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. 

            

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

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.