Homeowner Crisis

With house prices being at its lowest, it’s the best time to be looking for a new home. However, if you already own a home you might not be in the best of luck. This article is illustrates the issue that many people are facing due to the economy, owning a home you can’t afford anymore. Because people are being laid off and stock markets are down many people are finding that they can’t pay off their mortgages and having to refinance. Nevada has the largest number of “upside-down mortgages” in the country (55%) and Michigan right behind at 40%. At the end of the third quarter there were 18% of mortgages underwater. Home values have gone down significantly this past year making many people frustrated with owing the banks more than their property is worth. A couple of years ago Tucker Roberts bought a 500,000 dollar home hoping he could pay it off with time and use his house as a bank. Back then, his plan seemed promising because the value of a home was rising significantly. But now his home is only worth 150,000 dollars. As many are nowadays he is struggling to keep up with the mortgage payment. What hope is there for people similar to Roberts? U.S. Treasury Department program is planning on helping people like Roberts to offer cash incentives to home owners up to 729,750 dollars so that not too many homes are owned by banks. Some people are trying to increase their homes’ value by investing in hopes they can receive more money for what the home is truly worth. However, right now not many people are looking to buy a new home because of the economic trouble (unemployment rate is up and stock numbers are down) therefore raising the value of the home may have no effect to help sell their homes. Until we see a rising economy there is not much hope for people like Roberts.

Restaurants Struggle To Keep Up

Considering becoming a server anytime soon? You should probably think twice about that. Right now restaurants are seeing the troubling economic effect. Servers are receiving a significantly smaller tip and not as busy as they have been in the past. This article describes the overall downturns for restaurants and how it is affecting the restaurant business. Many people need to make changes in their budget and eating out is an easy one to change. People substitute by going to the grocery store (which is more healthy), eating at cheaper restaurants or eating fast food. The demand for fast food has gone up significantly, so companies like McDonald’s are not suffering like many restaurants are. Restaurants like Joey’s Seafood & Grill are seeing an opposite affect that of McDonalds. Co-owner Marc Wilder describes the ups and downs of Joey’s Seafood & Grill; some days there’s a 30 minute wait while others there’s none at all. People are not willing to pay as much to eat out as before. Because of this many employees that work at a restaurant are getting laid off or struggling to make payments that were as hard in the past when people were willing to give a 20% tip on a 100 dollar tab. Once the economy resolves itself in the future, being a server won’t be so bad because people will be more willing to eat out and be more gracious in their tips. Until then, the income of a server will be scarcely lower than what it has been the past two years.

Mexico Hopes Spring Break Will Help Their Economy Crisis

Mexico is the ideal place to go on spring break; white sand, hot sun and a spectacular ocean view. According to the article 2009 has been one of the best years to go despite the economic troubles. Airfare prices are cheaper than before making it affordable and more attractive to go to Mexico. Not only this, but the dollar exchange in Mexico is excellent, “In August, it was trading at 10 to the dollar. Now it is 14 to the dollar”. Tourists from the US are able to buy more for their dollar than they would in America making it more appealing. Hotels are offering good deals for a week on the ocean. Erin Erwin (from this article) is going to Cancun with five girlfriends only costing her 1000 dollars for an all inclusive for a week. Can’t get any better than this, but why and how is this so affordable when an economy is at a recession?
Mexico, just like the US is suffering the raft of the economy. One way they are hoping can help them out of this crisis is tourism during spring break. Like this article mentions other Caribbean Islands are not receiving as much tourists as Mexico, one of the factors being the airfare tickets are far more expensive to go Costa Rica, than Mexico. This is giving Mexico a huge advantage and attracting US citizens. By attracting tourists to Mexico they are able to increase their GDP, helping them out with the economy. For how much longer can Mexico rely on this? It’s hard to say but as long as they continue to have excellent deals on hotels, food and activities spring breakers will be sure to be going.

AIG bonuses result of government bailout

I have recently researched the bad decision making of AIG (American International Group). Following current anger with Obama's bailouts issued under the recent introduction of the trillion dollar stimulus package one company has stood out in a big way. AIG a company owned majorly by the US government was recently bailed out by the FED in hopes of avoiding future collapse of yet another big name firm. Unfortunately in AIG's case, the free market system punishes us for bad decision making. Following a 86 billion dollar push from Greenspan and friends AIG issued major million dollar bonuses to many employees. Unfortunately, even though the major equity stake of 80% belongs to the government the only punishment they can issue is a large tax on the bonuses; some 35% has been proposed. The inconvient truth of the matter is the lag between creating law that prohibits this or installing the tax will make quick recovery hard. Many politicians and citizens have become enraged at the situation because it further supports how inneficient these government bailouts are. Though expansionary fiscal policy says it is important to increase government spending and decrease taxes, too much aid could eventually cripple the American free market system. But this lose, lose situation makes the decision making hard. Either risk inflation and further debt by helping out greedy banks and lenders or back off and let the country fall into a recession. On the upside the mass amounts of money the FED is pumping out, and government is spending, will eventually stabilize our economy because we still have a very small rate of inflation and these firms that are being saved are a vital part of American economic success.

Weighing current supply and demand of crude oil

I recently researched on imbalances in the crude oil industry. Although in late 2008 and early '09 America was experiencing record shattering gas prices, the general change in crude oil supply was a mild one of about 2% in the amount of barrels produced daily. This recent exponential rise in gas guzzlers is what has caused the price per barrel to increase from 33$ to 132$ within a 6 year period. So you see that an increase in oil demand has incresed its price even though supply stayed relatively constant. As the oil industry continues to experience somewhat of a plateau, many question what will become of the long run oil supply. The possible shortage in the future is coupled with the growing incentive of oil companies to invest in scrounging more oil as it remains profitable. This growing incentive to hunt down open oil fields, or "elephants", has caused a rise in the demand for steel companies that provide equiptment for the job site. Though many citizens are becoming increasingly worried as companies continue to capitalize on this nonrenewable good and subsequently demand has also gone up in bio-diesel, and fuel alternative industries. Unfortunately I forsee major problems in the future as money hungry monopolies like OPEC continue to harvest as much oil as they can and don't decrease their output. Because though the American demand for gas and other crude oil products will remain constant, oil supply will not.