Financial+Crisis+of+2007-9

= = Notes from Lectures //Links to information from lectures.// toc

Thurs, Mar 8


=Questions for the Lecturer= //Have a question from the textbook (or any relevant question) you'd like the lecturer to address in class? Put it here in advance so he is sure to get to it (and has time to prepare for it).//

=Misc Links/Discussion= //This is for **highly optional** additional information and discussion.//

The added effect of oil prices on the recession is very interesting, given the current situation in the Middle East. Here is a great article explaining the correlation between oil prices and political instability, and the stock market: http://www.nytimes.com/2011/03/11/business/11markets.html?ref=business An especially interesting piece of the issue is the large effect of expectations of future changes in price. Even when oil prices are relatively low, factors like political instability can lead to very volatile markets. Could we talk more about the effects of uncertainty and expectations in class?

Adding to the discussion on oil prices, in chapter 11 of our textbook, the author credits the rise and then sudden drop in 2008 of oil prices to changes in demand. The rise in prices is attributed to the rise in demand of oil in mostly in rapidly growing economies, and the sudden drop in price is attributed to the sudden drop in demand of oil after the finical crisis began in 2007. The article below from the Chicago Sun-Times claims that recently, "oil industry experts say gas prices could hit $5 a gallon--possibly before summer." They attribute this mostly to the war in Libya and unrest in other parts of the Middle East, therefore implying that it is a supply side effect. Since the prices are expected to rise so drastically, I think it is interesting to compare the impact of both demand and supply changes on the price for oil, and I think it would be interesting to look at how and why one has more impact than the other. Here is the link to the article: http://www.suntimes.com/business/4457988-460/5-a-gallon-get-ready-oil-experts-say.html