The Sun Dollar

As the economy continues to falter many qualified high school students who were looking to attend a four-year college next semester are starting to consider other options that they had never dreamed of.

Here's what Verdugo Hills High School Students plan to do to get into college despite the recent CSU budget cuts.

This semester is quickly ending and with that Spring semester starts. Many seniors are getting ready to graduate to join the working class. Unfortunately, our economy is going through a crisis and jobs are scarce.

Here is a CSUN business students thoughts about what he is expecting as a soon to be graduate!

Thanks to a colleague of mine who tipped me off by providing this article written by The New York Times back in 1999 titled "Fannie Mae Eases Credit To Aid Mortgage Lending" which basically gives us a great insight on the mess we have now.

This article sure gives us a greater understanding as to how economic decisions we make now may and will come back and bite us in the fanny. Along with that, it also spreads a different light on our beloved and praised ex-president, Bill Clinton.

According to this article, "Fannie Mae, the nations biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."

"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's...if they fail, the government will have to step up and bail them out..."

Their intentions were honest, sorta.... it was intended to "extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans."

This meaning that it was a "move that could help increase home ownership rates among minorities and low-income consumers..."

"By 2001, 50% of Fannie Mae's and Freddie Mac's portfolio was made up of loans to low and moderate income borrowers. " Obviously they were making tons of money but not worrying about the long term effects it could have.

"Despite these gains (that of more minorities purchasing homes) home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings."

So there you go, it has been almost 10 years since this decision was made; but, there have been many more contributing factors that have put us in this economic trough. This is just one piece of the pie.

Nonetheless; it is, how it is.

(Jacky)

Student Loans. If you are lucky, you wont need one. But, not everyone is that lucky.

Recently, I read an article written by CNNMoney.com discussing the burdens of paying off private student loans. In some cases these college grad's had to leave the country because their payments were to high to be paying every month.

One grad named Chris graduated with $160,000 in dept and his monthly payments came to $2,400 a month. Lets be realistic, no college grad will be making more than $2,400 a month while paying for rent and bills.

Thus, Chris and others fled the country.

I do not reccomend leaving your family, friends, and loved ones because your dept is too high: therefore, here are some reccomendations that CNNMoney.com found:

• "If your income isn't sufficient to repay a federal loan, you can apply for an economic hardship deferment or forbearance which would suspend or reduce your monthly payments. To find out if you qualify for these programs, check out the hardship calculator at http://www.finaid.org/."

• "If you have federal loans through the Direct Loan program, you may qualify for an income contingent repayment plan. In this case your payments are based on your income and your debt load ."

• "These steps must be taken before you default on your loan. If your loan is already in default, you won't qualify for deferments or forbearances. If you can't resolve an issue, contact the Federal Student Aid Ombudsman at http://www.ombudsman.ed.gov/ or call 1-877-557-2575."

• "If you have defaulted on a federal loan, you can rehabilitate yourself. It will require you to make nine to twelve full payments of some agreed-upon amounts within a certain time period to the Department of Education. For more information on this, contact the Department at 1-800-621-3115."

• "And there's another way to get help if you're buried under student loans. Talk to a non-profit counselor."

• "The counseling session should be free of charge. Make sure you ask if the agency works with student loans. And in addition to helping you with your student loan payments, these agencies can work with you to manage your spending and your budget. If you are put on a managed debt program, there is typically a small fee. To find a non-profit credit counselor in your area go to the National Foundation for Credit Counseling at www.nfcc.org."

This is a short video that might help you understand how all these huge companies failed and why the government had to bail them out. Basically all in a "nutshell"





(Jacky)

So I know some of us are still in college and the thought of buying a house is still far far away, but still it's good to know about these things.

Well, according to a brief story written by the Orlando Business Journal on a recent study released by Urban Land Institute and Pricewaterhouse Coopers LLP , it says that the future of the real estate industry is looking grim.

The real estate markets are supposed to hit rock bottom in 2009, so for those of you who are graduating next year: taking out a loan to buy a house might not be such a good thing, because there will "continue to be drop in property values, along with additional foreclosures and delinquencies."

This comes as bad news during these times where many people have already lost their homes.

The report also goes on to state that those who will benefit from these failing real estate markets are foreign "cash-rich" buyers who will take advantage of the weak dollar and buy off "trophy properties in major cities."

On the upside...(yes! there is an upside) those who are savvy investors will be able to cash in on the "inevitable recovery" sometime during 2010, or so they predicted.

So there is a quick rough preview of what our future looks like. Perhaps renting is the best thing we can do for now.

What do you think?

(Jacky)

As I wrote a few weeks ago, one focus of our blog will be the future of Business students.
I found this video that summarizes some fears Pennsylvania business students have about their future on Wall Street.

But the faltering economy is not only an American problem. One proof that the US financial crisis impacts people all over the world is this podcast about German business students who are equally worried about their future.

Katherine

The crisis around the country is not the only worry we have, but also right here in our Golden State. Did you know that Arnold Schwarzenegger asked the federal government for 7 Billion dollars to help out with the financial crisis.

Video by AP



Jacky

Here is another interesting and short video ,by AP,about how the economic situation is affecting college students.


Jacky

Here is a brief video conducted by AP about the rising amounts of Vanishing Jobs

In addition to what Kerstin wrote, here is another cool website that gives tips out to kids, parents, and teachers about how to use and spend money wisely.

There is a decrease of money sent to Mexico due to the recent economic failure. This is something that really impacts Mexico because for the most part, Mexicans who move to the US move here to secure a healthy future for their kids and themselves, and to send money back to Mexico.

I know this personally because my Dad and Mom both send money back to my grandparents but lately they too are unable to send as much money back to their parents.

According to a story done by BBC "This money is the country's second largest legal source of foreign income after oil revenues."

This is a huge amount of money lost in Mexico.

(Jacky)

I was sitting around the other day and for some reason Daryl Hannah popped into my head, but more importantly Daryl Hannah's character in the movie "Wall Street", where she played Charlie Sheen's love interest. (Sticke with me, this post does have a point.)

So I then begun to think about Charlie Sheen's character, and how it was so easy for him to be successful in the stock market, despite the fact that he didn't have any experience in the business. This made me wonder-is it really that easy to make money in the stock market? Granted that I was taking my prime example from a movie...but you constantly hear about people making money more than people losing money, save for our current conditions.

But yes! I've found a website that allows you to simulate what it would be like to actually play the mark. This way you can get a feel for the market environment without losing any money.

Have fun!


-Kerstin

The historic 700 billion dollar bailout plan for Wall Street is officially approved. Within hours after the House voted in favor of the bill yesterday, President Bush signed it into law. But not too many on Wall Street seemed to be impressed by the result of the vote. Yet again, Wall Street closed lower than on Monday when the original proposal failed and the Dow Jones fell 777 points within one day.

One of the reasons for the lack of improvement might have been the release of new unemployment figures. The Labor Department states that employers cut another 159,000 jobs in September. We can only hope that the bailout bill will stimulate the economy enough to change the continuing downturn. But hopes are not very high, especially because the unemployment rate is traditionally higher in winter months. We will have to wait and watch if the bailout plan can give a boost to the ailing economy. Stay tuned...

Katherine

It seems as if WaMu and Wachovia arent the only ones in the gutter...now according to Market Watch the European financial firm Fortis has needed the aid of 3 European governments( Belgium, the Netherlands and Luxembourg ) to bail out the company. The grand total of this is $16 billion.

Stock Ticker - Free Stock Market Tickers - NASDAQ.com

Posted using ShareThis

Just some news updates for anyone who has a bank account with Wachovia!

The Federal Deposit Insurance Corp. has just been involved in the new buyout of Wachovia by Citigroup. In response of the on going financial crisis, Citigroup bailed out Wachovia and bought it for $2.16 billion!

As stated in the recent article by the Washington Post, Citigroup is now one in three of the major banks that control "almost a third of the nation's deposit!" The other two are Bank of America, and JP Morgan Chase.

The cause of Wachovia's downfall was the money lost in mortgage loans.

This is the second bank buyout since Washington Mutual was sold for 1.9 billion to JP Morgan Chase.

To watch a video on this bank buyout crisis from Bloomberg click here!

(Jacky)

Personally, I've never been what many would consider "financially independent". I blame this mostly on my parents, my high school...and partially on myself. Throughout my adolensence I was told to focus on academics and everything would be taken care of--everything as far as necesseties. But once my necesseties turned out to come with a hefty price tag, I realized that I was becoming too dependent on my parents. And it didn't help that my high school didn't offer some sort of financial class. Sure there was the recquired "Life Skills" course, but the curriculum was too broad and fleeting for a freshmen high schooler to comprehend.

So, here I am, 21 years old and, like so many of my peers, I'm near dead broke. I am a full time student and have a part time job, and bills and expenses continue to pile up. And there is no sympathy out there for me, too expensive. Unlike my two blogging counterparts I am the least economy savvy--I don't know where I fit into it all. Or even if I fit into it at all, and if I do how to I work around all the obstacles? I never took the time to interest myself, and so I am looking for a path to financial independence blind. And on my path this article caught my eye.

To me, the economy is a vast spider web with many very intricate details...I just need a good way to navigate it.


-Kerstin

I want to update our readers on some of the bigger themes our blog will be following this semester. We, that is Jacky, Kerstin and Katherine agreed to follow four specific topics related to the economy. We are still discussing the fourth topic, but here are the three we will shortly have available on this blog.

First, we will focus on student budgeting. We will have some important tips on how to balance your budget and leave college without being in serious debt. We will have more information on this topic in mid-October.

The second subtopic will be the economy's influence on immigration patterns. There is an interesting article related to this issue in a recent issue of the Washington Post.

Third, we will investigate what influence the economic downturn has on students who are just leaving college with an MBA or other business degree. We want to hear what these people's hopes and fears are now that many respective employers are failing or taken over by the government.

Katherine

This website allows you to read different journals and published studies and papers on what is happening economically around the world or as a nation. People can join, by reading and rating certain entry's as well as publishing your own journal. There are also discussion papers that you can comment on.

Economics E-Journal

Jacky

This has been a stormy week on Wall Street. First, Monday's bankruptcy and closure of financial giant Lehman Brothers. Then, Bank of America acquired Merrill Lynch. And by the end of the week the government bailed out financial giant American International Group. This bailout comes after Uncle Sam already bailed out Fannie Mae and Freddie Mac a few weeks ago. While I am currently trying to figure out how to pay for my groceries for the upcoming week, the government is throwing around 85 Billion dollars at AIG. This makes me wonder where all this money is coming from...

I did some research to answer this question. This massive wave of failures is certainly not unprecedented. The market has been in crises before and the economy has had its fair share of ups and downs over the past decades. But it certainly has never had such a global impact as this time. Because markets are more interrelated now than ever before, other countries are affected by what's happening on Wall Street. The US government is not alone in lending money to bail out some of these hurting international players. Some of the bailout money is coming from foreign countries. On Thursday last week, several foreign central banks including the European Central Bank and the Bank of Japan announced a plan to invest a combined 180 billion dollars into the global markets. The central banks are hoping to prevent an economic crisis with a global impact.

But where is all this cash coming from? Did someone open a treasure chest or do we have a secret savings account for situations like this? The answer is no. But the US Federal Reserve can sell some of its securities including treasury bills on the world markets. This will mean more international investment in the US market which can eventually lead to more instability. Other parts of the bailout money will of course come from us, the tax payers. So, remember to cut back on things you don't really need and save up some money. Because tax day is coming.

Katherine