that interest rates will rise to "cool off" the economy.
Why would we want to "cool off" the economy, he asks, stupidly. I thought a hot economy was a good thing--for us plebes and the fat cats running the show. But no, supposedly this "hot economy" phenomenon inevitably leads, through yet another process I don't comprehend, to "inflation"--which in economic speak seems to be the equivalent of "the deepest darkest depths of Hell". One person speculating that inflation might rise causes a mini-panic.
Inflation: as far as I know, it means prices go up. So long as wages keep pace, what's the big deal? And if they don't keep pace, it means employers are simply pocketing more profit...doesn't it?
Another definition I've read: inflation is the process by which your money deteriorates in value. Fair enough, except money doesn't have a value in real terms, not since the world abandoned the gold standard. Money is just paper.
So are shares, and it astounds me to think how many shares there are in any given company. I'll hear something like "quarterly profits were $7 million, or twelve cents a share"--my God, that's a lot of shares.
Company stocks, I've noticed, always go up when (a) there's a merger in the works or (b) they lay off a bunch of people. Following that logic, there should be one company producing everything in the world, employing only robots, and its shares would be infinitely valuable.
The above is proof positive that the stock market cares little for the peons that actually drive any given company.
Bonds, mutual funds, GICs, annuities...the complexity goes on and on. This is all stuff that should be taught in school, part of a "Life Skills" curriculum that ought to be mandatory.

Meantime, I'm an economoron.

1 comment:

The Mad Wombat said...

What always boggles me is hearing tales like "Company XYZ stock plummeted today on reports that profits were up 28% instead of the 29% projected."
It's as if no matter how well they do, it isn't enough.