Days of easy credit are over

With lingering concerns over the instability of the market, many lenders are becoming increasingly reluctant to allow customers to borrow. Credit that was recently easy to come by is beginning to disappear.

An article in The Boston Globe explains the challenges that ordinary people are likely to face if credit remains scarce. Many businesses and even some industries such as construction and manufacturing depend largely on the ability of their customers to obtain credit.

When credit is not available, growth and job creation trend downward. As a result, it becomes even more difficult for the market to recover. These effects can lead to a long term slow down, taking time to appear.

For example, the average person does not make a large purchase very often, so a short term scarcity of credit would have a limited effect on the economic situation. When a large number of people cannot get credit to take out mortgages, car loans, or home equity loans, houses remain on the market and new cars are sill in the lot.

Consequently, retailers have a harder time making money and a smaller workforce is needed because there are not as many customers. When jobs are scarce, so is disposable income, and the cycle worsens.

Some believe that banks' recent tightening of standards when considering applications for credit may be an over correction due to the concern over the ability of many borrowers to pay back their loans. As long as credit remains difficult to obtain, it will be difficult for the market to regain strength.

Read the Boston Globe article here.

--Bridget O'Sullivan

Interest in wood-pellet heating rekindles

As the weather begins to cool down, many New Englanders are thinking about how they will heat their homes this winter. A new cost effective and energy efficient alternative that has become popular in Europe is making its way to the United States, the Boston Globe reports.

Many people are familiar with the traditional wood burning stove, but an adaptation of that comes in the form of a wood pellet burning stove. Pellets are made dense plant particulate matter, and as a result they are more efficient than wood in the form of logs because every part of the tree's wood can be used to make pellets.

The article reports that the boilers cost between $6,000 and $13,000 and installation can cost a bit more than traditional wood stoves. The pellets themselves, however, only cost about $400 dollars a ton, and about 5 tons are required per winter. This cost is significantly lower
than what some homeowners are paying for oil this winter.

In addition, the pellets are very environmentally friendly because wood is a renewable resource but oil is not. Burning the wood does not generate a carbon footprint unlike burning oil for heat.

The cost of producing and transporting the pellets is also lower because the New England states rank among the most forested states per acre in the United States. Oil, however, usually comes all the way from the Middle East and costs are incurred during the extraction and
shipping process.

Wood pellets, on the other hand, are much more likely to come from nearby, they are cheaper than oil, and do far less damage to the environment.

Click here for the complete article.

--Bridget O'Sullivan

Gas price tumult fuels interest in alternatives

Is the search for alternatives fuel coming to an end?

Over the summer, $4 gas has changed the way Americans live. The cars we buy, the places we live, the "stay-cations' we take and the crowded trains we are forcing ourselves to jump on all have to do with the summer's high gas prices.

Now that gas prices are down to a near $3.60 in the Boston area, will we change our gas-budgeting ways? "Right now, I hear people exclaiming with glee that they paid $3.39 for gas somewhere," says Art Kinsman, spokesman for AAA Southern New England. "People have to remember, they're still paying almost a dollar more than they were last year. So prices are still extraordinarily high."

According to The Boston Globe, with gas prices down, the critical moment is now. Will Americans go back to their old habits, or will they demand improved public transportation options from the government? Investors may or may not continue to show interest in alternative fuels. American's miles spent in the car may continue to plunge, however, with current gas prices their is potential for miles to begin an increase.

Gas prices will rise and fall, and the time and research spent on alternative fuels may come to a halt if we go back to our gas-guzzling days. Henry Lee, a director of the environment and natural resources program at Harvard's Kennedy School says, "We're going to have to do a lot more if we're going to significantly reduce our use of oil."

--Bridget O'Sullivan

Younger generation not big on saving

According to research done by Fidelity, younger generations are less likely to save as much as their older counterparts. The Boston Globe reports that the research could reflect an increasing dependence on credit to make purchases when past generations would have saved enough to pay for them in full.

“Debt prevents saving in older generations as well, but it's especially a challenge for [Generations] X and Y," the Globe reports that Pamela Norley, executive vice president of Fidelity Consulting Group, said in a statement. "Our research revealed that younger generations are more likely to use credit than save for short-term purchases, which results in an ongoing struggle with debt management."

One relatively new issue to affect these generations is the high number of those still paying off student loans. These payments decrease the amount of money that members of these generations can save or put toward their big purchases. In turn, they must turn to credit to finance something they couldn’t save for.

The study also reports that concerns over money are the biggest worries facing these two generations. Money is not, however, the primary factor members of these generations consider when making choices about their careers.

As access to credit grows increasingly scarce, borrowing can become more expensive, especially for those who do not have the savings to make sizeable deposits on their purchases.