Crash

Recently I’ve been finding all I’ve learned about economics turned on its head. As someone recently graduated from a university undergraduate program, I am not too far removed from economic abstraction. How economics should work, an ideal if you will.  Real world effects either confirm or confuse what’s been learned in the classroom. One such effect is to see how two accepted economic models react to a recession. On one side, we have the microeconomic model of the firm and it’s pathway to success, and on the other, the macroeconomic model of growth of a domestic economy. I accepted both of these models from lesson one. Now I see how one can work against another.

Despise not foul speculation

As any oil-watcher has noticed, the barrel of oil’s price has dropped dramatically in the past couple weeks. This afternoon, the barrel fell to $120. Considering at the beginning of July, the barrel was $147, that means is that in a little under a month, the price of a barrel of oil has dropped nearly 20%. To me, it shows how bidding in the market will usually overshoot equilibrium before moving back, much like a pendulum. What worries me is that this price drop has occured amidst cries of foul speculation, and proposed taxes on windfall profits. Who makes these cries and propositions? Politicians do, and since these events have occured simultaneously, I am afraid those same politicians will claim these asanine policies brought the price of oil down. Nothing could be further from the truth.