Thursday, May 14, 2009
Wednesday, May 13, 2009
Credit Cards - Crisis and Comparison
1. "Mad as Hell, More Investors File Suit" (Kiplinger's Personal Finance magazine). Anne Kate Smith's article addresses the impact of the present credit crisis on class action suits in the past three years. From the research of Dr. Stephanie Plancich, who works for the international consulting firm NERA as a tracker of their securities class-action suits, Smith reports a dramatic increase in the number of filings, which has risen from 131 filings in 2006 (the lowest point in 12 years) to 268 filings last year. Furthermore, compared to an average of $378 million of losses for other cases, investors who filed suits related to the credit crisis have a median of $3.5 billion in total losses, evidently demonstrating the magnitude of this crisis. Most of the complaints that have been filed allege that the products "structured and sold" by the brokers (and banks) were "defective," claiming that the mortgage's quality was not at the level that was specified in the original security statement. However, most of these suits do not generate grand settlements for the plaintiffs (one-third of whom are immediately dismissed, and another two-thirds of whom make a deal before ever heading to court). The reason is that, while the credit-crisis cases are generally large, bankrupt companies cannot afford to pay the full amount of the claim. Thus, the author believes that, between the paperwork and the amount of the final settlement, it "doesn't seem worth the effort" to file these suits initially.
http://kiplinger.com/magazine/archives/2009/05/more-investors-file-suit.html
2. At MasterCard's website, I found two credit card offers directed toward college students: the Chase +1(SM) Student MasterCard® and the Citi® Platinum Select® MasterCard® for College Students. Of the two, the Citi card has the both the best introductory rate (0% for 6 months vs. 0% for 3 months) and the lowest ongoing rate (APR of prime + 9.99% variable vs. 16.24% variable). However, the Chase card comes with a rewards program that works to ensure that students build sufficient credit toward the future, rather than setting up students for accumulating debilitating college debt. By contrast, the Citi card has no minimum income or co-signer requirement (making it easier to acquire a card if student desperately needs credit) and enables free online account management. Between this array of positive and negative features, I would most likely select the Citi card, which, though absent of the credit-building rewards program, has much better rates overall and enables free online checking, rather than having to pay to track one's account; as well, it is possible to enable credit much faster with the Citi card as it does not require a min. income or co-signer to gain approval.
http://kiplinger.com/magazine/archives/2009/05/more-investors-file-suit.html
2. At MasterCard's website, I found two credit card offers directed toward college students: the Chase +1(SM) Student MasterCard® and the Citi® Platinum Select® MasterCard® for College Students. Of the two, the Citi card has the both the best introductory rate (0% for 6 months vs. 0% for 3 months) and the lowest ongoing rate (APR of prime + 9.99% variable vs. 16.24% variable). However, the Chase card comes with a rewards program that works to ensure that students build sufficient credit toward the future, rather than setting up students for accumulating debilitating college debt. By contrast, the Citi card has no minimum income or co-signer requirement (making it easier to acquire a card if student desperately needs credit) and enables free online account management. Between this array of positive and negative features, I would most likely select the Citi card, which, though absent of the credit-building rewards program, has much better rates overall and enables free online checking, rather than having to pay to track one's account; as well, it is possible to enable credit much faster with the Citi card as it does not require a min. income or co-signer to gain approval.
Friday, April 24, 2009
The Hot New Car Is Your Old Car
For one thing, one must consider the extent of privilege we have been afforded during this "reincarnation" of sorts of the Great Depression that began eighty years. Unlike in our present recession, the availability to own one's car was limited amongst the middle class; a renowned photograph from the era shows a former Wall Street stock who, having lost all of his life savings in the market, he was forced to sell his car off on the street. Fortunately, the nature of the automobile market has progressed as such in the past century that at least most Americans in some form own cars - whether by lease or by ownership of new or (more often) old, used cars. While the decline of new car sales signal a concurrent decline in the former strength of the automobile, the trend towards maintaining older cars in some ways ought to be celebrated. rather than "craving the latest mechanical 'bling'" and taking advantage of "easy credit" and cheap leases to spend beyond their means on luxury cars, Americans are becoming increasingly more practical in saving money and managing their transportation needs without the excess of services (and more importantly, monthly interest) that follows leasing out new cars.
At the same time, however, while the practical frugality of keeping older used vehicles in relatively good condition and functioning should certainly be commended, there are grave consequences to the development of such short-term financial solutions. Inevitably, the only way in which the auto industry, like other industries, will be revived is through the economic principle of high demand and low supply, such that most Americans will be motivated to return to leasing out cars on three or four year plans, which will in turn generate the revenue necessary for companies like Ford and GM to return to their former prestige. At the same time, the recession persists long enough that, for most Americans, holding onto older vehicles becomes feasibly the ONLY option for them, this establishes a dangerous trend away from periodic purchases of new cars, integral to the growth of car companies.
Furthermore, we endanger our own public health, as older vehicles diminish in safety quality over time, are more prone to engine malfunction, are more delicate (and thus require more frequent oil changes), and lastly are more economically UNfriendly than newer cars, which (variably) tend to have better fuel economy, and are more likely to be "hybrid"ed in some manner than older cars which are more likely to run solely on gasoline. Over time, it is easy to see the trend return to new cars as Americans restore fiscal confidence and return to their incessant desire for buying new and having the latest gadgets, but until then, economic prudence may be the best option.
Thursday, April 2, 2009
The Stock Market
Wall St. rallies late as data offsets bond sale gloom by Edward Krudy (Reuters)
http://www.todaysfinancialnews.com/us-stocks-and-markets/panicked-short-selling-causes-financials-rally-3531.html
According to Krudy's article, the present Wall Street rally stems from the recent reports in the "housing and durable goods" markets. Most notably, the February housing report boosted consumer confidence with statistics that indicated a rapid increase in new home sales within a ten month period. Consequnelty, homebuilder shares have been steadily rising. Krudy offers the share DJUSHB as an example, which has went up by 2.2 percent since the report's release. Another factor contributing to the rally is the advance of large manufacturers, including Boeing, as the nation's "orders for long-lasting manufactured goods unexpectedly rebounded." The third, and most critical, aspect leading to the rally was the belief that (save for Citigroup) the U.S. banking system was "stabilizing," confirmed for most people by a recent LA Times interview with the Chief Executive Kenneth Lewis of Bank of America Corp., who, says Krudy, stated that his company would "start repaying $45 billion of federal bailout money" beginning in April.
However, this late progress strikes me as rather artificial. While the strength of the stock market relies on these bursts of consumer confidence, the premise of the current rally appears considerably fragile. For one thing, the rise in home sales comes in light of plunging housing prices, a trend that still persists, and while it is commendable that many large manufacturers have experienced a surge, the more crtical automobile manufacturers, companies like General Motors, still suffer and demonstrate little hope of feasible recovery. This hinders the supposed "stabilization" of the banking system in light of the struggles of Citigroup, and even companies like Chase that have shown some upward progress. Underlying this is that a facade of consumer confidence will not be sufficient to boost the economy, given that the more significant issues of the housing crisis, the auto industry, the banking system, and the unemployment, retirement savings losses, and other financial and social consequences that this financial crisis has created, will take years, perhaps even two presidential terms, to begin feeling lasting economic progress.
http://www.todaysfinancialnews.com/us-stocks-and-markets/panicked-short-selling-causes-financials-rally-3531.html
According to Krudy's article, the present Wall Street rally stems from the recent reports in the "housing and durable goods" markets. Most notably, the February housing report boosted consumer confidence with statistics that indicated a rapid increase in new home sales within a ten month period. Consequnelty, homebuilder shares have been steadily rising. Krudy offers the share DJUSHB as an example, which has went up by 2.2 percent since the report's release. Another factor contributing to the rally is the advance of large manufacturers, including Boeing, as the nation's "orders for long-lasting manufactured goods unexpectedly rebounded." The third, and most critical, aspect leading to the rally was the belief that (save for Citigroup) the U.S. banking system was "stabilizing," confirmed for most people by a recent LA Times interview with the Chief Executive Kenneth Lewis of Bank of America Corp., who, says Krudy, stated that his company would "start repaying $45 billion of federal bailout money" beginning in April.
However, this late progress strikes me as rather artificial. While the strength of the stock market relies on these bursts of consumer confidence, the premise of the current rally appears considerably fragile. For one thing, the rise in home sales comes in light of plunging housing prices, a trend that still persists, and while it is commendable that many large manufacturers have experienced a surge, the more crtical automobile manufacturers, companies like General Motors, still suffer and demonstrate little hope of feasible recovery. This hinders the supposed "stabilization" of the banking system in light of the struggles of Citigroup, and even companies like Chase that have shown some upward progress. Underlying this is that a facade of consumer confidence will not be sufficient to boost the economy, given that the more significant issues of the housing crisis, the auto industry, the banking system, and the unemployment, retirement savings losses, and other financial and social consequences that this financial crisis has created, will take years, perhaps even two presidential terms, to begin feeling lasting economic progress.
Sunday, March 1, 2009
Will I Have a Job?
If one majors in finance, that individual will not necessarily be offered a job. In fact, with the present economic situation, companies are much less likely to hire interns during the summer, formerly an opportunity for finance majors to put their foot in the door of Wall Street, and without much job experience, businesses are reluctant to hire students out of business school unless they demonstrate exceptional ability, and even in that case employment cannot be guaranteed.
As far as an education major, the chances for getting a job are relatively similar to those prior to the recession. However, many public school systems have suffered from cutbacks in state spending on education, since the recession, and in that sense are more reluctant to hire as many new teachers as they would consider in past years, and with pressures to cut back existing teacher salaries, schools with experience-scaled salaries are less accommodating to new teachers than in the past, although compared to finance majors education majors are managing considerably better.
However, one sector of the economy with the many job openings currently is the employ of the federal government. Thus, it can be inferred that political science is a college major that could lead to a sizable number of job openings; a law degree (J.D.) would also fare well in obtaining a federal government position, particularly in working with state and federal courts or working in the law firms of D.C. attorneys (technically not a federal position but one closely affiliated with the higher Courts as well). As we have learned in class, however, other careers with openings include nursing, teaching, and bankruptcy law.
Given the nature of rising unemployment, it becomes increasingly important to have some sort of income, versus pursuing what one loves; indeed, many adults in their mid-twenties feel that living in a reasonably comfortable apartment and having a consistent, reliable salary (in such an unpredictable economy) holds greater importance over pursuing a career whose pay is less stable, such as a career in writing or music or even a career in professions that traditionally do not pay highly. Sadly, the recession forces people to make sacrifices of their true loves, pursuing jobs that they may not prefer in exchange for fiscal security, with tenure, wealth.
To my surprise, the article did not resonate as dramatically as I would have anticipated before reading it. To me, the numerous statistics - 600,000 jobs lost in January, total of 3.6 million jobs lost since December '07, a 7.6 percent unemployment rate - seemed oddly surreal and yet at the same time so gravely true. When I consider the recession, these are not the numbers that I see - after all, even in a community like the New Trier township where people are scaling back, we are still able to fund multi-million dollar community projects, and to my knowledge, most of my friends' parents continue to be employed, though to what extent they are as fiscally secure as before I cannot know for certain.
I do, however, appreciate one number: $38,088. This, based on the 2008-2009 tuition reported on northwestern.edu, is roughly the cost of tuition that my family will have to pay for me to attend Northwestern next fall, and it is through the financing college that the reality of the recession has truly resonated with me. Considering that the median salarly in the United States is just below this amount, and that many working Americans can barely make this amount of money annually, much less accumulated in college saving accounts from the time of their childrens' births. In this sense, considering how each person's family has struggled in one way or another from the recession, I believe for teenagers this is the most real context from which to understand the economic plight our nation faces, and it is in only in this respect that I will truly be able to sense the impact of our economic plight in the next several years of my education.
Welcome!
1. Of all food varieties, I regard steak as my favorite. An ideal steak has a tenderness unmatched by any other meats, while also managing to strike a balance with its charred, smoky flavor that it retains from the grill. Furthermore, served just right (for me, cooked medium to medium-well), one can fully relish the authentic juice of the steak between my taste buds.
2. English has been my most enjoyable academic class during high school. One of my greatest loves are writing and reading, and over the past four years, English class has enabled me to explore an array viewpoints toward the world that I would never have considered and to examine my own role as an independent thinker and a developing young adult through words. Hence, I feel that of all of my academic classes, English has enabled me to grow the most an individual, and moreover, it is the discipline that most interests and captivates my imagination. Although I have several outstanding academic teachers in my years at New Trier, my favorite was my freshman year English teacher Mr. Steve Meyer, who has since retired. At the same time that he instilled such high expectations of communication through the written word, he had a wry sense of humor and irony that always our enlivened our discussions of the literature and writing, and I feel that all of my teachers in the past four years, he taught the most within the shortest amount of time and was the teacher I shared the closest relationship with.
3. The time that I take the most pleasure in is the afternoon, the time that I deem as a bridge between the morning, the early part of my day that generally consists of school, and the rest of the day, in which I have academic and musical committments to fill at home. In this sense, the afternoon provides me with the opportunity to recharge myself and momentarily reflect on the obligations that will occupy my evening, clearing my mind for the challenge that awaits. In addition, I also enjoy the afternoon because it retains the light of morning prior to transitioning into the darkness of night, which suggests such a stark conclusiveness to the day that I always lament (oh if the days were longer...)
4. Between an igloo or a desert, I would much prefer living in the former. Being in an igloo, I would at least have the protection of ice bricks and therefore be sheltered, and I could wear a fur jacket and boots that would enable me to keep warm in spite of the persistent cold. Moreover, from such an environment I could learn how to fish and hunt for food and thus would never remain starving, would be able to drink water from surrounding freshwater lakes and would most likely be able to interact with other individuals within the "igloo community." By contrast, were I to live in a desert, there would be no humans around, no animals for food or water to relieve my thirst, and I would be basked in constant, agonizing heat.
2. English has been my most enjoyable academic class during high school. One of my greatest loves are writing and reading, and over the past four years, English class has enabled me to explore an array viewpoints toward the world that I would never have considered and to examine my own role as an independent thinker and a developing young adult through words. Hence, I feel that of all of my academic classes, English has enabled me to grow the most an individual, and moreover, it is the discipline that most interests and captivates my imagination. Although I have several outstanding academic teachers in my years at New Trier, my favorite was my freshman year English teacher Mr. Steve Meyer, who has since retired. At the same time that he instilled such high expectations of communication through the written word, he had a wry sense of humor and irony that always our enlivened our discussions of the literature and writing, and I feel that all of my teachers in the past four years, he taught the most within the shortest amount of time and was the teacher I shared the closest relationship with.
3. The time that I take the most pleasure in is the afternoon, the time that I deem as a bridge between the morning, the early part of my day that generally consists of school, and the rest of the day, in which I have academic and musical committments to fill at home. In this sense, the afternoon provides me with the opportunity to recharge myself and momentarily reflect on the obligations that will occupy my evening, clearing my mind for the challenge that awaits. In addition, I also enjoy the afternoon because it retains the light of morning prior to transitioning into the darkness of night, which suggests such a stark conclusiveness to the day that I always lament (oh if the days were longer...)
4. Between an igloo or a desert, I would much prefer living in the former. Being in an igloo, I would at least have the protection of ice bricks and therefore be sheltered, and I could wear a fur jacket and boots that would enable me to keep warm in spite of the persistent cold. Moreover, from such an environment I could learn how to fish and hunt for food and thus would never remain starving, would be able to drink water from surrounding freshwater lakes and would most likely be able to interact with other individuals within the "igloo community." By contrast, were I to live in a desert, there would be no humans around, no animals for food or water to relieve my thirst, and I would be basked in constant, agonizing heat.
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