We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

Home / Markets / Industries / Energy

Thursday, June 12, 2008

Greencastle Applies for Oil and Gas Exploration Permit in Quebec

Email this Story | Respond to Editor | Print

Comtex

TORONTO, ONTARIO, Jun 12, 2008 (MARKET WIRE via COMTEX) ----Greencastle Resources Ltd. ("Greencastle," or the "Company,") (TSX VENTURE: VGN) is pleased to report that the Company has applied for an oil and gas exploration permit in the St. Lawrence Lowlands of Quebec. The permit covers approximately 6,000 hectares in the Longueil area, east of Montreal, to the southwest along the trend from the recent gas discovery in the Utica Shale by Forest Oil Corporation (NYSE: FST) a U.S. oil and gas company with a market capitalization of $5 billion. Over the last two years, Forest has accumulated approximately 269,000 net acres, under lease or farmout, in the St. Lawrence Lowlands in Quebec. Two vertical pilot wells were drilled in 2007, testing the Utica Shale, to a total depth of approximately 4,800 feet. Production rates tested up to 1 million cubic feet per day.

The Quebec government geological map indicates that the permit area applied for by Greencastle is underlain by Utica Shale, which is the target formation for much of the current exploration for gas in the area. Data available from the Quebec government show that drilling and geophysical surveys in the vicinity were carried out on Jesus Island, Varennes, St-Hubert, Boucherville and St-Denis by several companies, such as SOQUIP, Shell Quebec, Imperial Oil and Laduboro Oil. Other companies having interests in permits along trend to the northeast include Forest Oil, Talisman Energy, Gastem Inc., Junex Inc., Altai Resources Inc. and Molopo Canada Inc.

Anthony Roodenburg, CEO, states: "The Utica Shale is an extremely compelling gas exploration story and the kind of high impact play we have been looking for. We are also currently examining several other opportunities where Greencastle can leverage a strong balance sheet with over $4 million in cash and monthly cash flow of over $200,000 for the benefit of our shareholders."

This news release includes certain "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of commodities, general market conditions, risks inherent in exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. The Company relies on litigation protection for forward looking statements.

No Stock Exchange has reviewed nor accepted responsibility for the adequacy or accuracy of this news release.

   Contacts: Greencastle Resources Ltd. Anthony Roodenburg CEO (416) 367-4571

SOURCE: Greencastle Resources Ltd.

Copyright
   2008 Market Wire, All rights reserved. ********************************************************************** As of Sunday,
   06-08-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated an UPTREND on 05-06-2008
   for FST @ $63.43. For more information on SmarTrend, contact your market data provider or go to www.mysmartrend.com SmarTrend
   is a registered trademark of Comtex News Network, Inc. Copyright � 2004-2008 Comtex News Network, Inc. All rights reserved.