yeahhh

In my first article, "Economic woes hurt Medicare, Social Security" the author talks about the titled programs will run short of funds sooner than previously expected, due to the recession. It is now expected that the Social Security trust fun will be exhausted by 2037 now, and the Medicare hospital trust fund will become insolvent by 2017. Treasury secretary Tim Geithner said this report shows the urgency for the government to overhaul and restructure these programs. Republicans and Democrats disagree over how to restructure, with the Republicans opposing a democrat-written bill to offer government health insurance to the 46 million uninsured people.

I wish I knew more about the health care industry, but it seems to me that it is impossible for the government to pay for so many people's insurance. It astounds me that almost a sixth of our population doesn't have health insurance, and that makes me think: why aren't health insurance companies efficient enough to tap into this huge consumer base. I feel like in the last few years more and more people have started to take advantage of the government plans, which creates a burden on the government and is bad for our debt. However, the goal should be to find a system which can sustain everyone, and I feel if people want to keep these institutions such as Social Security and Medicare, we're going to need to raise taxes.

My second article was titled "GMAC to provide financing for Chrysler dealers, which was about about how Chrysler's bankruptcy judge said that since Chrysler Financial (Chrysler's lender), stopped lending to Chrysler after the bankruptcy declaration, that Chrysler could now get financing from GMAC, the former financing unit of GM. GMAC will now assess dealer credit over the next 180 days to determine which Chrysler dealers  are eligible for long-term credit lines, and which ones have to find their own financing sources.

I wonder how much having to transfer to this new financial company is going to hurt Chrysler's chance at survival. It seems like it will definitely slow down the recovery process if anything. Also, i wonder why a financial institution named after Chrysler refused to lend them money after the bankruptcy declaration. There is much to learn here....

My third article was called "How business will wage war on Obama tax plan", and it talks about how business will fight Obama's overseas tax shelters that were supposedly loopholes for corporations. One of the most contested loopholes is letting companies not pay U.S. taxes on oversea investments until the money comes back home, allowing them to stash profits and jobs overseas. Big companies have already started to form coalitions to fight the administrations plan, and have 4 major points they are addressing. 1) that america is unique in taxes overseas subsidiaries and the loopholes are necessary to keep American business competitive, 2.) that the action would be bad for an ailing economy, because by making them less competitive, your giving multinational businesses incentive to move headquarters, 3.) the companies are drumming up local stir by appealing to lawmakers in their own states, and 4.) companies are stressing that changes to deferral should only happen in the context of a broader rewrite of the tax code, one that can properly compensate a little for these new expenses.

In my opinion, these companies are completely right. It seems to me that Obama did not do his homework on this one, and that this tax change is only going to hurt the American people. rather than helping them. If these companies are pissed enough to move out of the country for this, I think Obama should reconsider instituting it. If America is the only country that taxes its country's abroad business investments, why take it any further than that?

whatever

My first article today was named "Microsoft ordered to pay $388 million in patent case" which talked about the case between Microsoft and Uniloc. Uniloc claimed back in 2003 that Microsoft infringed on their patent for anti-piracy software  in Microsoft's Windows XP operating system and parts of its Office suite of products. The software generates unique identities for licensed users and prevents unauthorized use of or copying of programs. The damages award goes down as one of the largest on record for patent law disputes.

Assuming the correctness of this verdict, I plainly praise the American system for this triumph over big business. For years Microsoft has nearly had monopoly over the software industry and it seems has done everything in its power to keep it that way. With all the other negative things in our country right now like the economy and foreign disputes, I enjoyed stepping back and appreciating what our American system is capable of doing, which most other countries can not brag of: Uniloc, a small, almost unheard of company, wrenching over a third of a trillion dollars from one of the biggest companies in our country. 

The second article I read was called "Auto parts shares jump as GM, Chrysler launch aid". This article was about the effectiveness of government-backed assistance programs for parts suppliers have had. The government as pledged up to 5 billion to help auto suppliers, and will give 2 billion to GM to support suppliers, and 1.5 billion to Chrysler. The success of these types of programs determines the kind of restructuring these huge businesses will have to endure in order to survive the recession, with GM teetering on bankruptcy and Chrysler creating an alliance with the Italian car-maker Fiat. Germany has boosted car sales by introducing a car scrap program, such as the one proposed but denied in the U.S. The only place seemingly immune to this auto-industry meltdown in China, where vehicle sales for March could hit a record high.

Its good to hear that at least one of the gambles the government used with our tax money may help to spur recovery and help the economy rally. I was skeptical about this huge government spending plan at first, but now feel like its preventing a lot of excess damage to the economy. What I am worried about still though, is that now with the government having huge stakes in these companies, what's their plan for eventual withdrawal? Do they even have one? Or are they planning on overseeing these industries for ever? I hope not, because I feel like that could hurt the ability of these companies to take normal industry risks.

My third article is called "GM stock drops, Nissan posts losses amid downturn", which was about the huge drop in GM shares. They dropped to the lowest level since the Great Depression after the executives of the company reported selling their stocks. Also, Nissan posted a fourth-quarter loss and forecasts a bigger-than-expected annual loss. Meanwhile, Chrysler is going through the bankruptcy process, selling its assets to Fiat, a union-trust, and U.S. and Canadian governments. This will come with a lot of plant closings.

It seems to me now that all the government bailout for the auto-companies might have only helped to a point. If GM goes bankrupt with nobody buying its assets then what is going to happen to all their employees? They won't be getting jobs from Chrysler because they'll be closing off plants and not opening any. However, at least a good portion of the suppliers and lenders who stood to lose their jobs didn't.

may 10

In my first article "What investors need to know about the Stress tests", the author talks about the results of the stress tests applied to the 19 largest U.S. banks, including which ones need to raise additional capital and how much. The article explained the adverse scenario, but that the banks do try to politicize their numbers to look better for the market. The prospective survivors of the stress test, those that seem viable enough to withstand further economic downturn, are expected to become bigger, strong, and earn greater returns that will offset the balance sheet deterioration. Some bank executive thought the bigger companies such as JPMorgan Chase $ co and Bank of America Corp are going to be earning a lot of money over the next few years since their deposit bases are bigger than they've ever been.

As a person that never really understood the stress test thing other than the clues given by the name, this article shed a little bit of light on it for me. Basically it seems like the government puts the bank through a hypothetical adverse situation and see's if its assets and capital are strong and dependable enough to survive. Also it seems like they're seeing if any banks are in need of more capital. However, the system is being played by the companies, who don't want to lose stockholder confidence if they don't fare well.

My second article "U.S. infrastructure bank no quick fix" was about Obama's vision for a national infrastructure bank. He set aside $5 billion for an entity to provide direct federal investment for roads and highways. Obama's plan calls for the bank to include 25.2 billion through 2019, though the country needs $210 billion a year in infrastructure (3 times current rate), that the need may be too great. Many politicians like the idea, but say it faces too many political and monetary risks. Also, funding a bank is hard because bank investments have to come with returns to stay afloat, and the only way to do that is with tolls or taxes, which are very unpopular.

This article was very interesting. I have never heard anything like this before.  It reminds me of the programs and institutions FDR implemented with federal money when he was in office during the Depression. It seems like a good idea since infrastructure is such a huge cost in America, with our developed system. A system built around focusing on this issue seems like it could improve the standards which i feel like, will serve us in the long run, because better built roads will save us money.

My last article "Fed rejects request to help credit card holders", which was about how the Fed Reserve rejected a request to force credit card companies to immediately halt retroactive interest-rate increases on existing balances. The government already has dealt the with the companies directly, and feel like pressuring them by helping the credit card holders can cause unexpected results and hurt their current efforts. The laws that are being pushed onto the companies will make credit card pricing more transparent and predictable.

It seems to me everybody is lining up for help nowadays. Everyone that is in some sort of trouble, whether its an institution, or an individual, wants something. The economy is bottoming out, and the government can't afford to help both the individuals and the institutions, because that would pretty much mean supporting much of the nation.

week 6

The first article I did this week was called "Fed's Stern, critic of bank bailouts,set to retire" and was on Gary Stern's imminent retirement. Stern is the Federal Reserve's longest serving regional president, and is a very vocal critic of big bank bailouts. He has served the Minneapolis Fed since 1985, and is most likely to be replaced by Christine Cumming, who will become the third current female regional president. Strategists predict that the switch probably wouldn't have any major market consequences. Stern co-wrote a book called "Teoo Big to Fail: The Hazard of Bank Bailouts" in 2004, which criticized government intervention in saving financial institutions. The book argues that "protecting uninsured creditors of system institutions leads to underpricing of risk and, therefor, excessive risk-taking, which in turn sets the stage for turmoil in financial markets and disruption in the economy". Stern still believes if the government had followed his thesis, the country would have at least been better prepared to deal with the current problems, and also has proposed a program of "systematic focused supervision" which is designed to minimize potential spillover effect of large institutional failures.

This article was pretty interesting to me, because the phrase "too big to fail" was not a term too familiar to me before this economic crisis occurred, and yet it seems that it has been an issue in the American political system for some time before this. I have understood why the government has decided to act to save these huge institutions as a way of saving hundreds of thousands of jobs, but never really thought of why not to do it other than it was "un-american". Stern brings up a good point about the economic consequences of saving huge companies, and it worries me that maybe all the things the government is doing right now maybe be beneficial in the short term, but might have some pretty terrifying consequences in the future.

My second article of the week was called "Emerging recovery may give legs to market rally" and was about growing signs that the global economy might have hit a trough and is rallying in stocks and other risky assets. World equitis have risen more than 6 percent in the past 2 days, the biggest monthly gains in March since december 1999. Investors are also happy with the actions of the world governments, such as G20's pledge to give a trillion dollars to the IMF and other institutions. Some risky assets, which were hit very hard recently, have also shown some signs of recent investor confidence. Convertible bonds, which are a risky asset, have doubled in sals in the first quarter

This article gave me hope that this recession won't turn into the decade long debacle of the 1930's, which has been scaring me for some time now. I think the news needs to cover these types of stories more often, in order to help do their part in bolstering consumer confidence and hopefully improve overall spending. hopefully enough people will get this information and the market continues to show signs of improvement so we can all get on with our lives and focus on more important things than money.

My third article was called "After Obama ultimatum, GM standoff now a footrace?" and was about Obama's message to GM that pretty much said: make a deal now... or talk to the judge in bankruptcy court. The government has told GM that they have 60 days to present officials with a credible overhaul and survival plan, which must include major concessions from debtholders and United Auto Workers union. However there is one plan that GM is working out to use bankruptcy protection to shed all its toxic businesses and emerge reorganized around its solid ones, which would be terrible for GM's active and retired workers, which might get wiped out by such an action. This puts the union in a terrible position, meaning they have to agree to concessions that satisfy the government, GM, and their own members, before the bondholders of GM find reasonable concessions, because if they don't and the company goes under, it will look like it was the Unions fault.

I have heard before that some people have blamed the UAW for GM's economic woes. It seems from what I have heard that autoworkers who used to be underpaid and such, have for so long now fought for what they want, that they are actually overpaid with too many benefits and have limited companies abilities from sending some manufacturing overseas, a problem some foreign car makers have not had, thus disadvantaging U.S. automakers. It seems now is the time that a reasonable balance is to be found for GM's survival, and giving concessions up is better than having the whole union lose their jobs and benefits in bankruptcy, so it seems to me they should act as fast as possible in accommodating whatever the company needs.

Week 5

My first article this week was called "AIG CEO asks employees to repay some bonus money" and was about Edward Liddy, the AIG CEO, and his sit down in Washington about the 165 million dollars the company, who is receiving unbelievable amounts of bailout money in excess of 180 billion dollars, spread out to 400 of its top employees as bonuses. Liddy flimsily attempted to appease some anger by stating that he had "asked" employees of the company that had received in excess of $100,000 to return at least half of their bonus, but that he would not list the recipients names for safety reasons. Liddy explained that the payouts were necessary to retain top employees with specialized knowledge to dispose 2.7 trillion dollars in complex securities that dragged the insurer down last year. Liddy then claimed they had whittled that amount down to 1.6 trillion, while the Washington POst reported that the work of defusing the most dangerous bets placed by AIG was mostly finished, down to 13 billion. Public rage is apparent on this issue, and Congress is even trying to pass a bill on Thursday to recoup most of the bonus money paid to the AIG executives. New York Attorney General Andrew Cuomo subpoenaed AIG for a list of the recipients.

This article really pissed me off. Hearing that the money that our society works for as whole for the betterment of our nation is being used to fill the pockets of greedy executives who let this giant corporation fall to its knees and beg in the first place is absolutely ridiculous. When you are AIG, and you screw up enough to bring one of the biggest corporations in the world to bankruptcy, how can you honestly believe that you deserve a bonus? Especially 165 million spread over 400 people! Thats more than 400,000 each if distributed evenly. Also, the lackadaisical responses Liddy gave to the subcommittee made it seem as if it wasn't a big deal, like "oops my bad too late now". It's his foul up, their his employees, he should straight up tell them to give the majority of their bonuses back. I'm sure these people work hard for these bonuses but a company has to recognize when they don't the luxury of handing out such sizable payouts, and their employees should understand that. If they value their job, they will stay, if they don't then they leave, it seems to me like AIG is going to collapse sometime in the near future anyway.

My next article was name "Fed says let's Twist again after 48 years" and was about how the Federal Reserve on Wednesday flashed back to a campaign almost 48 years that was named "Operation Twist" as it announced the purchase of $300 billion worth of longer-dated Treasury securities, as well asa $850 billion of mortgage securities, to help curb the deepening recession. The Japanese did this in the 1990's and by the Bank of England in recent weeks. The Fed is trying to boost the mortgage securities and debt market to the tune of 1.45 trillion dollars, and has also aggressively tried to support private credit markets, which is a program that could grow to 1 trillion in size. This combination of monetary, credit, and fiscal easing will hopefully slow the recession in the second quarter and spark modest recovery by year-end. However the risk for inflation is high since all this money is going to be printed, adding a lot of parchment into the economy.

These spending plans are beginning to absolutely blow my mind. The money that is being talked about here is a humongous sum of cash. Multiple trillions of dollars being injected into our economy. Hopefully, all this government spending sends us into an even more prosperous era than we were in before this crisis, because there is going to be a huge amount of national debt to pay off. I have to keep reminding myself that this is our money that these people are playing with, and when the Fed decides to print a trillion more dollars, that effects how much the money in your bank account for your kids is actually worth. This is all very scary stuff, I feel like America is one big social experiment now, with the end either being the discovery of something new and cool, or in the end the chemicals we used end up combining into explosive material and blowing up right in our face.

My last article was called "FedEx profit tumbles on global slump" and was about the huge drop that FedEx took in profit. Reportedly, the package delivery company took a 75 percent drop in its profit due to the recession and gave a low quarterly outlook. In the span of one fiscal year the company has reported that its net income went down from 393 million or 1.26 dollars a share to 97 million, 31 cents a share. Fed Ex is considered a bellwether of U.S. economic activity because when the economy does well, companies and consumers ship more goods; in a recession, package volumes drop. FedEx also has a 14 percent revenue drop to 8.14 billion. The company will be forced to suspend paying matching contributions to its 401 k retirement plan reciepients for a minimum of 1 year, and also gay pay cuts and cut man hours to compensate. 

It seems that the economic windfall is really catching every part of our socioeconomic system now. I fear for the job market for when I get out school, hopefully it will be back to normal by that time. I am just surprised about how much FedEx fell within a couple of quarters. Other than that the article was interesting, I'm now thinking of buying some FedEx stock so when things get going again I can see a quadrupled return.

WEEK4

My first article was called "Near-term outlook for U.S. darkening: Fed officials", and was about the economic outlook for the near future and the actions that the Federal Reserve is taking in response to these dismal projections. The Feds main aim is to stimulate the economy by lowering interest rates without causing a rampant inflationary response that would in turn end up screwing the American people more than helping them. The article had presidents of both the Atlanta Federal Reserve Bank (Dennis Lockhart) and the Dallas Fed (Richard Fisher). Fisher states that he expected the first quarter of 2009 to be roughly equal to the 6.2 percent annual rate of contraction seen in the 2008 fourth quarter, a huge hit on the economy. The projected amount of job loss for last month is 648,000, a number that will increase our unemployment rate from 7.6 percent to 7.9 percent. In response to this the Fed has cut interest rates to almost zero and more than doubled the size of its balance sheet to around $2 trillion through programs to support private lending. Lockhart was more optimistic than Fisher, trusting the power of the Fed to act and effectively stimulate our "enormous potential for growth and prosperity". However, the large expansion of the monetary base could lead to inflation at some point, which in response the Fed would have to tighten monetary policy, the problem is, in order to be effective the Fed would have to tighten monetary policy before signs of recovery were underway in order to work properly, something that no one can really foresee. Business does not expect improvement until late this year or early 2010.

I think it is a great thing that we live in a free country where people like Lockhart and Fisher are able to reasonably inform the American people about the going-on's of essential Federal economic institutions such as the Federal Reserve. The information in this article provided a lot of detail as to how bad the state of our economy is right now, which can be useful information for people wiling to use it wisely. However, I feel like some of our economists and great minds have become too math and data oriented about the market. They seem to underestimate how easily an informed opinion from experts in the economy can persuade an average consumer from one set of actions and behaviors to another. It's about time our politicians and educated elite learn that the market is a very psychological place, with a lot riding on the outlooks of its consumers. President Obama and a lot of Congressmen seem to be inundating the press and in turn the American citizen with news of a devastating economic meltdown, which I feel only serves to discourage consumers from spending and putting money into the market and contribute. I feel like these people need to be reasonable and responsible with the information they deal out, and make sure that what they say has America's best interest in it.

My next article was called "Venezuela sees no further Cargill takeovers" and was about the President of Venezuela,  Hugo Chavez, and his relationship to Cargill, a privately owned U.S. food giant. Chavez follows a pretty socialist doctrine, is staunchly anti-American, and is a good ally of Cuba's. Chavez seized Cargill's rice plant because the company seemingly refused to meet Chavez's demand to produce cheaper rice. He has taken similar action against Venezuela's own top food company Empresas Polar, and threatened to nationalize the company if it did not comply to his demands. Chavez has stated that these seizeurs are temporary, that he does not plan on seizing anymore American companies plants, as long as they comply with his demands. Some economists think that this recent grip that Chavez has taken on the food industry may end up contributing to food shortages. Venezuela is a member of OPEC, and is beginning to feel the effect of tumbling oil prices on their economy, which might be a motive for Chavez's action.

This article was very interesting to read, because it explained a lot to me about Hugo Chavez's personality that I have not really come into contact with before. Previously he was more of a name to me, someone I didn't know much about, but now I feel like I've learned some key components of his personality. Chavez seems combative, and extremely demanding. Three weeks ago he won a referendum allowing him to run for reelection again, something that scares me because it seems to defeat the purpose of having an election. He is a powerful man obviously and with no risk of losing the upcoming election he has less reason to care about the people's opinion, which is the major flaw with dictatorship. However, he has been successful in pulling Venezuela out of some serious poverty and has always been one to help out his nations poor. His success makes me question some of my own political beliefs, maybe sometimes countries in dire need of modernization and implementation of an economic base need a strong, demanding, and controlling leader such as Chavez?

My third article is called "U.S. launches 75 billion mortgage plan to aid homeowners" and talked about Obama 75 billion dollar mortgage plan, which is part of a 275 billion dollar housing stimulus program. The article talked about the trouble the current housing market is in, with about 8.3 million properties underwater at the end of 2008 and widening still. The plan aims to help people facing imminent hardship by offering cash incentives to loan servicers to cut monthly payments on single unit homes up to $729,750 in value. Obama hopes that this program will precent forecloser for struggling borrowers and allow standard refinancings for strong borrowers whose homes values have eroded. The only real positive point of the article is when it talks about how Foreclosure sales and how they have surged in these conditions, since foreclosed homes sell at a discounted price compared to what other people are asking for homes.

This article was informative, but pretty boring. It reiterated the weak housing market which I feel I've heard too much about in the past to care about anymore. Anyway, the plan seems pretty fair to me, giving people in trouble because of this crisis a helping hand to stay afloat while making the market a little more accessible to stronger borrowers who might be looking to refinance because of their own home value decreasing. Hopefully this plan will do something in the short term to help this market from free falling more. Its crazy to think that the housing sector is in its deepest downturn since the Great Depression, a place I really hope we are not going to have to revisit anytime soon.

WEEK 3

My first article was called Boomers: 30% Underwater, and was about how the housing erosion has will leave the baby boomer generation who is about to retire very little to live on. The article cited facts, the main one being that 30 percent of boomers ages 45 to 54, if they needed to sell their homes, would end up owing money at closing. A non-partisan think tank group found that those renting homes in 2004 will have more wealth in 2009 than owners, and that recent financial collapse will leave many baby boomers to rely mainly on Social Security and Medicare for their retirement. The study also found that boomers 45-54 have lost 45 percent of their net worth, and those between 55-64 38 percent.

The article's overall point to me seemed to be showcasing the necessity for social welfare programs such as Social Security and Medicare, which could offer a higher portion of retirement support to boomers. In my opinion, the market does fluctuate, a fact of life everyone has to live with and be ready to deal with. However, in huge society changing times of economic woes, the government has to be ready to do its part in maintaining societal order and helping out those who need help getting back on their feet. I know that Social Security is somewhat unsustainable, but i think our government has to try and give something back to those who have worked hard their entire lives, no matter how little a smaller generation can afford a huge one like the baby boomers.

My second article was called Angry Shareholders Demand Change, and was about the upcoming annual proxy season, when corporations give stockholders a rundown on their operations and discuss other issues near and dear to the investors hearts. It will be a time when investors can list their grievances  with the company and demand certain changes to the company. Shareholder activists are trying many things to make investors more powerful in their companies going-ons,  a major one aimed at giving investors a vote, or "say on pay", when determining compensation packages for senior management. Also, measures aimed at pushing companies to become more environmentally friendly and also disclose their political contributions will also be on the table.

Honestly, I did not even know there was a proxy season before I read this article. Knowing more about it now has really made me excited in the opportunity shareholders have to make a difference within their company. Hopefully these "shareholder activists" can get enough backing to really make significant changes, especially in a time where so many investors have been hit hard by the economic crisis. I plan on following the outcomes of this proxy season and hoping to see some significant change made by the people to these huge corporations.

My third article today was called Bernanke: Bail out bad borrowers, too, and was about Federal Reserve Chairman Ben Bernanke's comments on Wednesday, where he stated that the government should help at-risk homeowners by bailing them out, even if they knew they couldn't afford their house in the first place. This means that the government would have to trade off the moral hazard issue in order to achieve their goal of fixing the economy, even if it means giving money to some of the people who selfishly took advantage of the system and got us in the current our current mess. Some politicians fear that the governments policies pretty much aim to give a full correction to the market, a goal that will saddle future generations with trillions of dollars in debt. Bernanke also made comments recognizing some people's fear that the government will have to nationalize some of the country's most troubled banks. He stated that the supervisory powers the government has is already enough power and the government doesn't need to do anything more radical.

It seems to me that everyone who has been hit by the economic crisis is demanding a full bailout, which to me seems a little ridiculous. I feel like the job of the government is to assure societal stability, not pay the private sector to the point to full recovery. By this I mean the government should do as much as to cushion the fall of the economy, and then help the market get back to its feet, let the private sector learn its lesson about how to handle the housing market, and then get out of the way again. It already scares me how much power people seem to hand over to the government every time something goes wrong, and I think people have to be more vigilant about how much government they want regulating their lives. 

WEEK 2

My first article, "NAFTA foes have hope for Obama renegotiation", talked about President Obama's trip to Canada, which is only a one day visit with Canadian Prim Minister Stephen Harper. The article pointed out that the day visit probably wasn't enough to get in the NAFTA talks and renegotiations the President's constituents would like, but that it was on the agenda for the meeting. Obama and his ex-democratic primary rival  and current Secretary of State Hilary Clinton both criticized the North American Free Trade Agreement which has tripled the trade between Canada, the United States, and Mexico, to nearly a trillion dollars. The agreement has been blamed for the loss of many jobs, especially manufacturing jobs in the midwest. However, drastic change to NAFTA will take congressional direction, which some fear. There are things the President can do to change the agreement such as redefine core labor rights and convince the Canadian and Mexican governments to adhere to new environmental issues.

From an economic perspective, free trade is usually seen as pretty beneficial. It lowers costs of goods and makes valuables more readily available to consumers. However, when different countries have different labor and market policies that may advantage one countries industry over another's, the "free" trade get complicated. This is why governments are sometimes forced to put tariffs and things like that on products, to protect the industries health in their own country. In my opinion however, the world is being globalized everyday, and with cheaper and faster transportation methods, I feel like countries that can afford to globalize will, giving them an upper hand, and that eventually the poorer countries will have to follow suit and let the market and international programs figure out where they fit in this massive, seemingly unsolvable puzzle of a world we have.

My second article was about the auto industry bailout. Some experts think the bailout could ultimately top 130 billions dollars, even though they have already received 17.9 billion already. GM and Chrsyler asked for 21.6 billion more in additional loans, on top of that, they are already pretty much set to get 7.5 billion for the financing arms of the companies and 25 billions to convert factories to produce my fuel efficient cars. But now, dealers and suppliers are also looking for aid, in the form of loan gaurantees of 5-20 billion and 18.6 billion respectively. Also, Ford is looking for 9 billion for a line of credit in case sales become worse than expected or a competitors bankruptcy causes widespread failures in their own supplier, which has become a likely forecast for the near future. There is also proposals "Cash for Clunkers" program which gives people 10,000 in tax credit to return old fuel-inefficient cars to be scrapped, as well a 9 billion proposal to allow buys to deduct auto interest loan from their payment.

In my opinion, the auto industry is not one to be looked down upon with sympathy. American car manufacturers have been losing out to more stable Japanese manufacturers for decades now and have been in trouble more than once. However, I do think this is a good opportunity to use government intervention to transform the auto industry into a more fuel efficient and technologically sound industry, while also giving government incentives for buyers to buy these cars. Also, letting these companies go bankrupt in this climate is not acceptable for it could become the nail that closes the coffin and put us into some of the worst financial standing in the last century.

My third article was about President Obama's newly unveiled plan to use up to 275 billion dollars to tackle the housing market. This package could help up to 9 million families refinance their mortgages if their defaulting or even about to see trouble. Also, 5 million homeowners still making payments who can't afford regualr refinancing because their home values have dropped could refinance through Fannie and Freddie, which will do much of the heavy lifting.This aid will aim to reduce borrowers payments down to 31 percent of their income.

The plan aims to lower the number of millions of U.S. homes that could fall into foreclosures, a number that is very high, up to 16 percent of all households by 2012. I feel really bad for the people who got indirectly shafted by those who took advantage of the mortgage system before this crisis, and I hope enough is being done to make sure people don't take advantage of this government bailout just as much.

us govt and econ

The first article I read for current events was an essay written by Carly Fiorina named "Government Shouldn't Decide Executive Pay", in reference to Obama's new policy that executives of companies receiving bailout money aren't to receive more than 500,000 dollars salary. Carly Fiorina is chief executive of Carly Fiorina Enterprises and former chief executive of HP and also a former advisor to Senator John McCain during his presidential campaign. Although slightly biased because of her position of CEO in  her own enterprise as well as her former position at HP, she brings up a good point when it comes to Barack Obama's new policy that CEO's of companies receiving government bailout money have to cap their pay at $500,000 a year. It is true that the government should have a significant say in the working of a company that they are bailing out, but where should the line be drawn? Mrs. Fiorina asks: Why $500,000, and why not more or less? The number does seem to be arbitrary, and it goes against some of the traditions of the workings of the American free market.

First of all, the government deciding how much each job is worth does not strengthen the economy, for it draws back incentives and respectability from certain company positions. The only thing that hurts the economy is when companies and corporations hide the compensation they give to the CEO's and executives. Transparency gives investors a better idea of what they are getting themselves into, and balances greed with accountability. And, it should be up to the owners of the company to determine what the executive pay should be, but when that company receives taxpayers money, the executives should be prepared to take responsibility for the reasons that company failed and thus resign, not keep their job and take a pay decrease. This means that when an executive gets lavished with money, but does not produce, it is apparent to all through the transparency afforded to the investors by the owner, and thus, as a free market works, the investors, who usually foot most of the bill when it comes to the wealth of that particular company, are informed enough to recognize and call for a power change in the executive offices. Not disclosing this kind of information deters the free market ideals of this country and makes it more apt to be taken advantage of by the few and wealthy.

The next article I read was called "Republicans Urge Obama to OK Offshore Oil Drilling". This article talked about the Republican proposal for a 5 year plan of oil and natural gas drilling expansion off the U.S. Atlantic and Pacific coastline. This proposal was left over from the very end of the Bush administration and would authorize 31 energy exploration lease sales between 2010 and 2015 for tracts along the East Coast and the coasts of Alaska and California.The Republicans said in reference to the plan, "Our country needs to remain on the path to American energy independence, and we believe this is a critical and achievable goal." They cited for backup of the plan a study that concluded the untapped offshore oil and gas reserves would create more than 160,000 jobs by 2030 and provide the government with 1.7 trillion in royalties.

In my opinion, although there is a clear environmental crisis at hand, I think that politically and economically for America this plan could be very beneficial, if limited. This plan, along with Obama's extensive plan to make America green could snap the need America has to deal with the tumultuous and unstable Middle East. Countries that are anti American will no longer benefit from our money or our sharing of weapons, and thus be very apt to become more peaceful as the demand for their prime product diminishes. Also, 160,000 jobs is a very significant along with the 1.7 trillion dollars promised. I think if this plan, if limited so that the green revolution can still be ushered through, will speed the process of diplomatic and economic stability, and hold us over for a few decades until oil drilling become completely unnecessary.

My third article is called "Japan and Australia warn on "Buy American" protectionism", which talked about the provision in the proposed $825 billion stimulus package that only American iron, steel, and manufactured goods would be allowed in the construction of public works proposed by the bill. This offended Australia especially who is a major iron and steel producer who exported 484 million worth of steel to the United States last year. Japan stated that "The common responsibility shared by the two countries, which are the world's number one and number two economies, is to resist protectionism together".

The fact of the matter is that this bill is going to funded by the American tax payer, and that as such the bill should have their interests in mind number one. Now, along with meaning accommodating them by directly giving them jobs, it also means not starting trade wars with other countries which make it harder and more expensive for American government to buy materials. So, as such, the bill should slightly disproportionately favor American materials over foreign, but only to the point where Australia and Japan and every other country losing out on essential money during bad economic times doesn't ban together to stop trade with us.