Oil in the Arctic: New Discoveries

Did you know that the Arctic Circle now contains double the amount of oil that was previously found in that region? According to CNN's recent article, the "Arctic may be home to 30 percent of the planet's undiscovered natural gas reserves and 13 percent of its undiscovered oil" (Azadeh Ansari, CNN). This assessment performed in the Arctic Circle is helping scientists with their latest discoveries, and has the potential to "help oil and gas companies locate new troves of fossil fuels". One of the main concepts of Macroeconomics is the idea of scarcity (and accessibility) to resources: in today's society, fuel and gas are certainly considered to be limited resources. Although offshore oil exploration is at its "infancy", companies such as ExxonMobil have claimed their drilling areas without hesitation. Since the United States is one of the largest consumers of oil and gas, it makes sense that the drilling and oil sources are diversified. Public policy ensures us easier access to such scarce resources, which is especially important in regards to the United States' current situation within the economy.

No country for Dead Seals

The EU is putting a ban on seal products from Canada. Seals are hunted in a couple countries across the globe, for their furs and fats. The problem in seal hunting is the methods and ethics involved. Everyone loves a good baby seal, and no one wants to see them cudgeled to death. But, the market for seal products has been established. For some seal hunting provides greater marginal utility than the costs of killing it. Income, trade, and possibly meat for the family (if one believes in such things). Ultimately though, the market of seal stuffs has been promoting economic trade for centuries. So, when the EU Parliament approved the ban 500 something to 49, it was obvious that the trade is nearing its end. Economics gives way to cute, cuddly goodness.

-Adam

A Economic Opportunity on Wheels

Bicycles are becoming more and more common for hotels to rent out. This is a very good thing, because it promotes all sorts of different economic activities. First of all, they benefit the hotels and users of the bikes. The customers at the hotels who rent or provide free bike rentals have a greater utility from the hotel, and therefore, choose to stay at that hotel more often. the hotel benefits from the business, creating more GDP for the country in which it is located. Also, the use of bicycles promotes international trade in two ways: tourism and the market for bicycles. Where tourists flock, the demand for the local currency increases. And countries that produce bicycles can specialize and trade in order to benefit the most from trade. Just to think that one revolutionary idea creates so much economic growth. Imagine what other exciting possibilities there are in other additions to hotel services.

-Adam

Reaching Towards Recovery: What Should Be Expected

Although unemployment rates may remain high, Federal Reserve Chairman Ben Bernanke believes that the United States economy will begin to improve later on this year, assuming that financial sectors continue to 'heal'. Now more than ever, Bernanke appears to be fairly confident that our economy will soon reach its recovery. He predicts a "rebound in consumer spending, which is the driving force behind the economy". Bernanke also claims that we, "continue to expect economic activity to bottom out, then to turn up later this year". Even at the first sign of recovery, however, economic activity rates still won't be as high as they should be. This will keep inflation low for a while, resulting in lower interest rates as well. Bernanke announced that the Fed will soon be releasing further information about various lending programs in order to help release us from this credit crisis. Even though our current situation has become a serious issue and there are only a limited number of loans that banks can offer, Bernanke believes that things will only begin to get better from here.

-Hannah Rutzick

Animals are needy.

The Minnesota zoo announced an new raise in admissions prices by $2, due to a cut in its state funding. This would put them among the highest costing zoos in their category. This summer, prices for admission will rise to $16 for adults and $10 for children between Memorial Day and Labor Day, and will drop back to $13 and $7 in the off season. Family memberships will be increasing to $95. What a discount. The prices for many zoos in the nearby area are much lower. also, there are other options such as the science museum, complete with Imax experience. The problem with raising admissions is the current economic situation. Although input costs for the zoo will be increasing, there is a there is a threshold for prices. Currently, the issue will be whether or not demand will decrease due to high opportunity costs for the possible visitors. If this indeed happens, Minnesota very well could see its zoo closing, due to a downward spiral of customers, and an increasing price of admission.

-Adam

Piggy Pandemic

Let's face it, these past few days, the entire world has been frantically looking out for cases of the swine flu, also known as the "2009 H1N1". We can't help but to notice the increasing number of confirmed cases of the swine flu, which are spreading like wildfire across the globe. Just like any other respiratory virus, this worldwide pandemic is contracted by person-to-person contact. Health investigators from the World Health Organization (WHO) are working hard to keep things under control. A doctor from the WHO stated, "It really is all of humanity that is under threat during a pandemic". We just all have to be careful and make wise decisions regarding our health. Now you may be wondering, how does this situation relate to economics? It's a simple case of supply and demand. Schools and businesses are being shut down. Take into consideration the amount of antiviral drugs that need to be supplied to patients around the world. There is only a limited amount of supplies available right now, and the WHO is debating whether or not a vaccine made specifically for H1N1 is necessary or not. Medications are very costly, therefore creating a vaccine, which is in high demand right now, would cost our economy a lot of money. "There's no one action that's going to stop this. There's no silver bullet, but all of the efforts ... will help to reduce the impact on people's health."

-Hannah Rutzick

Un-Stimulate me, Please

Governor Sarah Palin (R-AK) announced her rejection of 45% of Alaska's portion of the stimulus package. In the short run, this bold move would reject $415 million aimed in multiple areas of life, such as $170 million for education, and several million focused on energy. With this in mind, she claimed that she does not want strings attached to her funds, and expand government, only to have deplete and have programs that become liabilities after the expiration of support. This is a valid objection, but it is a decision that could draw the treatment of economic policy along party lines. If this action holds, and is followed by other governors, much of the stimulus package could go to waste. This would result in an eventual increase in taxes for no apparent reason, causing people to feel less wealthy. End Consequence: a decrease in aggregate demand, leading to... more economic recession. In short: although the stimulus is a highly liberal solution to the economic crisis, opposing it could prove fatal, if not properly researched and planned out. Some conformity of opinion might be necessary for the current recession to be overcome.
-Adam

Pump Up The Profit: The Fed

The Fed's most recent attempt to help the economy has put banks in a tough situation. Their intention was to benefit mortgage volume, but consequently, loans are not as profitable as they used to be. On Wednesday, the central bank revealed their plan to purchase $300 billion in long-term debt. The outlook, however, does not appear to be a positive one. This situation causes problems for banks--banks that typically borrow money at short-term interest rates and issue long-term loans. Gerald Hanweck, a professor at George Mason University's School of Management says, "Normally banks do well when the yield curve is steep". This yield curve has presented the banks with a little bit of hope. The Fed's "aggressive rate-cutting campaign" is completely responsible for the acceleration of the current financial crisis. Hanweck continues saying that, "It could backfire a little on the Fed by weakening bank earnings which aren't that strong to begin with". The Fed's Treasury buying program has released very few details, but the Federal Reserve Bank of NY assures that the previous purchases are focused on improving the current situation.

-Hannah

Oil to respond to the Fed's newest economic plan

Amid America's economic woes, the oil industry is plotting its next move. The prices of many commodity goods are rising at an alarming rate. Commodity goods tend to increase in price when the dollar falls, or inflation goes up. With this trend in mind, prices will spiral upwards, and demand will plummet even further. So, OPEC had to meet and decide if they should cut the supply of oil, or let the market decide the demand. Their decision was to leave production unchanged. This could be beneficial for OPEC, because it would keep supply high, and in theory, increase the demand. But currently, demand is declining, and that will be the deciding factor for later action regarding OPEC. On a similar note, the cost of copper is increasing in a way parallel to oil. Since copper is linked to construction, it reflects the collapse of the housing market. With this in mind, oil and copper are two products to watch for the next quarter, in order to asses just how deep will the housing and transportation crises reach.
-Adam

Barrels and Bucks

In this image, employees on Wall Street are enraged that oil prices have increased to 'almost a hundred per barrel". However, in the following image, the cartoon alludes to the fact that since prices have risen, the cost of the barrel itself is almost a hundred, completely disregarding the cost of the oil itself. This cartoon gives a clear demonstration of how our economy has gotten out of hand. Prices on most product these days have gone way up, and it is becoming a major problem for us Americans. Hopefully, with a new president at hand, we will be able to get out of this recession and make a complete recovery.

-Hannah

Our Economy: 'Perfect Storm' to Economic Crisis

It is obvious to Americans that our economy is in terrible shape, but what many people don't understand is how it got this way. Although people have many different opinions as to where the economic crisis originated, experts say that the problem traces back to the housing bubble that came about earlier this decade. According to a recent study by Brookings Institution, "Housing prices jumped at a rate above 6 percent in 1999 and increased rapidly and steadily as the decade turned...After the mid-1990s, real house prices went on a sustained surge through 2005, making residential real estate not only a great investment, but it was also widely perceived as a very safe investment". Along with the housing trends, experts also say that the effects of the September 11th terrorist attacks are another leading cause of our current situation. Meanwhile, global investors were looking towards the United States for ways to make even more money, and consequently, they put their cash into (what they thought would be) "the 'safest' economy in the world". Now that our country is waist-deep in loans and debts, people are beginning to panic. Econmist Peter Rodriquez calls it a "death spiral of prices" that has spread across our country "like a virus", causing our markets to plummet. CNN's Ali Velshi claims "It was a perfect storm...It was a lack of regulation, it was greed and creativity in the financial industry, and it was an American dream that got off track."

-Hannah

This Little Piggy Crashed The Market

According to this cartoon, there are multiple problems with the economy. First of all, the Stock Market Crash demonstrated that our economy was waning. Also, the housing market, whose crash could be attributed to banking crises, crippled the economy. The real tragedy is that the most injured "toe" does not get the most aid. That was reserved for the auto companies and corporations, not for the American public.

-Adam