The presidential debate is experiencing its most exciting period. From Hillary Clinton, Barack Obama, to John McCain and Mitt Romney, every presidential candidate is giving their best performance for Super Tuesday.
America is ready for a big change. It doesn’t matter if the next president is democratic or republican; America will need to be united as a nation. Fixing the war in Iraq, healthcare, and economy are the three biggest issues the next president faces. So far, by watching the presidential campaign, I have realized that the candidates keep changing their strategy in every debate to show their own credibility.
All the candidates understand the problems that we are facing. However, nobody really states any solutions to how to solve the problems. How are we going to make healthcare universal and affordable for every single American? How can we recover the damage the war has done to the American economy? Changing the tax code and lowering taxes on the middle class is not going to get Americans out of debt.
Statistics shows that most of the middle class has at least $8,000 per person in credit card debt. While the price of the fuel is rising, energy bills are increasing every month and healthcare is becoming unaffordable. Tax cuts really don’t seem to be the solution to get out of the situation. America needs a change. We don’t know what the change will be like, how can the change be carried out, or how intense it can become. Let us wait and see what happens in California on Tuesday.
http://www.cnn.com/2008/POLITICS/01/31/debate.main/index.html
http://www.myfoxatlanta.com/myfox/pages/News/Politics/Detail?contentId=5634365&version=5&locale=EN-US&layoutCode=TSTY&pageId=3.14.1
Saturday, February 2, 2008
Wednesday, January 30, 2008
Is this a good time to refinance?
For many home owners, receiving a letter from their mortgage lender is common. Especially now, after the Federal Reserve cut the interest rate by another 50 basis points, refinancing is back on the table for most home owners.
Refinancing is a financial tool for home owners to lower their monthly mortgage payment. Many home owners, who originally had an adjustable rate on their mortgage, are desperate to refinance. These loans are made based on a variable interest rate, which means the mortgage lender can change it within 15 days of notice. Home owners that plan to save money by getting the adjustable rate can’t afford the higher monthly payment when their rate increases.
As it is today, for a 30 year fixed mortgage, the interest rate is 5.47%. Many borrowers are considering refinancing because they predict the interest rate will rise in the future. Taking advantage of the low interest rate now looks like a smart thing to do.
Lenders are tightening up their standards for mortgages. If a mortgage consumes more than 28% of the borrower’s gross income, it is less likely that the lender will approve the mortgage. Borrowers that are qualified to refinance should pay attention to the prepayment penalty. Sometimes, this penalty can be more than 6 months of the interest payments. Experts suggest the use of the break-even point as a time interval. With refinancing, you can save $100 per month with a closing cost of $3000. Your break-even point is 30 months. It is 3000 divided by 100. If you are planning to stay for more than 30 months, it might be a good idea to refinance. If you are planning on moving or selling the house, you might be better off without refinancing.
The bottom line is: this is a good time for the qualified home owners to refinance. However, weather you should refinance or not, you really should talk to the broker about your situation.
http://biz.yahoo.com/brn/080128/24433.html?.v=1&.pf=banking-budgeting
http://www.bankrate.com/brm/news/mortgages/20070418_refinance_exotic_mortgage_a1.asp?caret=4bhttp://www.bankrate.com/
Refinancing is a financial tool for home owners to lower their monthly mortgage payment. Many home owners, who originally had an adjustable rate on their mortgage, are desperate to refinance. These loans are made based on a variable interest rate, which means the mortgage lender can change it within 15 days of notice. Home owners that plan to save money by getting the adjustable rate can’t afford the higher monthly payment when their rate increases.
As it is today, for a 30 year fixed mortgage, the interest rate is 5.47%. Many borrowers are considering refinancing because they predict the interest rate will rise in the future. Taking advantage of the low interest rate now looks like a smart thing to do.
Lenders are tightening up their standards for mortgages. If a mortgage consumes more than 28% of the borrower’s gross income, it is less likely that the lender will approve the mortgage. Borrowers that are qualified to refinance should pay attention to the prepayment penalty. Sometimes, this penalty can be more than 6 months of the interest payments. Experts suggest the use of the break-even point as a time interval. With refinancing, you can save $100 per month with a closing cost of $3000. Your break-even point is 30 months. It is 3000 divided by 100. If you are planning to stay for more than 30 months, it might be a good idea to refinance. If you are planning on moving or selling the house, you might be better off without refinancing.
The bottom line is: this is a good time for the qualified home owners to refinance. However, weather you should refinance or not, you really should talk to the broker about your situation.
http://biz.yahoo.com/brn/080128/24433.html?.v=1&.pf=banking-budgeting
http://www.bankrate.com/brm/news/mortgages/20070418_refinance_exotic_mortgage_a1.asp?caret=4bhttp://www.bankrate.com/
Saturday, January 26, 2008
People can expect rebates in the middle of May
All taxpayers can expect a rebate of up to $600 in the middle of May. This plan will be approved by Congress within weeks. The IRS has already started on the preparation to send out rebate checks. Here are the details on the rebate plan:
Middle-class people, individuals whose gross income earnings is less than $75,000, can expect to get a $600 rebate. Couples could get a $1200 rebate. The rebate size can rise or fall depending on the size of the family.
Individuals who make more than $75,000, couples whose joint income is more than $150,000, will get a smaller rebate. For the low income families of four people, with income of $35,000 and no tax liability, would get $1200. That means $600 flat per couple and $300 for each child. A single person with income of $16,000, no children, would get a rebate of $600 flat.
People whose income is solely a social security check won’t get any rebate. Retired couple owing $4,000 in taxes would also get the full $1,200. A single person who earns minimum wage would get a single rebate of $300.
This rebate plan is designed to help working middle class. It doesn’t really benefit the wealthy or the poor. It focuses on putting more cash into middle class hands because these are the people more likely to spend the rebate check. I think it is a great idea for now. As consumers, we really need a break from taxes. Also, the rebate check will help many people to pay for their bills, credit card debt, or mortgage. I am sure the extra cash can simulate our economy in a positive way in the short run.
If you are interested in finding out more information about the rebate plan, or which category you fall into, you can visit the following websites:
http://biz.yahoo.com/ap/080126/stimulus_rebate.html
http://ap.google.com/article/ALeqM5jkFJhFOiiCe5SexadbIx7vUT_MZQD8UD5O5G1
Middle-class people, individuals whose gross income earnings is less than $75,000, can expect to get a $600 rebate. Couples could get a $1200 rebate. The rebate size can rise or fall depending on the size of the family.
Individuals who make more than $75,000, couples whose joint income is more than $150,000, will get a smaller rebate. For the low income families of four people, with income of $35,000 and no tax liability, would get $1200. That means $600 flat per couple and $300 for each child. A single person with income of $16,000, no children, would get a rebate of $600 flat.
People whose income is solely a social security check won’t get any rebate. Retired couple owing $4,000 in taxes would also get the full $1,200. A single person who earns minimum wage would get a single rebate of $300.
This rebate plan is designed to help working middle class. It doesn’t really benefit the wealthy or the poor. It focuses on putting more cash into middle class hands because these are the people more likely to spend the rebate check. I think it is a great idea for now. As consumers, we really need a break from taxes. Also, the rebate check will help many people to pay for their bills, credit card debt, or mortgage. I am sure the extra cash can simulate our economy in a positive way in the short run.
If you are interested in finding out more information about the rebate plan, or which category you fall into, you can visit the following websites:
http://biz.yahoo.com/ap/080126/stimulus_rebate.html
http://ap.google.com/article/ALeqM5jkFJhFOiiCe5SexadbIx7vUT_MZQD8UD5O5G1
Wednesday, January 23, 2008
How does the interest rate cut affect our economy?
We talked about hedging, buying insurance, and cost effectiveness in today’s class. We also discussed the relationship between the interest rate and mortgage loans. Just as the new tax cut policy, the new interest rate cut is going to affect each individual differently.
The Federal Reserve System lowered the interest rate by 75 basis points, which was 0.75 percent. The whole point of the interest rate cut is to slow down our economic recession process. Hopefully, it can give everyone a break and ease the crisis in the mortgage market. Like any other market, there are always winners of the situation, and there are also losers who suffer the downside. Experts predict that for borrowers who have a good credit history, the interest rate cut is beneficial. Borrows are still able to get a loan from a bank at a lower interest rate. These borrows are the market winners. For borrowers who have a bad credit history, the situation is worse. Borrowers are not able to refinance to pay off the debt. Their credit score will be taken into consideration very carefully. The possibility for them to be approved by the bank is getting lower and lower.
A credit card holder with a variable APR is more likely to see some decline in their monthly minimum payment. That makes them a winner. As an investor, seeing the interest rate decrease is a nightmare. They are taking a great loss on their shares. A home equity loan borrower is more likely to see the borrowing interest rate drop during the next month period, since the interest rate is based on the prime rate.
The interest rate drop can be good or bad. It really depends on the situation and the individual. A 75 basis points decline is a great relief for some people. In order to make the best of this situation, the smartest thing to do is to payoff your debt as much as possible. You are always better off without debt, rather than paying interest on borrowed money.
For more detailed information, please check the following websites:
http://finance.yahoo.com/loans/article/104266/Fed-Rate-Cut-Winners-and-Losers;_ylt=AvVC3FZitY0zMsb9Vva5AY67YWsA
http://www.mlive.com/business/index.ssf/2008/01/advisors_weigh_in_on_interestr.html
The Federal Reserve System lowered the interest rate by 75 basis points, which was 0.75 percent. The whole point of the interest rate cut is to slow down our economic recession process. Hopefully, it can give everyone a break and ease the crisis in the mortgage market. Like any other market, there are always winners of the situation, and there are also losers who suffer the downside. Experts predict that for borrowers who have a good credit history, the interest rate cut is beneficial. Borrows are still able to get a loan from a bank at a lower interest rate. These borrows are the market winners. For borrowers who have a bad credit history, the situation is worse. Borrowers are not able to refinance to pay off the debt. Their credit score will be taken into consideration very carefully. The possibility for them to be approved by the bank is getting lower and lower.
A credit card holder with a variable APR is more likely to see some decline in their monthly minimum payment. That makes them a winner. As an investor, seeing the interest rate decrease is a nightmare. They are taking a great loss on their shares. A home equity loan borrower is more likely to see the borrowing interest rate drop during the next month period, since the interest rate is based on the prime rate.
The interest rate drop can be good or bad. It really depends on the situation and the individual. A 75 basis points decline is a great relief for some people. In order to make the best of this situation, the smartest thing to do is to payoff your debt as much as possible. You are always better off without debt, rather than paying interest on borrowed money.
For more detailed information, please check the following websites:
http://finance.yahoo.com/loans/article/104266/Fed-Rate-Cut-Winners-and-Losers;_ylt=AvVC3FZitY0zMsb9Vva5AY67YWsA
http://www.mlive.com/business/index.ssf/2008/01/advisors_weigh_in_on_interestr.html
Monday, January 21, 2008
Stock Market Worldwide
Last week, the stock market on Wall Street dramatically fell. Today, Wall Street closed for Martin Luther King Jr. Day. While the US stock market closed, the rest of the world still suffers a significant downturn on their stock market.
London’s stock market fell sharply today. India’s benchmark stock index tumbled 7.4 percent. Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent. The stock market experienced the biggest percentage drop since Sep. 11th, 2001’s terrorist attack.
Investors keep selling their shares because of the decline in the market. Even though President Bush announced the Tax Cut plan, it will still require approval from Congress. The US Central Bank is also ready to act aggressively. That means a more likely interest rate cut late this month.
Some experts predict that Asia won’t suffer significantly from a US market recession. The increasing trade and investment has made Asia less reliant on the USA. I don’t quite agree with it. The overseas market and US market are positively correlated. Japan’s benchmark index slid 3.9 percent. In Shanghai, China, the bank’s stock declined 4.1 percent. It might be the case that overseas countries won’t go through the lowest point of its market as we do here. The damage can still be significant. The difference is that they can get out of the downturn much easier than we do.
http://news.yahoo.com/s/ap/20080121/ap_on_bi_ge/world_markets
http://markets.usatoday.com/custom/usatoday-com
London’s stock market fell sharply today. India’s benchmark stock index tumbled 7.4 percent. Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent. The stock market experienced the biggest percentage drop since Sep. 11th, 2001’s terrorist attack.
Investors keep selling their shares because of the decline in the market. Even though President Bush announced the Tax Cut plan, it will still require approval from Congress. The US Central Bank is also ready to act aggressively. That means a more likely interest rate cut late this month.
Some experts predict that Asia won’t suffer significantly from a US market recession. The increasing trade and investment has made Asia less reliant on the USA. I don’t quite agree with it. The overseas market and US market are positively correlated. Japan’s benchmark index slid 3.9 percent. In Shanghai, China, the bank’s stock declined 4.1 percent. It might be the case that overseas countries won’t go through the lowest point of its market as we do here. The damage can still be significant. The difference is that they can get out of the downturn much easier than we do.
http://news.yahoo.com/s/ap/20080121/ap_on_bi_ge/world_markets
http://markets.usatoday.com/custom/usatoday-com
Sunday, January 20, 2008
Total Risk
On Thursday, we talked about total risk is the sum of diversifiable risk and non-diversifiable risk. For any firm, the diversifiable risk doesn’t affect the cost of capital. As a matter of fact, the non-diversifiable risk will increase the cost of capital. The components of non-diversifiable risk are market risk and systematic risk.
I read the news on Yahoo-Finance today. It seems to me that the market is having a downturn. The stock market keeps falling almost daily. Market experts suggest that the best and the only solution to our situation is time.
The chief investment officer of Johnson Illington Advisors, Hugh Johnson, said that “there is an earning recession.” He also noted that the S&P 500’s operating earning growth was lower in the third quarter than it was in the second quarter; and it is sure to be lower in the fourth quarter than it is in the third quarter in 2007.
Systematic risk is the risk inherent in the entire market or entire market segment. The sources of systematic risk include interest rate, recessions, and wars overseas. Systematic risk affects a broad range of securities. With the possibility of going into a recession, the systematic risk keeps raising. It results in a raise in the total risk in our economy.
http://biz.yahoo.com/ap/080120/wall_street_week_ahead.html
http://www.investopedia.com/terms/s/systematicrisk.asp
I read the news on Yahoo-Finance today. It seems to me that the market is having a downturn. The stock market keeps falling almost daily. Market experts suggest that the best and the only solution to our situation is time.
The chief investment officer of Johnson Illington Advisors, Hugh Johnson, said that “there is an earning recession.” He also noted that the S&P 500’s operating earning growth was lower in the third quarter than it was in the second quarter; and it is sure to be lower in the fourth quarter than it is in the third quarter in 2007.
Systematic risk is the risk inherent in the entire market or entire market segment. The sources of systematic risk include interest rate, recessions, and wars overseas. Systematic risk affects a broad range of securities. With the possibility of going into a recession, the systematic risk keeps raising. It results in a raise in the total risk in our economy.
http://biz.yahoo.com/ap/080120/wall_street_week_ahead.html
http://www.investopedia.com/terms/s/systematicrisk.asp
Tax Relief Plan from the White House
I just read President Bush’s Tax relief plan for this coming tax season. I am very happy a plan like this is being considered and put into action very efficiently. Here are the reasons why I believe the new tax relief plan comes just in time:
First of all, let us have a look at the details of the plan. The basic idea of the tax cut is to lower income taxes for all citizens. President Bush believes giving the highest tax cut to the lowest income working class will boost the economy. The tax cut is categorized by lowering family income taxes, reducing the marriage penalty, promoting charitable donation, cutting marginal tax, and ending the death tax.
Secondly, it sounds like a fair plan to slow down our progression toward another recession. The plan came out just in time. Obviously, this plan will put a lot more cash into the consumer’s hands. It will also give us more confidence in our economy. It is a plan that will help every single American for a short period of time. This is a plan that America needs right now. Still, I keep wondering, with the new tax cut, how can we afford the trillions of dollars we have in debt? Does the tax cut today, mean another tax increase in the future?
You can find more details on the website listed below.
First of all, let us have a look at the details of the plan. The basic idea of the tax cut is to lower income taxes for all citizens. President Bush believes giving the highest tax cut to the lowest income working class will boost the economy. The tax cut is categorized by lowering family income taxes, reducing the marriage penalty, promoting charitable donation, cutting marginal tax, and ending the death tax.
Secondly, it sounds like a fair plan to slow down our progression toward another recession. The plan came out just in time. Obviously, this plan will put a lot more cash into the consumer’s hands. It will also give us more confidence in our economy. It is a plan that will help every single American for a short period of time. This is a plan that America needs right now. Still, I keep wondering, with the new tax cut, how can we afford the trillions of dollars we have in debt? Does the tax cut today, mean another tax increase in the future?
You can find more details on the website listed below.
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