Business & Economics: October 2007 Archives
I don't think oil prices affect the stock market nearly as much as many people seem to think. Even still, oil is rather expensive right now and some energy experts expect prices to drop soon.
Here's how Littell sees it. Last year Saudi petrocrats thought demand would slacken at the same time that oil production rose from sources outside the Organization of Petroleum Exporting Nations. They cut back Saudi production from 9.5 million barrels a day in March 2006 to 8.5 million a year later in order to keep supply and demand balanced and crude prices hovering around $60 per barrel. ...The Saudis hold the key to long-term oil prices since they are one of the few exporters--Kuwait and Abu Dhabi are the others--with the ability to increase production significantly. Littell says the Saudis realized their mistake and began pumping more oil in May. At the most recent opec meeting on Sept. 11 members agreed to boost production by another 500,000 barrels a day starting Nov. 1. That increase included a bump in the Saudi quota to 8.9 million barrels a day. ...
How long before we get some relief? It takes at least a week for the Saudis to complete the paperwork necessary to ship oil to new customers, including arranging letters of credit and other financial details. Then the oil rides in a ship across the Atlantic for 30 days. Add them together and Littell expects the impact of all that additional oil to hit U.S. markets in a couple of months or so. The Saudis "didn't plan on $80 oil," he says. "They wanted to keep it around $60 and did the wrong thing."
Other "experts" disagree, so your mileage may vary. The great thing about a free market is that it's a self-correcting system and doesn't require meddling by "experts" to reach a good solution.
John Baden explains why periodic downturns are important for a healthy economy. It would be nice if market participants always made smart decisions, but they don't, and downturns are part of how resources are reallocated to those who can manage them well.
Every successful society has devised ways of separating incompetent or systematically unlucky people from the control of valuable resources. (That's why civilized nations provide children and legally incompetent individuals with guardians and trustees.) This is an essential process for all but the most wealthy of nations, e.g., those cursed by great oil wealth. (This windfall wealth situation is the national analogue of individuals winning the lottery; a harbinger of bad things that follow the lack of a need to husband resources.)A society's economic success is increased if it has sure and quick ways to accomplish this separation, however painful to those who suffer losses. While there will be political pressures to buffer folks from the consequences of economic folly or bad luck, it is socially dangerous to do so. Reality checks should have force, so that those who fail to prudently manage resources will not keep control over them.
We all benefit -- directly or indirectly -- when our civilization's resources are managed by the most competent among us.
It's pretty common for restaurant servers to make mistakes -- sometimes intentional -- when ringing up a bill. Since you typically write int the tip when you sign and you never see the bill again, it's easy for dishonest servers to bump up their tip, and most customers will never notice! Unless you go through your credit card statement and keep your receipts you'll have a hard time catching these thieves... but now there's a simpler way! Checksum your tips..
Adjust the amount of the tip so that the numbers in the final total to the left of the decimal point add up to the right-most digit. In this case, the total has a “51″ to the left of the decimal point (A). 5 + 1 = 6, so the final digit should be six. Adjust the total to $51.86 or $51.96 (B) by adding nine or subtracting one from the tip (C).
This way you don't need your receipts at-hand to glance through your credit card statement and catch most tip fraud. If you see a checksum that doesn't match, dig out the receipt (you keep all your receipts, right?) and call your credit card company to report the fraud. Then call the police.
(HT: GeekPress.)
Yeah, the market is doing great. I've been buying into the bear for this whole downturn, and in the short-term at least things are going well again. Obviously they'll go down again at some point and others can wag their fingers at me, but I'm optimistic.
