CHAPTER 2 SUPPLY & DEMAND : “Home prices fell in August, near lows”

http://news.yahoo.com/s/nm/20101026/bs_nm/us_usa_economy_homes_index;_ylt=AtrhcFBkL8j8HK513nYdCAHv5rEF;_ylu=X3oDMTMxMzNmNzJwBGFzc2V0A25tLzIwMTAxMDI2L3VzX3VzYV9lY29ub215X2hvbWVzX2luZGV4BHBvcwMxNwRzZWMDeW5fcGFnaW5hdGVfc3VtbWFyeV9saXN0BHNsawNob21lcHJpY2VzZmU-

Summary:

The article I chose is called “Home prices fell in August, near lows.” It talks about how the prices of single-family homes fell for a second straight month in August due to the raised amount of foreclosures. The article discusses how due to the “flood of foreclosures”, home prices will likely be low for some time. The article also says that the expiry of home buyer tax credits earlier this year caused the housing market to struggle. The S&P/Case Shiller composite index of 20 metropolitan areas in the US saw a decline in 0.3% in August from July. S&P also saw that seventeen of the 20 cities were weakening in long term, year-over-year figures. S&P said this indicates that “the housing market continues to bounce along recent lows.”

Connections:

In this article, I have found factors affecting both supply and demand. The factor affecting supply is the the price. The large amount of foreclosures, and homes on the market has caused the prices of single-family homes in the US to fall. Foreclosures happen when people can't pay their mortgage, and the bank takes back the house. The bank then sells the house for a discounted price. The demand for homes has also fell in the states. This is due to 2 factors: The incomes of the people; and expectations of futures incomes. The recession in the US has caused many people to be out of work, and not able to pay for extra expenses like buying a home. Both factors: the decreased demand for homes; and increased supply of houses going on the market, pushing on the market, is what caused the prices of homes to fall and “to have stabilized at new lows.”

Reflection:

I think that the banks have to work with the people in danger of losing their homes, before they foreclose it. So many homes on the market are foreclosures sold at lower, discounted prices, so those who do want to sell their home have to compete with those lower, foreclosure prices, for a sale causing the market prices to fall. If the bank helped those who couldn't pay their mortgage, there wouldn't be as many foreclosures, and the housing prices would rise. In reality though, the banks wouldn't help those in danger because the banks make money off of the foreclosures, and they wouldn't give up a profit.

Chapter 1 - Business faces many threats from water scarcity

 http://www.wwf.org.uk/wwf_articles.cfm?unewsid=3869

Summary

The article is written by Lloyd's 360 Risk and Insight and WWF on the relationship between the growing threat of fresh water scarcity and businesses, as populations constantly continue to grow. The article basically states that certain businesses, that produce goods that require water in the production, “may face risks as governments seek to reallocate water to priority users.” paragraph 4, even to those who already who hold a water license. WWF head of Freshwater Programmes, Dr David Thinker, says companies should follow two strategies to manage water risk: the three Ms-measure their water risk, mitigate it, and market themselves in managing water use in the sector, and the three Is-consider water risk profiles, influence suppliers to mitigate water use, and consider water risk to businesses and supply chains when making investment decisions.

Connections

The connections to Chapter 1 that stand out the most are scarcity and the law of diminishing returns. Water is becoming scarce, and if we don't do something about it, we will run out of fresh water. Water is needed for everyday lives, but our over-use of the resource is becoming harmful to the environment and freshwater ecosystems, which are in decline from the over-use and pollution caused by humans. This article also deals with the law of diminishing returns, because the water is the fixed resource. As population grows, businesses will grow and produce more to accommodate the population, which means there will be a larger demand for water, but eventually we will run out of water to full fill the demands.

Reflection

I agree with the writers opinion. Businesses should be more environmentally-conscious of the choices they make, because some businesses are too worried about the present and how much profit they earn, and not enough about how their decisions will affect us, and freshwater ecosystems in the future. I believe that not just businesses, but everyday people should start becoming more aware of the choices they make that affects the environment, and change now instead of later, before it becomes to late to save our freshwater resources.