How long until we're out of this economic crisis?
With the proposed $700 billion bailout plan, it needs time to be put into action. As much as we would like to think things can happen overnight, it’s just not possible. The whole country, as well as other countries overseas, is in a state of panic over how this plan is going to be passed and how it is going to be funded. The money has to come from somewhere, and people have to trust their elected government officials that they will enact this plan to help our economy as quickly as possible. Even though consumers are definitely starting to cut back on costs and expenses, it needs to be something that remains stable until we fix this recession because right now is only the beginning.
Today, stocks were fluctuating despite the emergency rate cut by the Federal Reserve. Dow Jones industrials were at times falling more than 200 points or rising more than 100 points, thus illustrating its instability right now. Consumers need to be aware of these issues and that banks are going to be very reluctant when it comes to lending out money because they have to wonder if they will ever see their money again. One will not see changes of interest rates immediately because they take long periods of time to work themselves out.
In order for things to begin to get better, job losses and high unemployment will need to show an improvement. Also, the credit markets need to start working more normally before the economy can even think about becoming more stable.
Investors are buying anything they can consider safe so they know their money is secure due to the uncertainty in the economy; however, prices are skyrocketing. For example, the price of gold went from $19.90 to $901.90!!
Under McCain’s plan to help boost the economy, he wants to spend $300 billion to buy out “underwater” homeowners at the original value of their mortgages. He wants to show that he is different than President Bush and Senator Obama, but Obama has backed similar efforts in Congress. He recently stressed the issue that the government buying mortgages directly should have a very important role in the Treasury's $700 billion rescue efforts as well. McCain’s plan was not very clear, but according to Business Week, he said “the government would buy the mortgages from banks and investors at the original value of the loan.” He then wants to give homeowners the new mortgage.
But do we think this is a logical decision? I don’t think this will be a very successful plan because people will just choose to stop paying their mortgages if he is going to pay for them. As a result, we will end up with more and more fees for the government. The people who worked hard to be able to pay for their mortgage are going to be the ones hurt in the end because they will still be paying their own mortgages while the government pays for the ones who messed up and got themselves into a hole. Is this fair for all citizens? No; therefore, this is something that is going to keep us going around in circles and won’t help in the progress of getting us out of this recession because citizens will be upset and continuously fighting the proposed solutions.
Today, stocks were fluctuating despite the emergency rate cut by the Federal Reserve. Dow Jones industrials were at times falling more than 200 points or rising more than 100 points, thus illustrating its instability right now. Consumers need to be aware of these issues and that banks are going to be very reluctant when it comes to lending out money because they have to wonder if they will ever see their money again. One will not see changes of interest rates immediately because they take long periods of time to work themselves out.
In order for things to begin to get better, job losses and high unemployment will need to show an improvement. Also, the credit markets need to start working more normally before the economy can even think about becoming more stable.
Investors are buying anything they can consider safe so they know their money is secure due to the uncertainty in the economy; however, prices are skyrocketing. For example, the price of gold went from $19.90 to $901.90!!
Under McCain’s plan to help boost the economy, he wants to spend $300 billion to buy out “underwater” homeowners at the original value of their mortgages. He wants to show that he is different than President Bush and Senator Obama, but Obama has backed similar efforts in Congress. He recently stressed the issue that the government buying mortgages directly should have a very important role in the Treasury's $700 billion rescue efforts as well. McCain’s plan was not very clear, but according to Business Week, he said “the government would buy the mortgages from banks and investors at the original value of the loan.” He then wants to give homeowners the new mortgage.
But do we think this is a logical decision? I don’t think this will be a very successful plan because people will just choose to stop paying their mortgages if he is going to pay for them. As a result, we will end up with more and more fees for the government. The people who worked hard to be able to pay for their mortgage are going to be the ones hurt in the end because they will still be paying their own mortgages while the government pays for the ones who messed up and got themselves into a hole. Is this fair for all citizens? No; therefore, this is something that is going to keep us going around in circles and won’t help in the progress of getting us out of this recession because citizens will be upset and continuously fighting the proposed solutions.
posted by Jenny | 1:39 PM
4 Comments:
I think the election hinges on who has the best economic plan-- or rather, who can explain their economic plan best to the vast number of Americans who don't necessarily understand the high talk... it makes the debates about the economy more interesting and more folksy, I think.
I agree with Sarah. I think both candidates are having a hard time correctly communicating their plans to Americans. It is important for the common American to understand what they are in for and what the future president is "promising" them. It will also be interesting to see how the future president actually goes about handling the situation... not just how they "say" they are going to handle it.
I think this economic crisis is a result of the obvious failure of the Community Reinvesmtent Act. Becuase of this, now the enitre economy and country is suffering because this law pushed by democrats pushed Fannie and Freddie to issue sub-prime loans. Since McCain is targeting the issue of the bad mortgages, and his plan offers the hope to aid the "housing bubble" he is on the right track to bring our economy back. The question of how long unitl we are out of this crisis, is up to the people.
This video is very informative:
http://www.youtube.com/watch?v=ap1DPBg4jzY
...do the research it says to further understand.
I think it is important to keep in mind that our country has weathered hard times before and survived. The market will bounce back and the country will bounce back. That is part of what makes this country so great. American's hard work and ingenuity will ensure that better economic times are on the horizon.
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