Research is part and parcel of my new job and as I was researching in the world wide web, I stumbled upon this article on the Wall Street Journal website where there was an article on the improvement of the US economy. In that, the Federal Reserve Bank of Atlanta President Dennis Lockhart said that in overall, the U.S. economy is improving but still fragile. He also said that the he was confident that we (America) will return to a sustainable fiscal path but it would be unwise to be “Panglossian” or naively optimistic about the whole financial state.
In another article I found that the Federal Reserve Chairman Ben Bernanke, in his prepared testimony for Congress’ Joint Economic Committee had said that among the enormous costs of the downturn is the loss of some 5 million payroll jobs over the past 15 months. However experts predict that job losses and the unemployment rates will come to a sustainable level. Obama’s government is undergoing a tough, challenging phase and they are working on this, so let us give them some credit for their planned bail-outs.
So my question to Mr. Lockart is “Why not?”
Why not we stay Panglossian?
With a slow and steady resurgence in various sectors like manufacturing, real estate and every thing else, this the time when we can actually breathe a bit easy. America is a great country with the largest economy in the world and also by PPP. To top it all, we have the second highest income per hour worked in the world. Everything is close to perfect so why are we being so frugal?
The world is not coming to an end. This is the time of economic re-birth world wide. I am beginning feel that the recession is becoming more of a mind thing than of a money thing. Let’s cut the recession drama down a bit and try and stay a bit more optimistic. Panglossian, maybe. 
PS: The word Panglossian derives from Pangloss, the optimistic tutor in Voltaire’s Candide.
It has been just 60 days since Mr.Barack Obama took charge as the new President and the nation seems already displeased with him. I don’t know if we are being restless by expecting a man to pull the country out of a financial crisis caused by years of financial mismanagement. Or did we get carried away by those ‘yes we can’, rhetoric and expected too much out of him.
The new president already seems to be dipping in popularity charts and NY Times even had a page 1 story on Mr.Obama’s increased grey hair in just 44 days of taking over as President.
Coming to the point, Mr.Obama’s Tuesday night press conference did not appear to cut much ice with the media and people waiting for a ‘change’. The NYT describes his address as “sounding like the teacher speaking in the stillness of a classroom where students are restlessly waiting for the ring of the bell.”
The outrage over the huge bonuses that AIG officials paid themselves was a moot point in the press conference. AIG is 80% owned by the government and received billions of dollars in federal bailout money, even as the executives paid themselves huge bonuses. When asked why he did not go public with his outrage on learning about the retention bonuses at AIG, the president has responded, “I like to know what I’m talking about, before I speak”.
Large business corporations made windfall gains when the economy was on a boom all these years and shared the bounty among themselves. Now when the economy is on a tailspin, they rush to the government with bailout pleas (sometimes in plush private jets).
Blogger Hazzard calls to scrap bailouts and let things fail, because “there are hundreds and hundreds of financial institutions out there that made good business decisions. It’s time that they got to reap the rewards of managing their business in a responsible way”. Now, isn’t that what free market economy is all about?
At last the responsible tax payers, sincere homeowners and law abiding people are finally getting their due. Having spent thepast few months watching leaders of large business flying in their private jets to ask for bailout of their companies and board members of defunct financial groups having paid themselves huge bonuses, I started wondering why common people like us always get a raw deal. But now I guess it is pay-back time for being good citizens.
I am referring to the mortgage refinancing package announced by President Obama last week. Unlike the stimulus packages for large business houses which I feel benefit the heads of corporate houses more than the employees at the bottom rung, the mortgage refinancing package is aimed at the responsible homeowners, who have been regular in their mortgage repayment.
The package, which you all must be knowing by now, has two parts. The first, called “Home Affordable Refinance,” is for homeowners whose property has dropped in value. It would not reduce the principal of the loan, but allow the borrower to refinance the principal up to 105% of the home’s current value.
The second program, called ‘Home Affordable Modification,’ is aimed at borrowers whose payments have become unaffordable, because of either a job loss, illness or increase in interest rate. Here the lender will lower the monthly payment to as much as 31% of the borrower’s gross monthly income. The government would compensate the sum accordingly with the lender in terms of cash payments and financial subsidies.
And this one is the icing on the cake. In many cases, the lender would reduce the interest rate to as low as 2% for five years. Now, mortgage repayment at 2% is quite a steal. Fellow blogger Refinancing Condo makes an interesting observation by saying that refinancing at 2% interest rate will almost instantly raise home values.
But then again to qualify you have to be regular in your mortgage repayment and also your loans should be backed by Fannie Mae and Freddie Mac. NY Times has more details on what you need to know about this housing plan.
Economists have time and again being pointing out that foreclosure of homes is one reason for the economic crisis facing the country today. This effort by the Obama administration will go a great length in reducing instances of foreclosure. Allfinancialmatters has a totally different take on foreclosures and states that it is not that bad after all.
Just hoping that this mortgage refinancing package brings in the much needed liquidity into the financial system.
One of my many New Year resolutions has been to write down my daily expenses. The effort which I grudgingly took up has been a sort of enlightenment for me in that, I have realized that fuel expenses have started becoming one of the largest expenses for me every month, apart from food. In fact it has constituted almost one-third of my total expenses till date this month. This has made me more determined than before to reduce my gas bills. I read up a bit on the ways and tips to keep a check on and reduce fuel bills. I have been sharing those tips with my friends now. Here are some of them.
1. Driving the car at moderate speed to save fuel. Steering the car at over 70mph will only lead to an aerodynamic drag resulting in increased fuel consumption. Contrary to popular myth, keeping the air conditioner on while driving does not actually increase fuel consumption. In fact keeping the windows open while driving at high speeds only increases fuel consumption. Driving at lower speeds also consumes a lot of fuel. So moderation is the way to be.
2. Switch off the ignition if you know for sure that you are going to wait for more than a minute. It consumes less fuel to restart the engine than to keep the engine running idle for a long time during traffic jams, or while doing some quick shopping.
3. Service the car regularly to check the battery, spark plugs and tyre pressure. A well maintained car with clean air filters and the right tyre pressure always gives better mileage than the ones that rarely visit the garage.
4. What car you own, plays a big role in how much you spend on fuel. If you are yet to buy a car you can check out some of the latest hatchbacks in town. Small cars are known to be much more fuel efficient than large gas guzzling sedans. Beginners will find it much easy to park and handle hatchbacks as compared to sedans. Browse through car review sites to find the more fuel efficient models.
5. Do not hesitate to form car pools with those traveling to your college or office. Using messengers or community sites you can find out the list of those people who travel through the same route at the same time and form car pools. It is not shameful to form car pools and save fuel, certainly not when you have a look at your fuel bills at the end of the month.
6. Websites like www.fueleconomy.gov provide the list of locations where gas prices are lower compared to other places. You can check such sites by location, before filling the fuel tank.
7. Trying to fit into those slim fit jeans for a long time now? Drop those car keys at home and take a walk. You not only save fuel but will also end up shedding the extra flab which you have wanted to lose for a long time.
