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