Business News in the Eau Claire Journal

Rare Earth Minerals Discovered in Nebraska

The little town of Elk Creek (population 112) is rejoicing over the discovery of rare earth minerals and niobium in their community. The mining company Quantum Rare Earths Developments Corp. has purchased about four miles of land and plans to open a mine in the next couple years. Quantum will be the first company to mine rare earth since the lone California mine was shut down for environmental reasons nearly a decade ago. The steel strengthener, niobium, has never been mined in the US. Niobium is in great demand by the auto industry to create lighter, more fuel efficient vehicles. Rep. Mike Coffman fought for an amendment to relax regulations in order to allow rare earth mining in the US. "It's important to develop other sources [for rare earths] in the United States and not be so reliant on China," Mr. Coffman said.

Higher "Ed" Could Be Next Bubble to Burst

By Jack Kenny - New American

While Standard and Poor's downgrade of the U.S. government's credit rating has drawn much attention in the last few days, a generally overlooked report by Moody's Investment Services on the poor performance of student loans suggests higher education may be in a financial "bubble" that could burst in a stagnant economy that offers declining rewards for a college or university degree.

Titled "Student Lending's Failing Grade" the report appeared in the Moody's Analytics publication for July, 2011. It notes that dollar balances on student loans have increased by double-digit rates in the past decade and the number of loans has continued to increase in recent years as more people have been seeking education and training in a declining job market. That has not, however, led to a decrease in the availability of loans or a change in the requirements for obtaining them. "Part of this may be because the federal government ensured that lenders had funds to lend to students throughout the recession," the report said. "With no supply constraints and a federal guarantee taking losses in the event of a default, lenders had little need to curtail their lending and every incentive to expand it. This permitted borrowing to remain robust at the cost of poorer performance."

In a 2009 article in Chronicles of Higher Education, Joseph Marr Cronin raised the question of whether higher education fit the description of a financial bubble, "an asset that is irrationally and artificially overvalued and cannot be sustained. "

"Consumers who have questioned whether it is worth spending $1,000 a square foot for a home are now asking whether it is worth spending $1,000 a week to send their kids to college," they wrote. "There is a growing sense among the public that higher education might be overpriced and under-delivering."

S&P Downgrades US- Obama Wants More Spending

In response to the recent S&P downgrade, president Obama's solution is to add more debt by calling for more spending and extended tax cuts. President Obama proposed that the pay-roll tax cut be extended another year, more government sponsored infrastructure built, and longer unemployment benefits given. These provisions would cost $100 billion in 2012 alone, wiping out any 2012 savings gained by the spending cuts made by Congress. Sen. Jeff Sessions commented, "We must now begin a sustained program of reducing debt, not creating more. The president's determination to spend and borrow even more, despite the credit downgrade, shows that he is in denial. He remains unwilling to acknowledge the true danger posed by our debt."

Falling Gas Prices

According to energy experts, gas prices should fall anywhere from 30 to 50 cents per gallon over the next several weeks. Crude oil for September delivery dropped to $81.03 a barrel in New York futures trading. Retailers will begin to reflect these dropping oil prices soon. Patrick DeHaan, senior energy analyst for GasBuddy.com, predicts that prices will decline to $3.25 per gallon. Unfortunately, economists say that the falling oil prices are a sign of an impending economic downturn. James Williams of WTRG Economics notes, "Weak economies engender low oil prices. Stock market volatility illustrates the lack of confidence in recovery and an increase in expectations of another recession."

Banks Charge Fee for Keeping Cash

Bank of New York Mellon Corp. decided to charge their large clients a fee for storing cash. The giant bank (which specializes in handling funds for financial institutions and corporations) will begin, sometime in the next few weeks, to impose a fee on these corporations. Bank of New York said that customers that have deposited more than $50 million into their accounts since the end of July will face an annual fee of at least 0.13% of the excess deposits.

Study: Gov't Bureaucracy Hampering Oil Production

A new study puts a number on the economic impact of reducing the backlog of deep-water drilling applications in the Gulf of Mexico, and increasing the pace of permit approvals. The study from energy think tank IHS-CERA says 230,000 American jobs would result of such action, and more than $44 billion in gross domestic product (GDP), all by 2012.

Dan Simmons of the Institute for Energy Research calls it "one of the great ironies." "If the federal government were allowing more drilling, it would actually be bringing in a lot more money," says Simmons. "In fact, government at all levels actually make more money than oil companies do from oil production in the United States because of all the taxes and royalties and other fees that they pay." Since the drilling moratorium, only 15 to 20 permits have been approved. Less than five of them were new permits. The others were issued prior to the Deepwater Horizon accident in April 2010, and only recently reinstated. The study also found that reducing the backlog and speeding up permit approvals would result in U.S. oil production of more than 400,000 barrels of oil per day.