Wednesday, April 25, 2012

RS: 5 Inside the Meltdown - for real this time




“The financial system will melt down in a matter of days. If we don’t do this today, we won’t have an economy tomorrow.” Talk about a snowball affect. “The Meltdown” of 2008 was definitely the most impactful economic crisis and biggest spiral effect in the economy that I have lived through. The video provided detailed information about the 2008 meltdown from the housing burst to Obama getting into office and everything in between.
            In September 2008, there was an emergency meeting at the capitol, where congress watched the credit markets freeze after housing market crashed. Many people didn’t see this coming, due to the housing market roaring for months but when it crashed terror crept in quickly. When Bear Stearns could barely open horror struck Wall Street, Washington and almost every American. It was a difficult decision for many people in the Government to decide if they should bail Bear Stearns out or let them file bankruptcy. Paulson made a moral hazard point saying, “If you bail someone out of something they caused themselves, what incentive will they have to not make the same mistake”.
           After Bear Stearns, two huge mortgage companies were the next failure, Fannie Mae and Freddie Mac. The government stepped in to fire management and take over. Following that collapse Lehman brothers took a turn for the worse. At this point, it was officially the largest crisis since the Great Depression. This time the government didn’t want to step in and wanted Wall Street to find ways to resolve it. The only resolution was for another bank to buy out Lehman Brothers, but Bank of America and Barclays wanted nothing to do with it unless the Government intervened. From individuals, to companies and the government no one wanted to loan anything and credit markets froze. 
           The disease was spiraling and at now AIG, the largest insurance company, was at risk. After Lehman Brother’s declared bankruptcy, the economy had an even more drastic meltdown. The goevernment was limited and the financial system was quickly declining. Bills were created and rejects, ideas were proposed but nothing was getting through congress and it looked like nothing was going to work. Finally a revised bill was cleared and some people saw hope. Obama came into office in a major financial crisis, 350 billion dollars was given to save the financial system, and trillions were on the way.
            The meltdown was a frightening time for many Americans whether they were involved in business, government or individual practices. It didn’t take long for the panic to reach over seas when Lehman brothers collapsed. Suddenly, Ice land went bankrupt and China became a non growth company immediately. This economics crisis affected everyone and is still drastically affecting people. In no means is the crisis over, but there is hope on wall street and for many people that were affected.

RS: The End





After sitting through Professor’s Engle’s Macro Economics class, listening to the assigned podcasts and working on the econlab assignments, I’d say I’m on a successful path to being a genius. Economics is involved in everything today and a background of economics is crucial, whether you’re involved in business or not. With the application of listening to real world podcasts and understanding economic concepts, I learned fundamental macroeconomic skills.
            Throughout the semester I enjoyed the podcasts/videos the most. Listening to people converse about economic topics was not only interesting but also insightful. I found some more interesting than others but overall they were good. The videos were educational videos but not boring. “The Warning” video about the women in Washington foreseeing the 2008 market collapse was extremely interesting. And other videos reminding us the world isn’t going to be over “Not Everything Sucks”, was enjoyable also.
          When a teacher gives an application in class and a student takes a test on it, it’s easy to forget the information days after the semester is over. When videos and podcasts are watched and then reflected upon it’s easy to remember. I think this information will be retained from the fact that I did the work by listening and reflecting. Overall, the class was enjoyable and educational. 
            

Wednesday, April 18, 2012

Interview Project Reflection


The interview project was a good assignment. I enjoyed interviewing my grandfather and my father. On the other hand, I didn’t really enjoy answering these questions. This may be a sexist comment but I feel that men are just more involved in economics and politics. Not to mention I am 20 years old and don’t really stay that up to date with the News, although I really should especially because I am a Business major.

Before doing this Economics interview I always knew my grandpa was extremely Republican my dad was somewhat Republican but I didn’t think some of their responses would be that much different. It was definitely interesting to see how much they agree and disagree on certain things. What surprised me the most was that the recession didn’t affect my grandfather. Maybe it’s because he is retired but I thought the recession affected everyone in one small way or a big way. Another thing that surprised me was that my grandfather did not get a credit card until the age of 32. It clearly was a different time back then, but by 32 he already had two children and was trying to start his own business.

Overall, the project was interesting and insightful. I think interviewing them in person also helped as opposed to over the phone or just making them fill it out. It was good to hear their tone of voice and their initial instinct on the questions. 

Interview Project




Economics has played an integral part in everyone’s life, whether people realize it or not is a different story. I interviewed my father who is 51, my grandfather who is 74 and myself. The following is the list of questions and the responses from all three of us.

Question: The government should regulate the economy.
            Grandfather: strongly disagree
            Father: disagree
            Michelle: disagree
Question: Politics has a major influence on the economy.
Grandfather: strongly agree
            Father: strongly agree
            Michelle: strongly agree
Question: Everyone should take an economics class in high school.
Grandfather: strongly agree
            Father: strongly agree
            Michelle: strongly agree
Question: Banks should be government owned.
Grandfather: strongly disagree
            Father: strongly disagree
            Michelle: disagree
Question: The government bailouts worked.
Grandfather: strongly disagree
            Father: strongly disagree
            Michelle: disagree
Question: Local government should have more control.
Grandfather: strongly disagree
            Father: agree
            Michelle: neutral
Question: We should invade Iran.
Grandfather: strongly disagree
            Father: agree
            Michelle: strongly disagree
Question: In 6 months the economy will be better than today.
Grandfather: disagree
            Father: agree
            Michelle: disagree
Question: I am well informed about economic news.
Grandfather: neutral
            Father: agree
            Michelle: disagree
Question: The recession personally affected me.
Grandfather: strongly disagree
            Father: agree
            Michelle: neutral

Question: In your lifetime, what city that you are familiar with has changed the most (both positive and negative)?
Grandfather: New York City
Father: New York has change for the positive and Camden in New Jersey has declined the most
            Michelle: New York City
Question: In your opinion, what president had the biggest positive impact on the economy? Why?
Grandfather: Regan – He just really knew what he was doing in office and how to help
            Father: Regan – I just think he improved the economy and the country
            Michelle: I don’t really have a favorite.
Question: What is your first memory of a major economic event impacting your life?
Grandfather: the recession in 2008
            Father: the oil crisis in the 70’s
            Michelle: September 11, 2001
Question: How do you get economic news? How has this changed over your life.
Grandfather: I used to get news through the paper, now I get news through the television
Father: I usually get the news through the Internet, or cable news channels and this has changed significantly through my life.
            Michelle: I get all my news from the Internet, and I always have
Question: What is your definition of economics (when you hear the word economy or economics what do you think about)?
Grandfather: dollar value
            Father: the business, the capital and business state of an are or the world
            Michelle: my macroeconomics class
Question: How do you deal will rising prices e.g. substitute cheaper brand, stop buying? Any examples?
Grandfather: Cut-backs is basically the only way to deal with it.
            Father: Conserve, switch brands, and look for lower prices. A good example o f this is using the app on my iPhone to find cheaper gas prices in the area.
Michelle: I try and not drive as much and now insist on making people pay when I drive long distances. I also try and only buy things I need but that doesn’t always work.
Question: What product or service has most changed over your lifetime?
Grandfather: The Internet is amazing how it has developed through the years.
Father: I was brought up with no computers and had to adapt to the new computers and watched them develop. The things a computer can do used to be unthinkable.
Michelle: I think the Internet has been a big change. I was brought up with computers but used to have to wait for dial-up and the internet wasn’t as easy to access.
Question: How do you handle saving and how has this changed
Grandfather: I really try and observe prices and spend less.
Father: We try and put money away every week, utilize a 401 K and put away any bonuses. Savings have become more difficult as a result of having two children in college and as a result of the economic downturn
Michelle:  I am really not good with saving my money even though I should be on a college budget. I try and only buy what I need but I work in the Summer and use that money to last me all year while putting some in a savings account.
Question: What product or service has had the biggest price change in your life?
Grandfather: I really try and observe prices and spend less.
Father: We try and put money away every week, utilize a 401 K and put away any bonuses. Savings have become more difficult as a result of having two children in college and as a result of the economic downturn
Michelle:  I am really not good with saving my money even though I should be on a college budget. I try and only buy what I need but I work in the Summer and use that money to last me all year while putting some in a savings account.
Question: What age were you when you got your first credit card?
Grandfather: 32
Father: 17
Michelle: I got a debit card, which is also a credit card at 18
Question: What was the price of gas when you got your first car?
            Grandfather: 50 cents a gallon
            Father: 37 cents a gallon
            Michelle: 2 something like 2.42

Monday, April 9, 2012

RS Your Choice





The housing crisis has affected no matter their living status. This podcast is mainly about an employee at Countrywide Mortgage, a large mortgage company. She was one of the many people affected by this crisis resulting in her seven-year mortgage loan. Her own company was increasing the prices of her mortgage. Quickly, she learned this company had a high turnover rate and they did not treat their employees correctly. After surveying fellow employees on job-satisfaction, the average was low teens if not single digits. She gave the results to the CEO and people in higher positions at the company to hope that proper actions were taken. Unfortunately, nothing ever happened. When Bank of America was trying to buyout Countrywide they asked this employee to create a PowerPoint to present her results. Weirdly enough, they never saw the correct PowerPoint. After lawsuits and the loss of a job, settlements were made and Bank of America bought out Countrywide.
What surprised me most about this podcast was the way Countrywide Mortgage screwed over their employees. It’s unfortunate to hear an employee being treated unfairly but even worse to hear nothing was done about it. Not only did she create a presentation for Bank of America but also, she went out of her way to survey other employees to see the results so low. 

Friday, March 30, 2012

The Warning



It’s a frightening thought that the economic break down could have been helped if people listened. Brooksley Born, a female chairperson at CFTC, a small government agency, tried to regulate derivatives, which would have made this break down not as bad. Who to blame for this? Some say Alan Greenspan and his committee.

Alan Greenspan, also known as “the Wizard” for his outstanding knowledge of the economy or at least his appearance of knowing all that he knew. Greenspan was an economist in the White House working with five presidents. He was well known and had renowned thoughts along with his committee members Summer and Rubin. Theses prominent men had similar views about Wall Street, essentially that the less government regulation the better. This made for an inevitable clash with Brooksley Born.

Born wanted to investigate the unregulated derivatives on Wall Street. The CFTC first found out about these large loans of money from Proctor and Gamble. But it was difficult to investigate because there was no record-keeping requirement. Overall, the market for derivatives was not well understood and only the people involved knew what was going on. By 1998 when the economy was booming, Greenspan, Rubin and Summer didn’t see the investigation to be necessary. When Brooksley tried to stop derivatives, the committee put out information to newspapers and congress saying they shouldn’t trust Brooksley. They lobbied hard, and congress believed them so no regulations were set.
 
Brooksley Born resigned and years later the economy collapsed with derivatives being a main point. Once a woman described as stubborn and difficult was know known as committed and dedicated. To this day Greenspan admits he was wrong and he had a flaw in his model of hands off.

No matter who is to blame for not listening to Born when she tried to regulate derivatives it’s unfortunate that nobody did. It’s also depressing to think the fact that she was a female had something to do with this. The economy and the business world is definitely not as male oriented but men still play the dominant role. 

Saturday, March 24, 2012

RS: NES


Han Rosling’s statistics presentation and Peter Diamandis’s speech were both inspirational and interesting. It was interesting to see the remarkable progress in the past two hundred years in over two hundred countries. From 1810 when all the countries were sick and poor, to 1948 when the differences of the world were wider than ever up until today, life span has increased and so has income. Based on gathered information and the past progression, Rosling was able to share this and insure a positive outlook for the future.

The abundance in the future that Diamandis lectured about was also positive similar to Rosling’s. The negative media that begins the presentation is a good example of why we’re so pessimistic in addition to his explanation of the danger detector in the brain. Clearly, there are problems in the world and Diamandis does recognize them. But he also brings our attention to the fact that we are living during the most peaceful time ever. Thanks to technology, our world has been able to grow and prosper through the years. But now more than ever technology is playing a significant part in the great progression of the world. Communication is a point that no one could have ever predicted and health is about to explode to the unimaginable.

Overall, I thought both these videos were really good. The information in the second video gave positive examples to the outlook rather than past numbers. It will be interesting to see things like a device that can diagnose you and it’s good to hear an optimistic speech about the future.