Last night, Atlanta was hit by an EF2 tornado. We haven’t seen a tornado like this for decades. The Georgia Dome, CNN, Equitable building, Philips Arena, and the Western hotel were all damaged. At this moment, downtown Atlanta is still in a big mess. Firefighters are cleaning up the streets and rescuer teams are working night and day to help victims recover from the storm.
The City of Atlanta officials estimated that the damage was roughly $200 millions. The Georgia Dome had damage of about $150 millions. There was more damage all over the Georgia counties that hasn’t been reported yet. This was a tragedy for many people who were hit by the storm. I was actually driving on I75 toward downtown Atlanta at 9:30p.m. To me, it was horrifying. I was not able to see outside the windshield. The hale was so heavy and it almost damaged my car. I turned on my emergency lights. I had to stop on the highway a couple of times just to avoid an accident. That was the worst storm I have ever experienced.
We talked about weather risk the other day in class. It is a component of financial risk and is unavoidable. A lot of the rebuild will be paid by insurance. However, there is still some basic risk, which is the cost that is not hedged, such as the time it will take to recover, the inconvenience that victims will have to go through, and the mental scars.
http://www.myfoxatlanta.com/myfox/pages/News/Local?pageId=3.2
http://news.yahoo.com/s/ap/20080315/ap_on_re_us/atlanta_storm
Sunday, March 16, 2008
Economy Upgrade
My biggest concern is becoming a reality. We are in a recession and the stock market keeps experiencing low points day after day. Some economists say that Wall Street is close to its bottom; others disagree. The stock market is still volatile. One aspect that drives the stock market to fall is the consistent withdraw of many investors.
Credit risk is also hurting the economy and perceptions. Banks and other lenders have tightened their standards for credit approval and consumers are feeling the credit crunch. The credit market will play itself out before it can turn back around.
The Fed will have another interest rate cut next Tuesday. We don’t know how much the cut will be. Experts say it can be up to 1 full point. The lower interest will work as a cushion for our recession. The prime rate is 6% now. It will help borrowers with adjustable loans to reduce their monthly payment. Another Fed cut is less likely to pull us out of the depressed economy.
The U.S. dollar has also been dramatically depreciated over the past year. Based on today’s exchange rate, $1 = 7 Yuan and $1 = 0.6 Euro. That made the record low. We don’t know how long it will take for us to get out of the recession at this point. I hope we can pull our way out someday.
http://biz.yahoo.com/ap/080315/wall_main.html
http://biz.yahoo.com/ap/080315/fed_interest_rates.html
Credit risk is also hurting the economy and perceptions. Banks and other lenders have tightened their standards for credit approval and consumers are feeling the credit crunch. The credit market will play itself out before it can turn back around.
The Fed will have another interest rate cut next Tuesday. We don’t know how much the cut will be. Experts say it can be up to 1 full point. The lower interest will work as a cushion for our recession. The prime rate is 6% now. It will help borrowers with adjustable loans to reduce their monthly payment. Another Fed cut is less likely to pull us out of the depressed economy.
The U.S. dollar has also been dramatically depreciated over the past year. Based on today’s exchange rate, $1 = 7 Yuan and $1 = 0.6 Euro. That made the record low. We don’t know how long it will take for us to get out of the recession at this point. I hope we can pull our way out someday.
http://biz.yahoo.com/ap/080315/wall_main.html
http://biz.yahoo.com/ap/080315/fed_interest_rates.html
Sunday, March 2, 2008
Social Security at Risk
The stock market keeps falling, the market economy keeps shrinking, and social security is in much worse shape than we all expected. These are some of the reasons why there is uncertainty about the future.
Social security used to compose 39% of retirees’ income, now is expected to get much smaller. Social security was created to support retirees. According to the National Center for Health Statistics, the average lifespan was 63 back in the 1940’s, now it is over 77. This means that more of a burden is carried by the tax payers than in previous years. By the year 2030, when all the baby boomers are ready to retire, it is possible that the funds will not be available to a certain extent. It is very important for every tax payer to start a 401K plan or other type of personal savings.
The government has been extending the age of getting the full amount of social security benefits. Now, it is between ages 65 to 67. Bonuses and raises are provided for people who work past the normal retirement age. It is not a smart move to rely on social security after you are old and grey. Contribution to IRA accounts, mutual funds, CDs, and money markets will be on the individuals. Even now that the interest rate is low; you should still keep contributing to your savings account every month.
Social security hasn’t been a hot topic for all the presidential candidates. It is the most essential and basic retirement solution for most middle class Americans. I don’t know where the country will be without the social security system.
http://finance.yahoo.com/how-to-guide/retirement/29029
http://en.wikipedia.org/wiki/Social_Security_(United_States)
Social security used to compose 39% of retirees’ income, now is expected to get much smaller. Social security was created to support retirees. According to the National Center for Health Statistics, the average lifespan was 63 back in the 1940’s, now it is over 77. This means that more of a burden is carried by the tax payers than in previous years. By the year 2030, when all the baby boomers are ready to retire, it is possible that the funds will not be available to a certain extent. It is very important for every tax payer to start a 401K plan or other type of personal savings.
The government has been extending the age of getting the full amount of social security benefits. Now, it is between ages 65 to 67. Bonuses and raises are provided for people who work past the normal retirement age. It is not a smart move to rely on social security after you are old and grey. Contribution to IRA accounts, mutual funds, CDs, and money markets will be on the individuals. Even now that the interest rate is low; you should still keep contributing to your savings account every month.
Social security hasn’t been a hot topic for all the presidential candidates. It is the most essential and basic retirement solution for most middle class Americans. I don’t know where the country will be without the social security system.
http://finance.yahoo.com/how-to-guide/retirement/29029
http://en.wikipedia.org/wiki/Social_Security_(United_States)
Saturday, March 1, 2008
Stocks Fell Sharply on Friday
Yesterday, Wall Street had another low. After the sharp fall in January, the stock market was hit again severely. The reason why this is happening again is because of the depressing economic market, negative corporate reports and high oil prices.
Consumers still don’t have confidence in our economic future. The tax deadline is right around the corner. Even with the federal tax rebate, most of the middle-income class is still in bad shape. Besides that, consumers fear the uncertainty of the market in the future. The real estate market is still experiencing its lowest point and banks and lenders are making borrowing tougher. A good credit history, 5% down payment, and W-2 forms are required form many lenders.
Corporate reports have reported lower revenues for 2007. Many firms are still eliminating their fixed cost. Companies like BMW have decided to cut another 2,500 positions by the end of this year. Firms are holding back on their investment. Prices for goods and services are increasing because of inflation, which makes corporate revenues decline further.
For the first time ever, oil prices are over $103 per barrel. On average, the price of gas is over $3.20 per gallon nationwide. The president said that the gas prices are not likely to go over $4.00 per gallon. He pointed out it was uncertain. However, it looks like it might keep going up.
Stock markets had some gain at the beginning of last week. Anyway, on Friday, it lost all the gain it has made. The Dow fell 315.79 points, which was a 2.51% decline. The 500 index lost 37.05 points, or a 2.71 % decline. The only thing that is rising now is the bond price. Investors are expecting more negative news this weekend.
http://biz.yahoo.com/ap/080301/wall_street.html?.v=5
http://www.myfoxatlanta.com/myfox/pages/Business/Detail?contentId=5912857&version=4&locale=EN-US&layoutCode=TSTY&pageId=4.1.1
Consumers still don’t have confidence in our economic future. The tax deadline is right around the corner. Even with the federal tax rebate, most of the middle-income class is still in bad shape. Besides that, consumers fear the uncertainty of the market in the future. The real estate market is still experiencing its lowest point and banks and lenders are making borrowing tougher. A good credit history, 5% down payment, and W-2 forms are required form many lenders.
Corporate reports have reported lower revenues for 2007. Many firms are still eliminating their fixed cost. Companies like BMW have decided to cut another 2,500 positions by the end of this year. Firms are holding back on their investment. Prices for goods and services are increasing because of inflation, which makes corporate revenues decline further.
For the first time ever, oil prices are over $103 per barrel. On average, the price of gas is over $3.20 per gallon nationwide. The president said that the gas prices are not likely to go over $4.00 per gallon. He pointed out it was uncertain. However, it looks like it might keep going up.
Stock markets had some gain at the beginning of last week. Anyway, on Friday, it lost all the gain it has made. The Dow fell 315.79 points, which was a 2.51% decline. The 500 index lost 37.05 points, or a 2.71 % decline. The only thing that is rising now is the bond price. Investors are expecting more negative news this weekend.
http://biz.yahoo.com/ap/080301/wall_street.html?.v=5
http://www.myfoxatlanta.com/myfox/pages/Business/Detail?contentId=5912857&version=4&locale=EN-US&layoutCode=TSTY&pageId=4.1.1
Auto Safety Features
The auto manufactures are making safety features more convenient for divers. New vehicles even have more safety feature packages for the customers to choose from. All these features can help reduce auto accidents and minimize the damage during a car accident.
By the year 2011, the National Highway Traffic Safety Administration will make electronic equipment mandatory in all vehicles. Electronic Stability Control is also known as ESC. It is designed to protect the occupants, as well as avoid accidents. ESC is usually built on the increasing electronic sophistications of vehicles. ESC has contributed to driver safety as much as seat belts and bumpers.
Here is an excellent example. Volvo’s new S80 Sedan offers a technology called BSIS (blind spot information system) that warns of other vehicles in the drivers’ blind spot. This will help so many careless drivers by preventing them from merging lanes at the wrong time. Another example that uses this type of technology is the collision mitigation. It involves the use of radar to anticipate the crash and charges the brakes for better stopping. I think this is useful, but it might not stop the crash. In other words, charging the brakes for better stopping is not going to prevent the driver from crashing into another vehicle. One more example is the rollover protection system, which means using airbags on the sides of large SUVs and convertibles. It is known that SUV’s lack sufficient protection above the occupants shoulders and the rollover protection system will help save lives.
Most new models or luxury vehicles have updated ESC. It is up to the consumer which package they prefer. It can be pricy, especially for those luxury vehicles. Hopefully, all these new modern technologies will not make our drivers lazy or careless when they are on the road.
http://finance.yahoo.com/insurance/article/104482/Autos-Top-10-Safety-Features-for-the-Future
http://www.carsdirect.com/features/safetyfeatures#NHTSA
By the year 2011, the National Highway Traffic Safety Administration will make electronic equipment mandatory in all vehicles. Electronic Stability Control is also known as ESC. It is designed to protect the occupants, as well as avoid accidents. ESC is usually built on the increasing electronic sophistications of vehicles. ESC has contributed to driver safety as much as seat belts and bumpers.
Here is an excellent example. Volvo’s new S80 Sedan offers a technology called BSIS (blind spot information system) that warns of other vehicles in the drivers’ blind spot. This will help so many careless drivers by preventing them from merging lanes at the wrong time. Another example that uses this type of technology is the collision mitigation. It involves the use of radar to anticipate the crash and charges the brakes for better stopping. I think this is useful, but it might not stop the crash. In other words, charging the brakes for better stopping is not going to prevent the driver from crashing into another vehicle. One more example is the rollover protection system, which means using airbags on the sides of large SUVs and convertibles. It is known that SUV’s lack sufficient protection above the occupants shoulders and the rollover protection system will help save lives.
Most new models or luxury vehicles have updated ESC. It is up to the consumer which package they prefer. It can be pricy, especially for those luxury vehicles. Hopefully, all these new modern technologies will not make our drivers lazy or careless when they are on the road.
http://finance.yahoo.com/insurance/article/104482/Autos-Top-10-Safety-Features-for-the-Future
http://www.carsdirect.com/features/safetyfeatures#NHTSA
Saturday, February 23, 2008
Home Equity Line or Home Equity Loan?
I have always thought that a home equity line is the same as a home equity loan. I was wrong. There are similarities between these two, as well as differences.
A home equity line of credit is also called HELOC or a line. A Home equity loan is called HEL or a loan. They are both designed to enable the home owners to borrow against the value of their homes.
HELOC is like a personal credit card. You can borrow as much as you want at anytime, up to a predetermined credit limit. You are required to make monthly minimum payments. You have the flexibility to pay off your balance anytime you want. HEL is a loan. You get the lump sum up front, up to the limit that is predetermined. Afterwards, a fixed monthly payment is required until the balance is completely paid off.
Generally speaking, the HELOC and HEL have a much lower interest rate compared to your credit cards or other loans. It is also relatively safe since it is secured by your property. The interest you pay on those is also tax deductible.
HELOC usually doesn’t have any closing cost. Its interest rate usually starts out lower than HEL, but it fluctuates with the prime rate. It is also relatively riskier. However, it does give you the option to take money out whenever you need. Vice versa, HEL has a closing cost. It offers you fixed interest rate, as well as the adjustable rate.
It depends on your own situation and flexibility. HELOC and HEL should be considered depending on the individuals. If would you like to find more information on the subject, you can visit the following websites.
http://realestate.yahoo.com/loans/guides/your_equity_options.html;_ylt=Ai5JitHP29yMV4UajsiRltyavYl4
http://realestate.yahoo.com/Georgia/Marietta/loans;_ylt=Auq6sNrnw4NLi.r22EZboZqTvYl4
A home equity line of credit is also called HELOC or a line. A Home equity loan is called HEL or a loan. They are both designed to enable the home owners to borrow against the value of their homes.
HELOC is like a personal credit card. You can borrow as much as you want at anytime, up to a predetermined credit limit. You are required to make monthly minimum payments. You have the flexibility to pay off your balance anytime you want. HEL is a loan. You get the lump sum up front, up to the limit that is predetermined. Afterwards, a fixed monthly payment is required until the balance is completely paid off.
Generally speaking, the HELOC and HEL have a much lower interest rate compared to your credit cards or other loans. It is also relatively safe since it is secured by your property. The interest you pay on those is also tax deductible.
HELOC usually doesn’t have any closing cost. Its interest rate usually starts out lower than HEL, but it fluctuates with the prime rate. It is also relatively riskier. However, it does give you the option to take money out whenever you need. Vice versa, HEL has a closing cost. It offers you fixed interest rate, as well as the adjustable rate.
It depends on your own situation and flexibility. HELOC and HEL should be considered depending on the individuals. If would you like to find more information on the subject, you can visit the following websites.
http://realestate.yahoo.com/loans/guides/your_equity_options.html;_ylt=Ai5JitHP29yMV4UajsiRltyavYl4
http://realestate.yahoo.com/Georgia/Marietta/loans;_ylt=Auq6sNrnw4NLi.r22EZboZqTvYl4
Bad Economic Strategy
I was reading the news earlier today. The news actually stood out and surprised me—more and more people are tapping into their 401K plan to make their monthly payment.
While groceries and utility bills are getting more expensive, many borrowers are having a hard time to make their SUV, mortgage, and credit card payments. Even though the interest rate has been cut a few times last month, the banks are tightening up their standard for loan borrowers. Many credit card companies, such as American Express, have already reduced their consumers’ credit limit.
Many middle income class Americans have their credit cards maxed out. They have mortgages that are not affordable. They also drive large SUVs or luxury cars that they can only lease. The bad financial situation has pushed many Americans to the edge. People are withdrawing their retirement money from their 401K plan. They are borrowing loans every month from their retirement savings. A 401K plan allows the contributors to take out loans up to $50,000 or 50% of the total investment, whichever is less.
For many 401K contributors, this is a very bad plan. People who can repay their loan back in a fixed period might not suffer from the penalty. People who eventually claim default will be in big trouble. Even if you can pay back your loan, you will earn less on your contribution. Besides that, many plans would not allow you to contribute until you pay off your balance.
What a terrible idea to withdraw from personal retirement savings. We are lowering our future living standard because we are buying luxury goods we can’t afford. Borrowing money is like a rolling a snowball. The more you add to it, the bigger the snowball is, and the worse the problem becomes.
http://biz.yahoo.com/ap/080219/borrowing_against_retirement.html?.v=2&.pf=retirement
http://www.msnbc.msn.com/id/23241606/
While groceries and utility bills are getting more expensive, many borrowers are having a hard time to make their SUV, mortgage, and credit card payments. Even though the interest rate has been cut a few times last month, the banks are tightening up their standard for loan borrowers. Many credit card companies, such as American Express, have already reduced their consumers’ credit limit.
Many middle income class Americans have their credit cards maxed out. They have mortgages that are not affordable. They also drive large SUVs or luxury cars that they can only lease. The bad financial situation has pushed many Americans to the edge. People are withdrawing their retirement money from their 401K plan. They are borrowing loans every month from their retirement savings. A 401K plan allows the contributors to take out loans up to $50,000 or 50% of the total investment, whichever is less.
For many 401K contributors, this is a very bad plan. People who can repay their loan back in a fixed period might not suffer from the penalty. People who eventually claim default will be in big trouble. Even if you can pay back your loan, you will earn less on your contribution. Besides that, many plans would not allow you to contribute until you pay off your balance.
What a terrible idea to withdraw from personal retirement savings. We are lowering our future living standard because we are buying luxury goods we can’t afford. Borrowing money is like a rolling a snowball. The more you add to it, the bigger the snowball is, and the worse the problem becomes.
http://biz.yahoo.com/ap/080219/borrowing_against_retirement.html?.v=2&.pf=retirement
http://www.msnbc.msn.com/id/23241606/
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