Down They Go
The New York Times is running an article entitled, "Stocks Tumble on Weak Dollar and Oil Prices." The article begins, "Stock markets were hit today by their second sharp sell-off in less than a week, sending the Dow Jones industrial average down 360 points to a level last seen in September, before the Federal Reserve cut interest rates." The article adds, "Investor confidence was further shaken by the news from G.M. that it will write down $38.6 billion in future tax benefits after a string of poor sales in North America and Germany. Shares of G.M. dropped 6 percent, to $33.97. Meanwhile, Time Warner announced a 53 percent decline in third-quarter profit. Its shares were down on the news to $17.80, a 2.9 percent decline."
Read the Article!!
Discussion Starters for Younger Children
- Do students think that it's good for schools to have recess? Why/why not? Ask your students how they would feel if they were told that from now on recess was going to be ten minutes shorter. Why would they feel this way?
- The class might put the idea of a shorter recess on trial. Encourage students to argue both sides.
- Ask students to explain how somebody buys something. What do students think happens with the money that somebody pays for something? Why do they think this? Ask students to imagine that they worked at a store. How would they get paid?
- Ask students to draw a series of small pictures explaining what happens when somebody buys something.
- Ask students if they've ever bought something with their own money. What did they buy? Why did they buy it? Ask students if they would have bought this thing if it cost much more money? Why/why not?
- Consider holding a small fair in your class in which students would have the opportunity to buy goods from other students. Students would have to decide how much money they would spend for a particular good. They might even use fake money and products that students made in class.
- Identify something in the classroom and ask students how much money they think it is worth. Ask them to identify two things in the classroom that might cost somewhere around the same amount of money. Now ask students to imagine that the first item was damaged in some way. Do students think that the damaged item would be worth more or less money than the undamaged item? Encourage them to support their opinions.
- Vocabulary terms to discuss: "Stock Market"; Brokerage; Bellwether; and, Appraisals.
- What does an investor do? What do students think it means for investors to have confidence in a company? What does it mean for investors to have confidence in the economy? Do students think that confidence is important? Why/why not?
- These questions might spark an interesting class discussion.
- Ask students to imagine that they worked for the Federal Reserve Bank and it was their responsibility to advise policymakers on how to help investors develop confidence in the economy. What are some strategies that students might advise? Why would they advise these strategies?
- Students might develop these policy proposals in small groups and then discuss them.
- Ask students to explain how the price of oil could effect the price of other goods and services for sale in the economy. Encourage them to explain their thought processes.
- Students could develop graphic organizers depicting how the price of oil effects other prices.
posted by Andrew Pass @ 4:06 PM
2 Comments
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2 Comments:
It's worth noting that even if stock prices stay the same, the value of the company in question is droping because the dollar is falling.
Related: most of the rise in oil prices is due to the weakness in the U.S. dollar. From my perspective, spending Canadian dollars, the price of gas has not increased substantially.
What should be asked is why the dollar is dropping so sharply on the world market, and what the consequences will be for Americans.
It's easy to jump to the quick answer, like the massive deficit created by the war. But other factors, such as personal credit, such as the housing bubble collapse, such as increased competition for world resources, are also playing a part.
My income, if expressed in American dollar, has risen 40 percent ovr the last four years, even though I have had only routine promotions and cost of living increases. More accurately, Americans' incomes have been dropping sharply relative to mine.
It means Americans won't b able to buy things the way they used to. Oil is the first and obvious thing. But all resources - wood, wheat, computers, toys - will be more expensive. And the government will not be able to raise interest rates to counter this inflation because (a) the demand isn't domestic, and (b) raising rates increases debt servicing costs, which reduces ability to pay.
It is worth asking student how the United States came to be in this fix. It is almost as though the government deliberately overspent to ensure that future governments *couldn't* restore programs to help the poor and disadvantaged.
Stephen,
Thank you very much for your very thought provoking response to my post. You've definitely gotten me to think. I'm a 37 year old and while I don't have a family of my own I do help my girlfriend and her children. Your thoughts worry me: Will I have the ability to provide for me and those I love into the future? Will my children and their children be able to live at with a quality of life that I would find desirable?
What will it take to ensure that the U.S. does not regress to the point where we can't meet the needs of our citizens, or have we already reached this point?
One thing seems certain, if Americans don't learn to put of gratification until they can truly afford it it will be harder and harder to satisfy their desires.
Here's another question, what is the relationship between this blog post about the fall in stock prices and the previous post about the writers' strike? Is there a relationship?
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