Blog Post 10

Stabilizing a Stabilizer

http://www.economist.com/world/international/displaystory.cfm?story_id=12725914

After the surging price of oil last year, the debate has recently turned to the huge decrease in the price of oil.  Now below $50 a barrel, oil producers are trying to cut down production 1.5 million barrels a day.  This cut is not happening fast enough however, because economies around the world are demanding so much less.  America, for example, is using 5% less oil than last year.  This is causing huge decreases in income for OPEC.  The oil producing countries are aiming for $75 a barrel, which many assume is reasonable, but the struggle comes from every country do there share, and in doing so losing there share.  

 

To bail or not to bail?

http://www.economist.com/world/europe/displaystory.cfm?story_id=13062174

The once admired euro is becoming more and more less attractive with its countries barely making it through the economic crisis.  Almost a year ago, Britain (who is not on the euro) was struggling the most and was criticized for not adopting the euro.  Now Britain is looking better than most of the Euro countries.   With Greece, Ireland, Portugal, Spain, and Italy all having massive debts, the future is looking very unstable.  Almost $2 trillion dollars of public debt has to be raised this year.  People who made a 10-year note investment in the government, are now ready to cash the investment but in doing so, may very well bankrupt their countries.  If the consumer realizes that the government may not be able to pay them back, then there would be a massive bail-out, and everyone would start to demand their money back.  People would lose confidence and trust in the government.

 

 

Raise is Expected for IMF

http://www.forbes.com/2009/04/21/imf-europe-banks-markets-equity-recession.html

The number crunchers at the IMF are expecting $4.1 trillion dollars in loss of assets by the world’s banks and stating that in order to fix it billions of dollars will have to be given back for the banks to be able and confident to make additional loans. The IMF is expecting to give US banks over $250 billion dollars to get the economy back to pre-crises levels, not to mention the $375 billion it is planning to give the European banks. They are also considering giving specific countries, such as England, an additional $100 billion to jump start individual nations. All in all, the IMF is planning on contributing over $600 billion dollars to Europe. That is a lot of money.