Debt in Australia, Monetary Policy Essay Example for Free

Debt in Australia, Monetary Policy Essay Introduction It is imperative that the Australian households’ debt have noticeably risen over the past two decades, and is currently rated high according to international standards. The sharp increase in housing debt has been the reason for the rise in the household debt. Increased availability of housing finance, strong demand for debt from investors, and lower interest rates are the main drivers of the rising housing debt. The households’ net worth and servicing ratios will be discussed in this paper as the impacts on the higher household debt levels. The impacts of the instability in global capital markets will be discussed in this paper in relation to the housing finance market in Australia. Lastly, the implications of the rising household debt will be discussed in relation to the financial stability and monetary policy. Trends in household debt It is important to note that Australian households had a fairly stable ratio of debt to disposable income at approximately 45% during the 1980s. However, rapid rise in the ratio of debt to disposable income was recorded since 1990, with it reaching optimum of 157% in December 2007. The bulk of the increase was accounted for by the housing debt, that is, over the period, the ratio of the housing debt to disposable income rose to 134% from 31%. It was also recorded over the same period, a rise in the ratio of personal debt to disposable income to 22% from 13%. A sharp rise in the ratio of debts to assets was recorded at 17% in December 2007, from 8% in December 1989 (Wilkins Wooden, 2009). A sharp rise in household indebtedness in a number of advanced economies has been witnessed over the last two decades. It is however, noted that the increase in household debt in Australia is pronounced. The Australia’s ratio in household debt to income was recorded as the highest in December 2007 despite Australia recording as one of the countries with the household debt lowest ratio to disposable income among advanced economies in the late 1980s. It is also imperative to point out that among advanced economies; Australia rose from the bottom position to the middle number in terms of the ratio of household debt to assets over the same period (Berry Dalton, 2009). Housing finance market Focus on the housing finance market is emphasized in this paper because the housing debt in households’ total debt is dominant. An average of 15% in the annual growth in housing debt was recorded since 1990. In the periods, 1988-1989, 1994, and 2002-2004 strong growth in housing debt was recorded. This strong growth in the growth in housing debt was faster than the growth in the disposable income of households over the same period that stood at an average of 6% only (Berry Dalton, 2009). Significant growth in house prices accompanied the sharp increase in the housing debt. Over the period 1987 and 1988, the house prices doubled, however, during the first half of the 1990s the house prices drifted slowly higher, with the house prices doubling more between 1997 and late 2003. Continuous increase in aggregate house prices was recorded since late 2003; however, the trend varies markedly across the country, for instance, house prices in Perth increased strongly, while the house prices in Sydney decreased over time. The boom in resources supports the varied trends in house prices across the country (Berry Dalton, 2009). A number of factors accounts to the rising house debt in Australia over the past years, with lower interest rates accounting for high borrowing by the households whenever they take their housing loan out. This trend has been responsible for the rise in the average size of new loans, which results into the rise in the average size of outstanding loans over time. The availability of housing finance has resulted into the rise in the capacity of households to borrow finances (Wilkins Wooden, 2009). Financial health of households It is noted that the historic sharp increase in the Australia’s disposable income in December 2007 was accounted by the strong rise in the housing debt in Australia over the past fifteen years. It was however, pointed out that only a few households had difficulties in repaying their debt obligations, despite the historic sharp increase in the housing debt in December 2007 (Berry Dalton, 2009). Impact of the turbulence in global capital market It is significant to note that the housing finance market in Australia has suffered greatly as a result of the global capital markets’ turbulence. This is because half of the total funding for financial institutions in Australia is accounted for by the deposits. The foreign and domestic capital markets the balance in the Australian financial institutions. There has been significant rise in the mortgage rates, and significant change in the markets shares from lenders, due to this, there is limited restriction to the overall supply of housing finance (Berry Dalton, 2009). Significant reduction in some forms of capital market funding as well as significant rise in the most of the forms of capital market funding have resulted from the turbulence in the financial market. It is however, noted that the impact of the financial market turbulence have been felt in a number of securitization markets. Securitization markets over the past decade or so, have established itself into as a significant source of funding for housing loans in Australia. In mid 2007 for example, outstanding securitization housing finance loans had accounted for 23% (Wilkins Wooden, 2009). This was a significant rise from the mid 1990s 5% housing finance loans that were securitized. A number of loans from mortgage originators were being securitized. Institutions like credit union, regional banks, and building societies had adopted securitization of their loans since it was a cost effective way of wholesale funding (Wilkins Wooden, 2009). The onset of the global financial turbulence in July 2007, led to significant close of the securitization market. There were significant rise prime residential mortgage-backed securities (RMBS) to 75 basis points in December 2007 from approximately 15 basis points in mid-2007. It is imperative to point out that Australia’s Residential Mortgage-Backed Securities (RMBS) accounted for the issuance of a number of Australian Asset-backed Securities (ABS) that extends on AAA-rated senior tranches (Berry Dalton, 2009). There was significant spread in the subordinated AAA-rated tranches that increased to approximately 110 basis points from approximately 20 basis points. It is significant to point out that despite the sharp increase in the spreads, investors in Australia has never encountered losses on rated Australian RMBS, coupled with the housing market in Australia remaining healthy. The investors have become more concerned with the product itself, as discounts are attached to all the sales of securitized products. The selling of residential mortgage-backed securities (RMBS) by several structured investment vehicles (SIVs) has also created excess supply in the secondary market (Berry Dalton, 2009). Implications for financial stability and monetary policy It significant to point out the access to credit by the household sector has greatly increased courtesy of financial innovation and deregulation. The households in Australia have become more comfortable to take loans owing to the ongoing strong performance of the economy (Berry Dalton, 2009). Â  The balance sheets of households have remained in good health despite the significant rise in the household debt; this has resulted into significant rise in asset-value capable of offsetting the rise in debt. It is also significant to note that macroeconomic conditions in the economy are also favorable. References Berry, M., Dalton, T. (2009). Mortgage default in Australia nature, causes and social and economic impacts. Melbourne: AHURI. Wilkins, R., Wooden, M. (2009). Household Debt In Australia: The Looming Crisis That Isnt. Australian Economic Review , 42(3), 358-366.

Are Spinozistic Ideas Cartesian Judgements? :: Philosophy Philosophical Essays

Are Spinozistic Ideas Cartesian Judgements? Abstract Some commentators of Spinoza maintain that Spinozistic ideas are judgements. I shall call this view the common interpretation, since it is popular to interpret Spinoza as reacting against Descartes’s theory of ideas and accordingly consider Spinozistic ideas not as Cartesian ideas, but as Cartesian judgements. The clearest difference between Descartes and Spinoza here is that whereas Descartes thought that ideas are passive, Spinoza thought the opposite. The concept of activity plays accordingly an important role in interpreting Spinoza’s theory of ideas. According to the common interpretation Spinoza and Descartes use the concept of activity in the same way. And since Descartes thought that judgements are active, it is maintained that the Spinozistic, active ideas are like Cartesian judgements. I find that the considerations according to which the activity of Spinozistic ideas is seen in the light of Descartes’s distinction between action and passion are based on too superficial an interpretation of Spinoza. I argue that what Spinoza means by saying that ideas are active does not merely mean that they are active in a Cartesian sense. He has in mind something additional to the mere Cartesian activity. Whereas Spinoza wants to say that active ideas incorporate the property of truth or certainty, Descartes does not think in that way about judgements. Thus, the Spinozistic ideas can be called truth-expressing. Introduction Renà © Descartes brought the concept of idea into a central place in epistemology. Another famous rationalist—Benedictus de Spinoza—made use of the same term "idea", but had an entirely different view concerning the nature of ideas. Whereas Descartes thought that ideas are passive, Spinoza had the opposite view according to which ideas are active. In this paper I shall examine what Spinoza means by the activity of ideas. According to some commentators Spinozistic ideas should be seen as Cartesian judgements. I call this view the common interpretation and I shall argue that it does not capture the whole of Spinoza’s theory of active ideas. The activity of Spinozistic ideas is something more than merely the kind of activity found in Cartesian judgements. In the first part I will sketch Descartes’ conception of ideas as passive. In the second and third part I move on the outline Spinoza’s position and point out that there are passages which motivate the common interpretation. In the fourth part I will proceed to argue that the activity of Spinozistic ideas is not merely that of Cartesian judgements.

Oligopoly Problems

Oligopoly Problems (Note that second page has some partial answers so that you can check yourself. I think these are correct, but I did it quickly. So I will offer one bonus point per mistake for the first person who finds the mistake in my answers with a maximum of 3 points per student. ): 1) Demand is given by P=100-Q/2. Two firms compete according to the Cournot model and each has TC=10q. What profit does each firm earn?How would your answer change if the second firm observed the first firm’s decision (this is the Stackleberg problem)? 2) Demand is given by P=80-2Q. There are three identical firms each with TC=10. Find the profit of a firm if they each pick quantity simultaneously (Cournot). Find the Profit of a firm if the each pick price simultaneously (Bertrand). 3) Suppose there are n firms that compete according to the Cournot model and that each has MC = C. If demand is given by P=A-BQ, what profits will a firm earn?What would a cartel do? 4) Factory 1 has TC=20q +10 and Factory 2 has TC=10q. If both factories are operated by rivals who compete according to the Cournot model, what profits would each earn assuming that demand is given by P=180-Q? If this was one firm (a cartel) what would it do (hint: if the one firm decided to operate both factories it would want MC to be the same at both locations or else it could increase profits my shifting where it produced)? 5) Firm 1’s demand is given by P=49-q1+0. 5q2 and Firm 2’s demand is given by P=49-q2+0. 25q1. If TC=q2 +5 for each, what profit will each firm earn? What kinds of goods are the two firm’s selling? 1) q1=60 and q2=60 for Cournot while q1=90 and q2 = 45 for Stackleberg. 2) Under Cournot, q1= q2 = q3 =10. Under Bertrand, the firms will push price down to 0. 3) Each firm will produce q = (A-C)/[B(n+1)] under the Cournot solution. 4) In the competitive situation, q1=50 and q2= 60. 5) Each firm would make q=13. 07.

The Hysteria of Salem Witchcraft Essay - 910 Words

The Hysteria of Salem Witchcraft Although there has been a long history of witchcraft, the main concentration is from the periods of the sixteenth and seventeenth centuries. In the British North American colonies alone there were over 100 witchcraft trials alone, were 40 percent of the accused were executed. Now two professors, Carol F. Karlsen of history and Kai T. Erikson of sociology, examine the Salem Witchcraft Hysteria to see if it was caused by a fear of women and give two entirely different interpretations. The first professor, Carol F. Karlsen, agreed that the Salem Witchcraft Hysteria was caused by a fear of women. She agrees that the belief in the Puritian culture, that women were evil, existed because they†¦show more content†¦It was all seen through the women’s new ways of forwardness and liberties. A good example was with Adam and Eve being punished for the sin of pride, rebelling against the order of creation, but Eve was seen as rebelling both as part of man and as man’s other. This is how Eve was seen as the fall of man. â€Å"Yet looking upon her as made for the man, and by the Creators law owing a subordination to him, so she may also be looked upon as instrumental.† as said by Willard. Willard means that Eve should have encouraged Adam to obey God since she was created to serve man, but she didn’t. This caused her to be seen as a mischief and for the cause of the downfall of man. For the actions of Eve God placed a special curse on t he female race, â€Å"Unto the woman he said, I will greatly multiply thy sorrow and thy conception: in sorrow shalt thou bring forth children: and thy desire shall be to thy husband, and he shall rule over thee.† It was seen that part of women’s sin was the seduction of man and another was her failure to serve man. Although Willard never actually said that there was a direct connection between woman and Satan, he thought that woman was influenced by the Devil and she did what she did voluntary of her own free will. In the Puritian society, Eve was seen as the mainShow MoreRelatedThe Crucible Of Salem Witchcraft Hysteria1661 Words   |  7 Pagesoff a spark that would start the Salem Witchcraft Hysteria. Wishing to know about their future, Betty and Abigail suspended a raw egg in a glass over a light.The images would act as messages and clues. Although this seems innocent enough after this â€Å"reading† they began to display unusual behavior associated with possession symptoms. This led to a full scale investigation and arrests of the slave Tituba, Sarah Good, and Sarah Osborne under the charges of witchcraft. Tituba was the only one to confessRead MoreWitchcraft Hysteria Of Salem, Massachusetts891 Words   |  4 Pagesconvictions and 19 executions of witches that took place in Salem, Massachusetts beginning in 1691 (Orr, September 30, 2015). Though the causes of the mania are still hotly debated even today, the primary cause of the witchcraft hysteria that captivated Salem, Massachuse tts in the 1690’s was socioeconomic tensions within the community. The town of Salem was actually split up into two distinctly separate settlements. The village of Salem was characterized by farmers who depended heavily, if not exclusivelyRead MoreSalem Witchcraft Trials : Hysteria And Craziness1470 Words   |  6 PagesSalem Witchcraft Trials This period in America can be summed up in two words: Hysteria and Craziness. The 1692 notorious Salem witch trials started after some young girls from Salem Village, Massachusetts, purported to be possessed by demons. The girls accused some local women of bewitching them. As the wild hysteria spread across Massachusetts, a court was specially set up to listen to the cases. Bridget Bishop was the first witch to be convicted and later hanged in June. Eighteen more wereRead MoreThe Causes Of Witchcraft Hysteria In The Salem Witch Trials1110 Words   |  5 PagesIn 1692, the British colony of Massachusetts endured abnormal accusations of witchcraft against more than 150 people (Prentice Hall Literature, p. 1087). Many factors caused the witchcraft hysteria to come alive during the 1600’s. Two important factors were: Daemonologie, written by England’s King James I, and the bewildering behavior of the accusing teenage girls. While Arthur Miller explains that the accusati ons could have been made over the lust for land, there are also reasons not explained:Read MoreThe Crucible By Arthur Miller1738 Words   |  7 PagesHysteria can be defined as exaggerated or uncontrollable emotion or excitement, especially among a group of people. In Arthur Miller’s, The Crucible, this feeling disperses throughout Salem, Massachusetts, a Puritan town with a theocratic government in 1692 and 1693. In this play, Betty, the daughter of Reverend Parris, the minister of Salem’s church, is under an unconscious and unresponsive state. Her condition follows her father catching her dancing in a forest with her cousin, Abigail WilliamsRead MoreWitchcraft in the Salem Village and The Crucible Essay1006 Words   |  5 PagesWitchcraft was as a capital crime in seventeenth-century New England. A hysteria over it was caused by a group of girls. (Kent 95). Witchcraft was considered a terrible crime throughout Europe; its punishment was death by hanging or burning. (Dolan 8). Everyone in the village of Salem believed in witchcraft, and only a few have tried to use it. (Kent 18). In 1692, Salem Village hysteria was a major event in United States history, which will never be forgotten. The people of Salem were caught up inRead MoreWitchcraft Hysteria By Laurie Winn Carlson1307 Words   |  6 Pagesto see real witchcraft, you watch people protecting their comfort, their beliefs.† This quote is saying if you want to truly understand someone, learn about what they believe in. It all began in Salem, Massachusetts in 1692. The accusations toward people who were thought to be witches was on the rise. These would not be the kind of witches a person would think about in today s world, but women and men who were put on trial for witchcraft hysteria, which in turn caused mass hysteria. Based on theRead MoreEssay on Witchcraft in the Small Village of Salem1585 Words   |  7 PagesWitchcraft was as a capital crime in seventeenth-century New Englan d. Madness over witchcraft was caused by a group of girls (Kent 95). Witchcraft was considered a terrible crime throughout Europe; its punishment was death by hanging or burning (Dolan 8). Everyone in the village of Salem believed in witchcraft, and only a few had tried to use it (Kent 18). In 1692, Salem Village panic was a major event in United States history which will never be forgotten. The people of Salem were caught up in aRead MoreHistorical Journalism At The Salem Witch Trials863 Words   |  4 PagesHistorical Journalism at the Salem Witch Trials The Salem Witch Trials are one of the best known outbreaks of hysteria and fear in American history. This event began when Betty Parris, who was a daughter of Salem’s church’s minister, and Abigail Williams, who was her cousin, experiences several occasions of odd, violent behavior that they blamed on witchcraft. They accused two white women, Sarah Good and Sarah Osborne, as well as a slave, Tituba, of practicing witchcraft in the village. The three womenRead MoreThe Crucible Mass Hysteria Analysis1012 Words   |  5 PagesMass hysteria is when a group bans together and acts as one as a result of rumors and fear, that may cause one to think irrationally. Mass hysteria has been seen in many events throughout history, that has led to an overwhelming outbreak of fear. In the play The Crucible, Arthur Miller presents how mass hysteria can quickly and easily overtake a group of people and wreak havoc on everyone by inflicting fear. Mass hysteria is a controlling force in t he play and is seen in the accusations of the guilty