Friday, April 16, 2010

(Preface) The Volcano & The Economy

Ash takes cash::: The Volcanic Ash Advisory Centre in London says that the high atmospheric pressure over the Atlantic is dictating that the wind strengths and the cloud will stay in northern Europe. However, should the pressure change, the cloud could move more toward the Mediterranean.

Our modern society is so fragile! When a volcano erupts, the whole world gets a major case of paralysis! It's happened before, and it will happen again. Early this week there was an article on Forbes that mentioned the possibility of oil reaching $100 a barrel, which would mean gasoline prices would also increase. Of course, that's the last thing our little budding "economic recovery" needs. Many times on this humble weblog I have pointed out that if pump prices, at any time, spike up past $3, brace for another crash. A few blocks from where I live, regular today was selling of $3.03. Now, that's not too bad. But once it gets around, say $3.49, people will start cutting back on other things to pay for gas. Whatever degree of "consumer confidence" consumers were feeling, will quickly turn cold.

Watching BBC World News tonight I learned that the thousands of cancelled flights due to the Eyjafjallajokull volcano in Iceland are costing the airlines dearly... Upwards of $200 Million PER DAY... and that's just the tip of the iceberg volcano!

Amazingly enough, there are some observers who think the volcano will have little or no effect on the economy! Huh? WTF? MarketWatch says the fallout from the volcano is "not yet an economic calamity" ... the last time this particular volcano erupted, back in 1821, the eruptions lasted for more than a year. MarketWatch is also trying to figure out why the price of Gold is suddenly falling. Could it possibly have something to do with the volcano? Just a thought!

Let's just say that every gain we've seen over the last six to eight weeks may soon be wiped away in a flash. Besides the airlines' losing revenue, BBC profiled some stranded travelers who were cleaning out their bank accounts trying to pay for food and lodging in places they could not leave, while other travelers spent all of their money finding alternate means of transportation to intended destinations DESPITE the expense!

If you thought the economy was in a perilous state before, watch it if the volcano continues to erupt...

I hope I don't end up posting "The Volcano & The Economy, Chapter One."

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