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Even if you don't think you do, you already know plenty about commodities. Want us to prove it? No problem.
What makes oil produced in Saudi Arabia different from oil exported from Nigeria? It's the same thing that makes the corn you ate at last summer¿s barbecue different from the corn used to produce ethanol. Stumped? Well, don't feel bad, it's a trick question. The answer? Absolutely nothing. Corn is corn no matter where it comes from -- just as wheat is wheat and natural gas is -- right! -- natural gas. (Though the quality may differ, the make-up is uniform.)
So, in less elaborate terms, corn and oil (and all other commodities) are homogenous goods that can be processed, resold and more often than not, used as an input to the production of other goods or services. These goods are traded on a commodity exchange, thus setting the price-per-barrel (or other metric unit) used to value them.
Now pay attention, here's a question that indeed does have an answer: What is the difference between a commodity and a stock? While a stock can tank and become worthless, a commodity cannot have its value be wiped to zero. One other difference: Most commodities are traded in futures, meaning traders buy and sell where they think the price of a product will be at a certain point in the future. Stocks trade based on the value of the underlying company at that point in time.
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Thursday, June 12, 2008
House To Vote On Extending Unemployment Insurance
Ruth Mantell
MarketWatch
WASHINGTON -- In the face of a veto threat, House Democrats are urging their colleagues Thursday to pass an extension of unemployment insurance benefits, a tool they hope will ease at least part of the financial stresses burdening U.S. families.
Several million unemployed workers could be helped by the program, according to the Congressional Budget Office. The legislation would provide up to 13 weeks of extended unemployment benefits to workers exhausting the regular program, which typically lasts 26 weeks. In states suffering from higher levels of unemployment, an additional 13 weeks would be available.
The administration has threatened to veto the bill, saying that the unemployment rate is too low to justify a national federal extension of the benefits. The White House opposes eligibility for workers in all states to receive extended benefits, and said it could support a bill that offers a 13-week extension of unemployment benefits only to states with higher unemployment.
Advocates of a national extension point out that lawmakers have historically been tardy in reacting to economic downturns.
"In past recessions, the Congress and the administration typically were late to recognize the need for such an extension or wrangled over the need for such action as labor-market conditions worsened," the Center on Budget and Policy Priorities said. "Prompter action would have provided worthwhile economic stimulus when it was most needed and relief to workers looking for a job in a worsening labor market."
The Labor Department reported Thursday that first-time filings for unemployment benefits spiked upward in the latest week, hitting the highest level since late March, as the number of continuing jobless claims reached the highest level since early 2004. See full story.
Last week, the government reported the unemployment rate jumped by half a percentage point in May to 5.5%, the highest rate since 2004. See full story.
In an April report on the proposed legislation, the CBO said extended benefits could discourage recipients from looking for work and accepting less-desirable jobs as quickly as they might otherwise.
"Thus, some recipients may remain unemployed for slightly longer than they would have otherwise, and direct spending for regular benefits would increase during 2008 and 2009," the CBO said.
Copyright © 2008 MarketWatch, Inc.
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