It's been a whirlwind couple of weeks across the country as the economy got shocking news from both the Federal Reserve and United Nations. The feds cut interest by a half percent while the United Nations unanimously passed a resolution for action against Iraq. Nobody knows where the economy is heading, and mixed news is delaying reaction from investors and consumers.
The reality of war with Iraq has hit closer as 600 Indiana National Guardsmen were mobilized. As many as 2100 soldiers are expected to be called to duty from Indiana in the coming weeks. Some Ball State students have been called to active duty.
War with Iraq has many economic implications. Perhaps the most noticeable is the effect of the Iraqi oil supply. Since the beginning of Desert Storm in April 1990, Iraq has been under sanctions restricting its oil exporting business. The sanctions specified that Iraq could not sell oil to any country except for medical and humanity purposes.
Let's be honest, Iraq has found ways around these sanctions; however, the country is sitting on trillions of dollars annually in potential oil sales.
The results of war with Iraq could increase global oil supply. If the United States goes to war and defeats Iraq, we will probably stay to help install a new government. We always do. It's a given that we will help the people and stay until things smooth over. If we help install a new government, sanctions will be lifted and the Iraqi oil supply will be available to the world. This will help long-term gas prices and the overall economy.
In the short-term, however, gas prices could spike because of the interruption of the oil flow. The $1.40-a-gallon price I paid yesterday isn't going to look to bad.
In 1991, Desert Storm began and ended. Immediately after the war, we saw a recession that quickly rebounded. Jack Meyers, chief economist for The Meyers Report, told Media Life Magazine, "Long-term, war is historically the only means that has been proven to pull our economy out of recession and depression. It's hard to say this war will do that. It's more than likely, given the nature of it, to deepen the recession."
Sometimes it's easy to believe that all this really doesn't effect the college student's pocketbook as much as say, my dad, who worries about his retirement fund. But it does. Every time I go to fill up my car, I'm paying more because of the Iraq's sanctions, and this could double with war.
Mr. Meyers dared to say war wouldn't help the present recession. That's not good news for seniors like me looking for jobs. A recession makes finding work nearly impossible for us who have very little experience and a four-year degree.z In all of this, we'll have to wait and see if history repeats itself.
Write to Liz at eabaker@bsu.edu
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