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.