manifesto 2.0

1. If a large corporation were to go out of business, causing severe problems of unemployment and greatly disrupting the market, should the federal government subsidize them?
It is my educated deduction that the government should either restrict bailout to a limited amount or not provide such financial assistance at all. The problem is that then even more financial stress is put onto a government that just doesn't have the money to throw it at companies that simply failed to carry out their business properly. The United States government shouldn't provide support for a corporation that could never support itself. Despite possible unemployment and market disruption, responsibility must fall in the hands it belongs and with that comes with failure as well as success. These hands are not the government's, but the corporation which failed to maintain a stable business plan.

2. After looking at the 2011 budget (revenues and expenditures), my manifesto leads me to support/criticize it because...
I do not support the 2011 budget because the expenditures in certain areas are just way too high and the balance necessary in our economy does not exist. The government spends more than it brings in, resulting in negative outcomes! Defense spending should be cut in half if not by more, this is especially true because so much of the spending doesn't actually go into defending the United States at all.Simultaneously, it is interesting to notice that almost half of US Revenue comes from the people, not other resources or other countries.  I highly criticize the use of resources by the government because the lack of financial diversity and use of funding.

 3. In keeping with my manifesto and after watching the movie I.O.U.S.A. explain the debt crisis faced by our nation, I propose the following solution...
Defense spending should be cut in half, if not more. More resources should be directed into a national medical health care plan even if that means raising taxes. A national heath care plan would benefit every American citizen and promote healthy lifestyles and preventative care, which in turn would cost less in the long term. Higher taxation would increase revenue, if and only if, outgoing expenses are cut so that they do not exceed the expenses of revenues brought in. This would be key looking forward in creating a more effective economy. I also believe that providing more financial aid to college students and returning student would promote a more educated population. Thusly, our economy would be able to have more jobs of higher paying rates and a more successful economic backbone. 

the inevitable fulmination of 2008

Setting: a panoramic birds-eye-view of suburbia with then sun shining and birds singing; moving from left to right, the even cut grass, identical roofs, and perfect little picket fenced-in yards. It’s the perfect scenery for the beauty of life to be created and raised, little families blossoming in their all-too-close together homes. It’s 2008 and the inevitable is upon every single one of these homeowners. Thrust into an economic downward spiral initiated in the 1990s, the massive bubble of perfection was about to fulminate. The housing market crash of 2008 was an inescapable consequence due to the faulty economic choices made by both the nation and world in the years leading up. 

            In the 1990s, China began to be a world leader economically. It set into motion an economy based on exports, which set it up to become the second-largest economy in the world (Jenkins). The savings rate of the developing world soared and went far beyond its investment rate. This, in turn, created an inevitable fall in the long-term interest rates; additionally, it would cause increasing asset prices, especially house prices: the housing market bubble.

            A housing bubble is a run-up on housing prices that are fueled by a dramatic increase in demand, speculation, and the belief that recent history is an infallible forecast of the future (Housing Bubble). Such housing bubbles are predictably started by a shift right on the demand curve as a result of a limited supply, which takes a relatively long period of time to replenish and increase. The biggest issue with this is that individuals whom enter the market believe that profit can be made from short-term buying and selling; however, this drives demand. When the demand drops, a shift left in the demand curve, and increases simultaneously, resulting in a sharp drop in prices and thusly the bubble bursts. This traditionally happens in other markets; in fact the housing market is not as prone due to the large transaction and carrying costs that are associated with house ownership (Housing Bubble). So what really caused the “inevitable” crash? One has to backtrack from the 1990s to 2008 in order to understand what happened.

            Following the events of September 11, 2001 and the dot-com crash, the United States was left in economic pain. The solution came from dipping into the Federal Reserve in order to cut interest rates to record lows (Jenkins). Real estate markets reaped the benefits and drove the financial vehicle of the country, eventually right off a cliff.

            There was too much homeownership. From 1994 to 2004 there was a homeownership increase of 5.2%; this meant that a record 69.2% of people owned a home (Merriam). This caused people to buy for speculation instead of for shelter. It was identified that 23% of homebuyers had identified their purchases as investments: house flippers. Real estate flippers are battling a whole minefield of problems in order to make some big cash. Problems with borrowing, insurance, renovations, inspections, market conditions and more can make a huge dent in the tens of thousands of dollars they could make on one flip (Flippers).

             Low interest rates made money cheap and cheap money had caused rates to drop to 1% from the 6.5% in order to overcome recession from 2000-2001. Consequently, the dot.com bubble burst brought in an influx of money for residential real estate (Merriam). People invested with the assumption that it was safe.

Bank-pressure resulted in simply bad lending practices from reduced jobs and income led to countless defaulted loans. The situation became that people jumped at the idea of achieving the “American Dream” when it seemed plausible. Legislation and changes to the Community Reinvestment Act of 1977 encouraged commercial banks to lend to low-income households (Jenkins). This pushed for greater homeownership; it was not directly meant to create such loans for securitized investments. However, it did encourage under-writing standards to decrease.

Economically, the perfect storm was created: the combination of September 11, 2001, the burst of the dot-com bubble, Federal Reserve spelunking and plummeting insurance rates. Loans were pooled together to keep such momentum going and caused alternative mortgage products or AMPs (Jenkins). AMPs were bad and toxic assets; they created a circumstance in which the borrower maintained very little in property equity. In addition, borrowers were able to defer on repayment for several years and caused increases to be faced that resulted in payment shock. In the end, the system broke and the bubble burst.

In the 2009 Congressional testimony by Federal Reserve Chairman Alan Greenspan, it was the “global proliferation of securitized US subprime mortgages” that triggered the crisis (Jenkins). However Randal O'Toole (an Oregon native, educated in forestry at Oregon State University and in economics at the University of Oregon) has a different opinion. He believes that local factors, not national policies, were a necessary condition for the housing bubbles where they took place (O'Toole). O’Toole backed his beliefs by referencing how the burst effected certain areas much more drastically than others. In 2006, research was done to model what would happen if a real-estate crash were to happen. They concluded that one cannot be sure of the scale of shock simulated could be sufficient to put the United States into any sort of recession. However, it was acknowledged that the burst could have serious and adverse consequences despite unknown exact size and speed (McKibbin).

Yet if one walks around their suburban fence-lined neighborhoods, it is very easy to run into a stopped project. The burst caused a “cease-fire” in many real estate building plans, with some neighborhoods adjoining a cluster of five houses where twenty-five had been planned. From the research gathered above it is clear that the relevant truth is that a trickle-down effect of poor economic choices caused our nation to be faced with a harsh reality, with no one to blame but ourselves.

the inevitable works cited

Works Cited

"Flipper." Definition. Value Click Inc., 2012. Web. 19 Dec. 2012.

"Housing Bubble." Definition. Value Click Inc., 2012. Web. 28 Nov. 2012.

Jenkins, Jason. "Understanding the Housing Market Crisis." Investment U RSS. N.p., 2012. Web. 30 Nov. 2012.

McKibbin, Warwick, Prof, and Andrew Stoecke, Dr. "Bursting of the US Housing Bubble." Economic Senarios.com. Economic Senerios.com Pty Ltd., 2006. Web. 28 Nov. 2012.

Merriam, Dwight. "Cause of the Housing Bubble, Burst and Recession Revealed: It's Growth Management." Planetizen. Urban Insight Inc., 2012. Web. 30 Nov. 2012.

O'Toole, Randal. "How Urban Planners Caused the Housing Bubble." Cato Institute. Cato Institute, 1 Oct. 2009. Web. 19 Dec. 2012.

fiscal cliff

According to the New York Times, the fiscal cliff is a metaphor for the possible $500 billion in tax increases and across-board spending cuts that are scheduled to take place January 1, 2013. This is unless the Obama administration and Republicans can reach an alternative deficit-reduction deal. If the deadline is reached before a new deal is decided on, then taxes would raise dramatically for nearly every taxpayer and business. In addition, the financing for most military and domestic programs would be cut.  

The problem is, that the emergency unemployment plan placed to save $26 billion (but end payments to the millions of Americans that remain jobless and have exhausted 
state benefits) is expiring. Medicare payments to doctors and physicians would be reduced by $11 billion. This is because Congress this year hasn't passed the expected fix which blocks the cuts; that have otherwise been required by a 1990's cost-control law. Yet, the largest amount of cuts would come from $65 billion from federal programs that would be concluded throughout the final nine months of the 2013 fiscal year. This cut was a mandated deal made between Obama and Congress in August of 2011, in order to end a standoff in raising the nation's debt limit. 

Simultaneously, the Bush-Era tax cuts are about to expire. In 2001 and 2003, President Bush and the Republican leaders of Congress thought that they were rewriting the tax code permanently; however, the laws passed actually gave the cuts an expiration date at the end of 2010. Yet in 2010, President Obama and Republican leaders made a deal to extend the expiration dates back two more years. This was done as part of a broader package meant to support the still-fragile economy. Basically, what this all means is that Americans are looking right in the eyes of the beast and Congress is too scared to shoot it down in it's path in order to prevent dramatic tax increases across the board. 

manifesto

consider personal beliefs are regarding to what degree the federal government should influence the nation's economy

church and state There is a very distinct connection between church and state presently. I believe that the connection should be much more divided than it presently is. Individuals in the media have made religious beliefs a major role in campaigning and profiling of candidates running for offices. This is because religion shapes ones beliefs and creates a bias toward specific rules and regulations imposed. For example, the presence and acceptance of gay marriage had become a major factor in the campaigning race; and was particularly present with this past 2012 election. I believe that the government has no right to have any say in whom people can or cannot marry. Personally, I identify myself as a religious individual and my religion does not support gay rights. Yet I feel that this issue is a personal choice every person has to make and their decision should not be regulated by the government. Economically, the government has bigger problems on its plate than individuals rights and the restriction of such rights. 

education As a cornerstone of our current economic situation  education should be at the top of the governments issues list. I feel that our government should be most focused on internal affairs rather than external ones. Education is the single most prominent internal affair which affects our economy directly. The higher education individuals are able to receive  the more of an educated country we may have. This in turn could mean more people in the work force, more people able to perform more advanced jobs, and the ability for our economy to grow under an intelligent working class. People need higher education in order to achieve most "american dreams". So why are costs skyrocketing and admission rates plummeting  Because the government refuses to put a price moderation on the cost of tuition for higher education. 

In addition, education begins at a young age; Public education grants are being cut and teachers are being let go. This means larger class sizes and less individualized attention that children need. It has been proven that the more children are able to absorb and comprehend at a young age, the more they will retain as they get older. Increase funding for the education system would only benefit the economy since it creates more jobs and pumps money into the market, since as well all know, with more jobs comes more money to go around. 

military funding This last topic, is by far the most controversial. Military funding, has forever, been something that bothers me greatly. I believe that the governments pumps way to much money into a military that then pumps money into other countries to be doing the United States any good. With such an immensely large debt, it is fascinating that the United States chooses to maintain the largest military in the world an yet cuts things like healthcare and education from budgets. Of course I do think that it is important to help other nations and countries in need, yet not at the extent which it happens. I think it would be economically mindful to reduce the size of the military. Not cut it completely, but reduce the man-power and the production of fire-power. 

minimum wage

I believe that minimum wage is key to keeping the American economy in balance. Especially with such a high cost of living and cost of goods.  If people were not given the opportunity to obtain the ability to live comfortably then the economy would crumble. I believe that the federal minimum wage should be raised to $8.00-$10.00 per hour. This would make the most sense since then anyone in America could both work and live a conformable lifestyle. By pumping more money into the economy, more people would be able to spend more. This would only continue to benefit the economy positively. Personally, I am a high-schooler that makes over $10.00. I am unable to work full time and can only work average 12hrs a week. By buying more and more groceries and having to help out around the house, I physically see the price and cost of living by just picking up eggs, milk, and bread once a week. Thankfully I don't have to buy my own yet, but i still see these prices first hand almost weekly. I believe this is an important perspective for all young adults to have in these economic times. 

price floor

Price floors seem to be a somewhat ineffective regulator when considered for general products. However, they appear to be effective when applied to minimum wage or gasoline. By setting a price floor for gasoline, the demand and supply are able to remain above the demand equilibrium. This is important because if there was not enough gasoline to go around, people (in mass quantities) would get very upset very fast. If there wasn't a price floor for a products such as gasoline, there would be lines and lines of people by the thousands to stock up on gasoline if it dropped dramatically in price. By initiating a price floor for minimum wage or gasoline, supply and demand are able to stay high enough that there is not a shortage of an important product which fuels the economy so directly, and in some cases, literally.