Wednesday, April 30, 2008

Supply and Demand in a Scarcity Market

Okay, I need help from you economically-brilliant folks out there. I just read this article that Mr. Wheeler posted on Mr. Smith's blog talking about scarcity markets and their impact on prices. I'm having trouble understanding the markets for, well, pretty much everything right now. And my main purpose is to try and put my understanding of prophecy surrounding the Four Horsemen and the Olivet Prophecy in a better context, at least to what information we currently have. So the gist of my question is:

Why is demand so high for basic resources right now?

Is it because there's a shortage of actual raw materials (unprocessed oil, grain, rice, copper, etc)? And/or is it because there's a shortage of production even with an abundant supply of raw materials? And/or is it purely psychological due to a shift in the balance of power, the falling dollar and rising nations of China and India and their resource demands? Is it all real need or just fear that we might need more resources in the future? Are things priced higher because demand rose suddenly when producers weren't expecting it and they're struggling to keep up? I understand the issues surround oil reserves, recognizing that tar sands, deep earth drilling and other new reserves deemed unprofitable until lately due to the price spikes. But do food and materials have the same issues? (I know we've already discussed corn here previously, too...)

And if we're not short on reserves for these various raw materials, but just lacking production or delivery methods, will catching up lower the market prices back to "normal" quickly? Are producers dragging their heels even though there's plenty incentive to hire more, drill more, dig more, make more, etc. with the higher prices? Or is there just too much fear that rapidly increasing production will rapidly decrease demand, thus bankrupting producers?

More importantly, if there isn't a shortage of raw materials, will these unstable markets create a shortage? Will they create famine? Will they cause nation to rise up against nation to fight for available resources? Will deep earth drilling cause major earthquakes? (Okay, that one's just me being silly, so don't take me seriously...)

It all makes me wish I took macroeconomics in college... It seems obvious that we're heading down the path of prophecy of the Bible, but I'm interested in thinking about just how it might all flesh out while we're getting there. Any input or perspective would be appreciated.

Friday, April 25, 2008

Psychology of the Two Trees

I read this recent blog entry of an occasional writer for Newsweek, Wray Herbert, and thought his points are excellent. Basically, his point is that the human mind switches between thinking in two basic ways: 1) thinking in absolutes, black and white, the gist of the matter, and 2) analytically, or relativistically, carefully weighing both sides of an issue and then choosing.

Traditionally, children think in the #1 category. Young adults think more in the #2 category as they come out of their teens and begin questioning all the things they were taught as children, figuring out who they are and attempting to find their place in this world. As people age more and more, they begin thinking more and more in the #1 category again, and view the younger adults as more idealistic rather than realistic. For example, a child is told that getting drunk is bad for you, so they believe it and stay away. Young adults may reconsider this attitude if they happen to spend time around drinkers of alcohol and become sympathetic to excessive drinking, even doing it themselves. Having learned hard lessons in their younger days, more mature individuals may once again have proven that, indeed, getting drunk is bad.

The above blog entry goes on to say that teenagers show some interesting results in behavior associated with each type of thinking. Teens are at a fine balance between the two categories as their minds grow and absorb tons of new information, perspectives, advice, independence, etc. So when asked questions on the subject of the risks of sex to determine which category of thinking they fell into, those whose thought more analytically about the risks, carefully weighing both sides, tended to be the ones who took more risks with sex. Whereas the group that thought more globally about it, "sex has risk, so don't have sex", they were far less likely to begin.

I think what I find fascinating is that as children, we are told very simple instructions on how to behave. When we are older, we learn why those behaviors were good even though our younger minds were incapable of understanding the full reasons behind them. We even go on to teach many of the same lessons to our own children. It reminds me of where Jesus tells His disciples that they must become as little children in order to enter the Kingdom of God. Follow God's instructions without question and then learn why.

Adam and Eve were also given simple instructions. But when given an alternate viewpoint on the matter of the two trees by the serpent, Eve probably began thinking deeper about the two sides of the issue, weighing the risks involved, hence the, "...and when she saw it was good for food..." part. I think that's where most of mankind's troubles begin. When something as black and white as God's instructions is presented to man (I mean, He's THE source of all good, right?), does one do it or does that person begin rationalizing? Do we surrender to His will and reasoning, or begin adding our own while not remembering that God's intention is to help and save all of mankind?

When people think of the smartest in the world, they might think of deep thinkers like Albert Einstein or Socrates or Plato who turned the world upside down with their perspective-changing ideas. And yet, when God thinks of the greatest people in the world, He tells us it is those who tremble at His Word and humbly do as He says... Many times without question.

As somebody who enjoys pondering many of life's questions, usually beyond what would be considered reasonable, I fall into the trap of thinking that more thinking is better. Indeed, aligning with God's thinking is better, but we can only gain His mind by first obeying what He instructs us to do. Granted, don't kill curiosity... But rather, don't be curious in the first place in that which God clearly states, "This is the way, walk ye in it."

Thursday, April 24, 2008

Farming Politics Prior To A Famine

This article just floored me. Basically, Congress is on the verge of passing a new farming bill. This occurs during a time when prices for crops are at an all-time high, and yet are extremely volatile. Farmers stand to make a bunch of money due to demand for corn-based ethanol, but are dumping other crops at a rapid pace to dive into this emerging market. Hence the volatility for other crops... No one knows what's going to happen this year on the markets, and just imagine if a major drought or other issues arise to decrease our supply.

But what really struck me just how Congress is replying to this increasing chaos in the farming markets: They're doing nothing. Nothing much, that is, and some congressmen are raging mad. Others, who come from states that give subsidies to farmers, don't have the support to take away the federal gifts appropriated to their constituents. Just look at this section:

"But even strong proponents of the bill, like Senator Tom Harkin, Democrat
of Iowa and chairman of the Agriculture Committee, concede that farm
interests are deeply entrenched and that there is little appetite for change
among many farm state lawmakers, especially when it comes to the direct
payment program.

The direct payments are based on the amount of land that certain farmers own, and Harkin, who has sought to eliminate the payments, said that many recipients of the money then use it to acquire more land and qualify for more payments.

"It's like the black hole in space that astronomers talk about, everything gets sucked in and nothing ever comes out," he said.

"This is the black hole of agriculture. It doesn't make sense, but farmers continue to get it." Harkin said there was not much he could do because, "I don't have the votes," adding, "People love free money."

Isn't that depressing? Leadership not willing to not only do what it takes to alleviate some of the stress caused by these markets on farmers (see this article for more on that subject) but on food prices, food availability, and whether or not this whole ethanol thing is really good for Americans in the first place! (On a side note, one place I read said that even though ethanol/gasoline mix (E85) is cheaper, $2.89/gal as opposed to $3.50/gal for unleaded, figuring in its inefficiencies on our engines (lower mpg) raises it's adjusted apples-to-apples comparison with gas to $3.65. And it may be worse for the environment.) So basically, people like free money and may not vote for you next time around, so don't fix anything and let the whole system tear itself apart. Nice.

Monday, April 07, 2008

Baseball: Read This... Quick!

Please hurry, for this article will only be funny for another couple of days or so! (The Royals are winning their division while Detroit, the odds-on favorite is 0-6. Of course, there are still like 156 games left to play...) I don't usually post on sports, but this is funny stuff...

Friday, April 04, 2008

Who Leads Europe?

Henry Kissinger once asked, "Who do I call if I want to reach Europe?" According to a Harris Interactive poll made for the International Herald Tribune, that answer is clearly becoming Germany. Click here to look at an image displaying what each country polled thought. It looks as though every country in Europe believes that Germany has a leading role while Americans believe Britain does.

Thursday, April 03, 2008

Duuuuude!

As I read over the news each day, I constantly encounter a word or two that, when I read them, I first think that they give credibility to the article and read on... But then I'm reminded that both are words that really means nothing. Those words are 'officials' and 'official'.

I talk to my wife, who is a journalism major, about this every once in a while. Since I wasn't regularly reading newspapers before, oh, let's say, 1988 (more like 2001), I have no idea how long this practice has been going on. But I would guess that the practice of using these words grew significantly after the Watergate scandal. For us young pups who weren't alive back then, some "official" called a reporter back then and leaked the whole story to the press about President Nixon having his people stealing some Democrat paperwork from the Watergate hotel in D.C. That "official" had a name of "Deep Throat". Of course, that reporter never told anyone who his source was, but fortunately, a slurry of evidence came forth proving that the President did indeed order the raid.

Again, this is my guessing here, but journalists everywhere probably saw this confidante witness technique used successfully and cheered, "Now I can publish anything anyone says as long as I don't say exactly who said it! What would be a good word to use here..." And the word officially became 'official'. Its definition is, roughly, someone somewhere who probably knows what they're talking about, but we won't bore you with the details of their actual name.

And call me picky, but this is probably where the downfall of modern journalism really picked up speed. I mean, really... What do you and I normally call someone who tells us some unsavory secret about somebody or something without telling us first who exactly said it first? That's right, a gossip. And isn't that what's going on in sentences like this: "Many Pentagon officials say that the War in Iraq is failing." Or "An official from the company stated that the executive was indeed having an affair." And it sounds official, doesn't it? Of course it does, that's what the word means! Some even say "senior official" to make it more legitimate.

Just for the fun of it, sometimes I like replace 'officials' with 'some dudes' and see how legitimate it sounds then. "According to some dudes down at the Justice Department, the case represents only a small facet of an intelligence-gathering operation... blah blah blah" Pssssh! Says who??

Granted, it isn't bad everywhere it's used, but there are some news stories that don't have as much as a single source outside of 'some dude' who told the reporter their thoughts and the reporter turns around and spews it to us like it was fact. How much 'news' is really gossip and opinion in a thinly-veiled disguise that appears on the surface to be vigorous fact-finding and research? Find out at 10!