Christmas 2008: 'Tis the Season to be Jolly?

With more unemployed, large corporations such as Citicorp planning to cut thousands of jobs in 2009, a questionable and uncertain automobile bailout plan many are wondering how this happy this Christmas may be. With money tighter than before questions of ‘will we have presents?’, ‘can we afford presents?’, ‘what kinds of presents will we have this?’ are definitely on the minds of the majority. From high positioned financial directors to workers in the car industry thousands this year have been laid off and it’s only a matter of time before more are let go. Many who have been lucky to keep their jobs have had to undergo salary cuts. With less money and several bills to be paid the idea of presents may be less whimsical and more stressful. Will children still receive presents this year? What kind of presents will be bought? Will more practical presents be exchanged this year? With so many questions about how merry this Christmas may be given the unstable economy and increase in unemployment I decided to explore the blogosphere.

The first post I came across ‘Sour Economy, Layoffs Dampen Inland Holiday Spirit’ is by New America Media, a large collaboration of ethnic news organizations. Being part of ethnic media, the fastest growing sector of American journalism, the blog focuses on current significant news using reliable sources and writers. The second post I used ‘The latest consumer information from Big Research’ is by ‘The News-Review’ blog. This post focuses heavily on economic and business data regarding current consumer spending. Although this blog is catered for Douglas County, Oregon, it remains strongly reflective of the current American economic situation. This blog focuses on how people will still be spending this year, however many have opted to shop at cheaper stores. When exploring the blogosphere I found other blogs regarding other states which showed the same change in spending. These hard times may be food for spending more quality family time. I left comment on both blogs and have added them below for your convenience.

Comment 1:
Thank for you a timely post regarding the important matter of how deep the economic crisis may really be. The Christmas holiday has always been when consumers spend most, yet this year it more are worried about keeping their jobs than putting presents under the tree. Your post is analytical of why and how this employment concern has come about. From the “out of work construction worker” to “financial giant CitiCorp’s plan to lay off 53,000 workers in 2009” it can be seen that everyone will be affected by the financial crisis during this year’s holiday. With retailers “shopping meccas” even “seeing slowing sales as the economy stalls” with Christmas only a month away, consumer plans to less are clear. Parents and children alike will feel the financial ‘pinch’. Many forecast that children will receive fewer presents as parents cut back their spending. As you discuss the concern of Thompson not being able to make mortgage payments, Christmas gifts are now seen as luxury items more than before.

You further address the problem of how “excessive worry can be a problem” as it creates the cycle of people spending less due to a decrease in hiring. Your use of the “employment studies” is a reliable source to show how companies have reduced employment. As recently discussed on the news and in one of my own blog entries, many believe that a decrease in consumer spending will harm the economy even more. Another reason you mention as to why this Christmas may not be so jolly is the increase in marital problems. Your mention of how “the growing financial anxiety” has created more problems among the “minorities and low income families” which I find extremely interesting. Is it because low income families already have such financial stresses, so any further decrease causes greater stress on the family or couple? I would have liked to have read on why this may be. I appreciate how your blog covers the many reasons of why this Christmas will be less whimsical than those before. You use a wide range and variation of sources but I would have liked to read more of your own point of view regarding this topic. With such large financial problems in the current economy, will families focus more on having each other and the fundamentals of a family than the material goods? Or have children and adults become too materialistic to enjoy a Christmas with less presents?

Comment 2:
Thank for you an extremely detailed and calculated blog on the “latest consumer information”. Your use of statistical information gives a general conclusion of how the economy may be doing and consumer confidence. Not only do you use bar charts and several references to the differing percentage outcomes but you also give a concise analysis of what they show. I highly appreciate your use of paragraphs to group together related figures making for an exceptionally informative post.

It is clear that the economy is both suffering from the financial crisis and now also a reduction in consumer confidence and spending. However your figures reflect that “post-election…22.3% are confident/very confident in chances for a strong economy”. Obama has clearly stressed the importance of stabilizing the economy through creating 2.5 to 3 million jobs through construction, education and green jobs. You mention at the end of your blog that “spending appears to have perked up in November” showing how consumers are still doing their Christmas shopping. You do well in further analyzing the different goods and that “most major categories… declined from last month and last year” yet there is an increase in spending on TVs and digital cameras. Your figures show the although there is a decrease in overall spending from the years before, Novembers spending has increased in comparison to Octobers. Many still plan to buy presents this Christmas though the consumer trends have changed. This year has been what you call “the year of the bargain hunter” where it’s “chic to be cheap”. Many consumers have also turned to lower-priced stores such as Wal-Mart and Target to pick up presents for this season. With this alternative kind of spending many should still see presents under the tree. I also enjoyed how you ended the post by showing that although people will be spending this Christmas they will also be “advocating spending” through staying at home, shopping online and eating cheaper.

Given the statistical nature of your blog you do very well is keeping it from being a dry read. Your paragraphs aid in a fluid read. My only criticism is that I would have liked to read more on your own opinion of this holiday spending. You clearly have a thorough understanding of the situation so I would have liked to read an additional small ending paragraph about your thoughts and what you might be doing this year. All in all I found your blog very interesting and credibly informative.

Recession: A Reason for Less Coffee?

It can no longer be denied that the U.S. economy is suffering from a recession. With shops closing after being opened for less than a month, a plunging stock market, thousands of people being laid off daily it is clear that the U.S. is now facing tough times. Starbucks, the world's largest chain of coffee shops reported a major 97 percent plunge in their fourth-quarter profits. Does this mean less people are drinking coffee? Each time you step into a coffee shop its hard not to notice all the businessmen lined up waiting to purchase their daily cups of coffee. With thousands of caffeine strung bankers out of work, has this lead to a decrease in the demand for coffee? Then chances are both yes and no. Yes in that with more people out of work, less coffee is needed to get the working population through each work day. No, in that many newly unemployed caffeine fiends will still need their coffee to get them through their job hunting days. The difference is that they now turn to the cheaper kind of coffee. The dollar cup from 7 11 or McDonald’s or even just making it at home using their 20-dollar Mr. Coffee machine is now the alternative to lining up at Starbucks and ordering a Grande coffee. Recessions have always caused a change in consumer spending and even the small luxury of coffee has begun to feel this.

Not only has Starbucks profits drastically dropped but Starbucks Corp recently reported that fewer international stores would be opened and offered a pessimistic earnings forecast for the coming year. Aside from a decrease in openings internationally, Starbucks shares have plunged by 50% this year alone, and in June they closed around six hundred stores. Many make the mistake of thinking that Starbucks drop in profits and sales means there has been a decrease in the consumption of coffee. Although the coffee industry may somewhat be affected, reports have shown a more significant change in consumer spending than a decrease in sales for coffee. An article by Time looks into the demographics of Starbucks and McDonald's customers and clearly states at the beginning that "McDonald's is planning to capitalize on the public's willingness to pay $4 for a cup of coffee by hiring baristas" while Starbucks has "lagging business". According to CNN Money Starbucks same-store sales were down 5% for the fiscal year while McDonald's sales "rose by 8.2 in October alone." This is a clear indication that more are turning to the cheaper alternative of coffee rather than a cut in the consumption of coffee.

Many have always felt that Starbucks and other major coffee shops are extremely overpriced, but only now are these chains feeling the consequences of selling at such a high-price. By looking at the demographics it can be seen that Starbucks consumers were generally older and consisted of those who earned more than $60,000 while McDonald's consumers were around the ages of 18-34 who earned less than $60,000. Therefore this change in consumer spending illustrates that people are simply trying to save more here and there rather than drastically cutting their spending. If overall coffee sales were plummeting along with decreases in sales of coffee by all stores this would signify a more drastic cut in consumers willingness to spend. Therefore, this signifies that the current economy is not in a depression as many are still spending onthe luxury good of coffee. Simply put, those of higher class status, the upper class and upper-middle class are feeling recessionary pressures and see the importance of cutting back. If the vice president of Boston Consulting Group still thinks that "the core group" of brand conscious consumers is enough to maintain Starbuck's Corporation he may be proven wrong. The first of many problems would be trying to prove this "core group" has not already changed their spending on coffee. Is it only a matter of time before this statistic further drops especially as more people are being laid off?

It is clear that Starbucks is suffering from the financial crisis. Yet their decline does not mean that Americans are consuming less coffee. Ultimately the recession has caused for a change in consumer spending where people are having to cut back or alternate their spending on luxury goods. During these times the stock market turns into a bear market where shares of low-priced businesses such as Target, Wal-mart and McDonald's increase in price as more people begin to shop at these stores. The slowdown and change in consumer spending has not just been felt by the U.S.: Starbucks has reported decreases in sales in the U.K. and Canada. The global economy and markets have undoubtedly started to the feel the negative effects of the crisis, luxury-good companies such as Starbucks are feeling the pinch by consumer pockets, their regulars both businessmen and even college students are no longer willing to pay or an expensive cup of coffee. It is clear that millions of Americans will remain caffeine energized, only this time without Starbucks.

Green Jobs: Obama or McCain?

With the weather extremely hot for what is meant to be winter and the election only a few days away I decided to incorporate both subjects into this week’s post while relating them to the overall focus of my blog. I researched the blogosphere looking for blogs regarding Obama and McCain’s policies on the environment and employment. As the economy remains in a fragile state both McCain and Obama have been greatly campaigning on how they would form jobs and aid America through these hard times. Obama has been proposing to invest more in renewable energy sources “that will eliminate oil” and create “5 million jobs”. He plans to eliminate having to obtain oil from the Middle East in “10 years”. McCain on the other hand has been focusing on nuclear power. He hopes to build 50 new nuclear plants in the next few years saying that not only will jobs be created through the maintenance and daily operations of the plants but also by creating an industry of constructing nuclear power plant parts. He plans to move nuclear power to the U.S. instead of having it based in other countries as it currently is. Therefore he plans to create jobs by creating plant-construction material and tools businesses. While researching blogosphere I found it harder to find blogs on McCain regarding his take on environmental policy and jobs. Although there were several on Obama many came from an overly bias point of view. However, I did find two blogs which focused on this topic in a more informative way. The first blog “Obama, McCain Promise Jobs by Advancing Clean Technologies” is an extremely useful resource it is more descriptive and analytical written by an employee at A.E. Feldman’s. The second blog “Can green jobs save us?” from Politico is a shorter more succinct blog regarding the presidential candidates’ proposals. I left comments on both blogs and have added them at the bottom for your convenience as the first blog has made comments closed to viewers.

"Obama, McCain Promise Jobs by Advancing Clean Technologies"
Comment:
Thank you very much for your thorough blog regarding the presidential candidates and their policies on green technologies and jobs. You introduce the differing policies clearly while also giving a deeper explanation and analysis. I can see how investments would be smart in the research and development of renewable energy sources. Being renewable resources will mean that more sustainable long-term jobs will be created. Your blog also shows great insight into how other industries and professions will benefit from a greater governmental emphasis on the environment. As mentioned, A.E. Feldman has seen a growing number of law firms increase their environmental law sector and energy practices. It can be seen that Obama’s focus is to invest not only in renewable fuels but renewable energy resources such as wind and solar power. Both of which have extensive potential in becoming major global energy sources. However, I would have liked to have read more on whether Obama’s policies will really create the 5 million jobs he says it will. Regarding the production tax credit, I agree with Obama’s extension of this and can see how Congress will need to also extend the quantity of this more frequently in order for the renewable energy projects to be most beneficial. McCain’s take on the tax although more appealing to the people of today only ensures the ‘even-handed system of tax credits’. Although environmental taxes will not be immediately raised, this means that the necessary solution of increasing research into the technology in order to form conventional energy sources will not be put into effect. McCain’s proposals of using nuclear energy plants have several underlying problems, namely radioactive waste. Furthermore, McCain’s comparison of using nuclear power to countries such as China, India and Russia are not good examples as these countries are seen as developing countries. Developing countries depend on industrial revolutions in order to increase their GDP to reach the level of a developed country. Given the fact that the U.S. is not a developing country we should be focusing on using a sustainable less harmful way of generating energy. Your use of Reuters as a source is professional adding to your scholarly post. Overall I extremely enjoyed reading your post and found it educational.

"Can green jobs save us?"
Comment:
Thank you for your concise yet informative post on McCain and Obama’s economic and environmental policies. I appreciate how you write about both candidates comparing their two views and plans. It is clear that both candidates want a two-fold approach of working towards a greener future while creating new jobs. Both plan for a “new energy income” as stated by Obama which as McCain earlier mentioned will “create millions of jobs”. I enjoy how succinct you are in your blog as you clearly mention the exact differences between Obama and McCain. Obama’s initiatives are directed towards pumping “$15 billion each year into research and development of cleaner fuels”. While McCain on the other hand has a program “mostly in the form of nuclear plant construction”, where “ultimately 55 more” plants will be built nationwide. I especially enjoyed your use of how John McCain supporters handed out tire pressure gauges of “Obama’s Energy Plan”. This comment makes for a witty approach towards a serious political subject therefore making the blog more enjoyable to read. Your choice of direct wording allows the reader to clearly understand Obama and McCain’s environmental plans for the future. While researching the blogosphere I found that many blogs smoothed over their direct plans making it difficult for the reader to decipher which candidate planned for what. Although I agree with you in that Obama’s choices are the better of the two, I would have liked to have seen you elaborate on how his plans are “optimistic” and problems beyond picking the “wrong technology”. With McCain, you go into the deeper problems of nuclear plants such as regulation, radioactive waste, and safety yet only discussing these problems on a surface level. I especially liked how you mention that Congress has also “made some headway in the past two years” towards a more environmentally conscious future. It is extremely important for Congress to support these policies in order for any president to have effective environmental policies. Overall I really enjoyed reading your blog and can see how Obama would be the better pick given his goals of investing in finding and developing more sustainable forms of cleaner fuels.

China’s Slowing Economic Growth: A Remedy In Itself

China, "the biggest contributor to economic growth" is now slowing down from a 10.1% growth in the second quarter of 2007 to 9% in the third quarter of 2008. Although many see this as a shake in confidence, I feel that China's reduced growth is not harmful to either the global or the American economy. As China's economy has extensively developed over the past three decades, there has been great concern as to when it would collapse. Having grown up in Hong Kong, once a British colony, I am well aware of England's constant concern with China's intensive growth. As seen by past economies such as Japan, many economists felt that it was only a matter of time before China would burst and face a recession. Therefore, the fact that China is now undergoing slower expansion will, in the long run, stabilize the economy and maintain its powerful position. Over the past few days, it has been made clear that Chinese officials are aware of the situation. Many have taken the necessary actions which will prevent China from becoming a permanently troubled economy. Furthermore, the Hong Kong economy has granted China a strong foundation for economic stability.

As China has become one of the most labor intensive economies producing the largest amount of exports, it was inevitable that its economy would be affected the American recession. As seen through a Bloomberg article, the massive plummet in U.S. Bloomberg World Indexes it is clear that China has been affected by the financial crisis. Recent figures show some of the highest percentage decreases which have occurred during the past few months. This does take into account the fact that China's economy is made p from several different, smaller economies. Looking at the split indexes of Hong Kong and China both are suffering from consistent decreases. Having grown up in Hong Kong, I have an ingrained understanding of the importance and enormity of Hong Kong's 'tiger' economy towards China. Although Hong Kong did suffer greatly from the financial crisis having reached its "its worst closing level since October 1982" on October 27th this year many have seen how quickly it has recovered. The China Daily, a resourceful website, recently reported Hong Kong stocks to have soared "more than 1,110 points". A good indications of a strengthening economy. Furthermore other websites have expressed that the 'tiger' city will remain a powerful economy as it suffered the least compared to other financial cities and has a high rate of production given its GDP per capita. Being part of China, this will greatly assist the Asian nation in ensuring stability during these economically unstable times. Furthermore, having returned to Hong Kong this summer, I could clearly be see that although there was a slight set back in consumer spending, this set back was only minimal. Hong Kong, being the freest economy, and thus having the least amount of government, has always been able to recover from such drawbacks as seen by its recovery from the 1997 Southeast Asian economic crisis.

China recently allied itself to European countries while saying it would back Europe's effort to "overhaul international regulatory systems". By doing this China is fundamentally securing its relationship with Europeans countries. This not only allows China to be able to remain well informed on European markets but also grasps opportunities to produce goods for Europeans at a low cost. According to the New York Times the "European Commission proposed a sweeping-stimulus spending package totally 200 billion euros... while officials in China cut interest rates there by more than a percentage point." These measures along with previous precautions demonstrates China's proactive commitment and determination to stabilize the world economy. Having been vague at first on the policies and changes they would make, their most recent reduction in interest rates illustrates their true dedication to solving and handling the economic problems caused by the financial crisis.

Additionally, it is important to put China's current economic growth rate of 9% into perspective. Although China's economy is slowly down, it is still growing. Compared to a rate of 6.1% expected by Europe and Central Asia in 2008, 9% represents a relatively fast expanding nation. Another indication of a secure economy, is that the Chinese currency, the Yuan has maintained its value throughout the crisis. Moreover, Chinese officials have shown an awareness of the current global situation and are taking no risks . By proactively meeting with EU leaders they are securing China's economy.

The slow down in economic growth is extremely important towards China's economy. Given their constantly increasing figures in the years before, many worried that over investment and overcapacity would lead to a collapse. Therefore, it can be seen that this decrease to 9% is a stabilizing factor itself. Additionally China has the strength of Hong Kong markets and are working with EU leaders to reduce the affects of financial crisis on the global economy. With all these factors in play, a slowing economic growth should not create instability for the China's economy. Furthermore, having studied China's history it is clear to me that memories of a collapsed economy as created through the cultural revolution are still prominent in China today, thus the Chinese will do all they can to prevent another recession.

An Economic Outlook: Tying Together the Online Economic and Employment Spectrum

This week I continued to research the Web and blogosphere for unique, interesting and educational resources about the economy and employment. Using the Webby and IMSA criteria for evaluating websites and blogs I have found twenty beneficial sites that will contribute to my blog and provide my readers with additional links and information. Aside from my own evaluations on each post, these sites have been added to my linkroll.

The first four websites chosen are related to all my posts. The New York Times economic section, CNN Money, Wall Street Journal and Bloomberg, although more mainstream are hugely popular sites as they offer straight-forward concise information and an accurate analysis on current situations. Given the websites news format, they provide a general idea of the state of the economy along with the most recent news. With regards to the current more complicated financial crisis CNN money's website at times overly simplifies certain important aspects. The New York Times, Wall Street Journal, and Bloomberg gives a more in depth view than CNN money. Lastly, as these are news based websites they are more focused on producing a broad set of articles granting the reader with a broad range of knowledge. Standards and Poors website on the other hand is more focused on the economy. Their website offers a list of sources and indices compiled from analysts and information directly given from companies thus making them a well known and relatively reliable source. Many of the above websites mentioned above refer to standards and poors as a source and resource given their well known reputation. Business News USA and World News America offer a more political approach. Their websites are more comprehensive resources in regards to American politics and American economics. Business News USA unlike many other sites, offers sections on farming and agriculture creating a more American industry based website. World News America also provides more political news as they refer to Obama's campaign and Hillary Clinton's view on the current economic crisis. However the use of somewhat amateur graphical icons creates a less professional look. The World Economic Forum provides us with an insightful analysis of how both developing and developed economies of other countries and continents are doing. They are one of few sites that offer reliable and succinct information on different economies.

The next three websites are more focused towards employment, the second focus of my blog. Job Web is catered for graduating students who are seeking a job. Although this site may lack in networking compared to those offered by some universities, the fact that these sites exist is extremely important in providing more ways to help students find a career. The U.S. Bureau of Labor Statistics also aids in employment while offering a clear and reliable indication of the current employment and unemployment situation. Californian Employment Development Department further provides more support and help in finding a job to those in the state of California. However, unlike the U.S. Bureau of Labor Statistics it does not show the current economic situation.

Generally, many economic websites tend use strictly professional language creating what some may call dry reading. Economic blogs offer an outlet where economics can be discussed in a less professional and rigid manner. Group blogs such as the New York Times and Economist offer a variety of scholarly yet relatively less formal articles regarding the economy. The New York Times' group blog focuses more on Wall Street, the stock market and the American market while also providing interesting articles that articles which may be constantly discussed but rarely written on such as "in downturn, college strains family budget. The Economist group blog posts more a wide variety of articles regarding the economies of different countries. These articles give a good summary on each topic allow you to gain greater worldly knowledge. The next five blogs Economy Society, Dani Rodrik, Marginal Revolution, Calculated Risk, and Greg Mankiw were blogs I found on the economy that provided a more personal view on the economy. The first three blogs center around to the current crisis and American economy. Economy society is extremely useful in giving you a good understanding on certain topics as the posts do not over simplify events and issues while also refraining from going into too much detail. Dani Rodrik and Marginal Revolution give brief overviews on current U.S. economic topics. These two sites are therefore useful as brief resources to gain a general knowledge on the current constant changing economic situation. Calculated risk blogs more on the financial side of the economics. Posts refer more directly to banking firms on a global level but remains relatively U.S. based given the extremely extensive U.S. economy. Gregory Mankiw's blog reflects his role as a professor as he explains concepts well while constantly referring to the issue at hand and giving his well explained point of view. As a student myself I am find Mankiw's blog educational, interesting and easy to relate to.

Blogs regarding employment were harder to come across. The ultimate resumes blog provides students with an optimistic outlook giving advice and even posting job listings on the site, an unusual yet nevertheless useful blog for students to follow. The second blog I used, recruiting jobs was one of the more common job seeking websites in the blog. The blog had several job listings but I found it more useful than others given its user friendly layout. I found the site easy to navigate and was quickly able to narrow down my search to what I wanted. Overall, both blogs fundamentally act as an extra tool for students and new graduates to seek employment.

The $700 Billion Bail-out: Why It Was Good to Say No

In my previous entry I discussed the fall of the Lehman Brothers and what this entailed for graduates seeking jobs. Given the growing concern of the current economic crisis many students felt that employment after graduating would now be harder. This week, I chose to write on another predominant issue of the economy, the $700 billion bail-out I felt it was extremely important to put the situation of the bailout and why it was voted against into perspective. I explored the blogosphere to find many bloggers and posts regarding this topic and focused on posts that contextualized the fundamentals of the plan. Through critical insight into the bailout, such as the fact the figure of $700 billion was admittedly chosen at random creates a better understanding while also revealing the many problems of the bailout. The first blog I commented on, Top 5 Reasons to Vote Against the $700 Billion Bailout gave extremely thorough and educated reasons why the bailout was a bad plan. Written by David Sirota, widely known for his coverage of political corruption and working-class economic issues, his immense knowledge and use of solid sources made his post extremely credible and influential. The second post I commented on was written by a Douglas Rushkoff, an extremely educated teacher, author and graduate from Princeton, Douglas focuses on people and institutions and how these influence one another. In his post Bail In or Bail Out? offers a more neutral and simple take on the plan that concluded that the bailout was not the right fix. In the case of the complicated bailout, I felt this blog allowed the reader to gain full understanding of the issue as it summarized the bailout and its effects in a simple but yet educated manner. Aside from publically posting my comments on each of the author’s blogs I have also posted them below.

“Top 5 Reasons to Vote Against the $700 Billion Bailout”
Comment:
Thank you for a concisely and clearly structured post regarding the complex issue of the $700 billion bailout. You are clearly extremely knowledgeable regarding this topic and have used extensively critically chosen facts and analysis to argue your case. By numerically ordering your points, you have made an extremely powerful, educated, and understandable case of why “every single member of Congress” should have voted against the convoluted issue of the bailout. Each differing factor you numerically examined kept straight to the point and therefore was understandable which is extremely important when discussing such an intricate issue. I fully agree with your opinion of not supporting the bailout and thought your use of examples both enhanced your ability to engage with the reader and to influence them. The example of “using a new credit card to pay off astounding debt from an old credit card … which is illegal” allows to reader to contextualize the concept of the bailout and engages them in thinking of the repercussions. Also by starting with such an example in your first of five reasons, immediately grabs the readers’ attention. Having read many articles both for and against the bailout, I was extremely glad to you wrote on the “clearly better and safer alternatives”. I agree with your point that many are under this ‘White House spell’ of “fear”. Many people who do not quite understand economics and the financial situation, especially those who are in powerful positions miss the point that several financial firms have began to work their way through the crisis even without the governments help. Furthermore, your point that increasing government debts will only harm us more is again something I agree with and see that many people forget to yet need to think of this important point.

Your choice of sources such as the U.S. Department of Treasury, Harvard’s Ken Rogogg, CEPR’s Baker and the NY Times reflects your wide spectrum of knowledge and your strength in analysis. You extract excellent evidence to further support and development your argument such as using Baker, someone who predicted the crisis, giving your post more credibility. Overall, a highly enjoyable post to read although I wished you expressed more of your opinion and thoughts on what policymakers and financial firms to do in order to resolve the crisis.

“Bail In or Bail Out?”
Comment:
I would like to begin by thanking you for blogging about the bailout in such an informative yet understandable way. By simply stating the fundamentals of what a bailout would mean you have constructed your post in a more open-ended fashion allowing to reader to either agree or disagree with the decision of not having the bailout. I especially enjoyed reading your blog as unlike many others, took a more neutral stance on the issue. Your explanation of the mortgages being currently extremely under-valued gives the reader more insight into the crisis revealing that in time these “depressed investments” will “earn out” and thus are solvable themselves. By describing that these “debts that are selling way way below their longterm value” you have also conveyed to the reader the governments reasoning as to why they began the debate of the bailout. Although this may seem obvious, many other blogs that I have read forget this point and see that the government was being irrational in even thinking of such a plan. I also thought your last paragraph of the need to invest “our time, energy, and remaining money in productive industries, education, and renewable resources” was insightful and showed your understanding of the economy. I agree with you on this and think that although the financial crisis has had detrimental effects on the economy it so far has proven to be more solvable than the problems of a lack of investments in renewable resources. Therefore, the bail-out is not necessary for relieving this crisis.

However unlike the general neutrality of your post you seem to focus more blame on McCain as to why the bailout did not go through. Instead, I feel that this was a minor reason as to why bailout was voted against. You do not mention the failures of the bailout itself such as increasing an already enormous debt as the main reason why the House voted against the plan. Although I found that your post importantly contextualized the bailout in a simple form which is extremely important in the case of such a complex issue, I would have liked to read more about your views and opinions.

Lehman Brothers Bankrupt: A Worry or An Opportunity?

Graduating has always been a time to celebrate. It signifies more than an end to an educational era, but also ones commitment to learning and attainment of knowledge. Most importantly, it marks the transition from childhood to adulthood and the working world. Today’s graduates however, are more daunted by the difficulty of finding a reliable and sustainable job than relieved to be finishing their education. Beginning from the sub-prime and credit crisis which offset the economic recession, Wall Street has not been as unstable as it is today since the Great Depression. Wall Street, the most influential powerhouse towards businesses from all industries, has seen dramatic and worrisome changes this past year. With major financial firms and markets in turmoil, firms and businesses are now facing harder times than ever giving graduates a reason to worry that employment may be harder to come by. With rising prices, the pressure is now greater to secure a job. “The Lehman Brothers has become the biggest firm in U.S. history to declare bankruptcy” as stated by The Economist, causing greater panic among those employed and those seeking employment. Although Lehman’s fall has created a major loss in the market and a great loss of jobs, their declaration for bankruptcy has also opened up opportunities for graduates who offer fresh perspective and lower expectations. The question remains whether Lehmans’ fall is a sign that the economy will continue in a downward direction making it harder to attain a job, or whether Lehmans’ demise is good for the industry and thus employment.

When the 158 year-old financial-services firm that had "survived the Great Depression and two world wars" filed for bankruptcy protection on September 15^th, 2008, it was "an indication that the U.S. economic and financial crisis was far from being over" as an employee of Lehman said. Its collapse created a further loss of faith in American stocks as the stock market and Dow Jones Indexes plunged. The damage has been widespread among businesses all over the nation as millions of both corporate and individual shareholders of Lehman have lost out. With such factors in place, graduates fear that the demand for jobs will sufficiently decrease.

What also comes along with a decreasing state of the economy is an increase in unemployment. Looking into this increase, it can be seen that the number of persons who lost their last job rose by 417,000 to 4.8 million in August 2008. Corporations are therefore now having to taking a more wary and cautious stance causing the great concern that businesses will be decreasing their recruitment. Furthermore, the ramifications of the such an enormous increase in the number of jobs lost means that graduates are up against those who have had years of work experience. New graduates are now fundamentally facing a higher and stronger level of competition in their respective professions. Lehman alone has approximately 26,000 employees who have now started to apply for other positions. A new worry has now arisen that diplomas graduating students have gained are questionably not be enough to give them jobs they would have originally qualified for before the crisis. However, firms are still hiring. Even more surprising is that after filing for bankruptcy Lehman posted four new job vacancies. Positions such as Foreclosure Specialists and Investor Accounting Specialist were placed on Lehmans’ website. Although these positions would be risky to take up, the sheer fact that a bankrupt firm is posting these listings show that firms are now preventing further problems they previously turned a blind eye to. Had the mortgage and credit crisis been resolved earlier, financial firms would have not been in the fragile positions that they are in today. These jobs therefore are a huge step towards stabilizing the economy and are targeted for more senior and experienced job applicants. Graduates therefore should not worry as this relieves the competition of lower level positions. Although there has been an increase in strength and quantity of those seeking jobs, within the graduate level the number of applications and competition remain the same. Moreover, Lehmans’ stance of posting jobs give an optimistic outlook that change for the better is soon to come thus installing more confidence in the markets and economy.

However, firms are still hiring. Even more surprising is that after filing for bankruptcy Lehman posted four new job vacancies. Positions such as Foreclosure Specialists and Investor Accounting Specialist were placed on Lehmans’ website. Although these positions would be risky to take up, the sheer fact that a bankrupt firm is posting these listings show that firms are now preventing further problems they previously turned a blind eye to. Had the mortgage and credit crisis been resolved earlier, financial firms would have not been in the fragile positions that they are in today. These jobs therefore are a huge step towards stabilizing the economy and are targeted for more senior and experienced job applicants. Graduates therefore should not worry as this relieves the competition of lower level positions. Although there has been an increase in strength and quantity of those seeking jobs, within the graduate level itself the number of applications and competition remains the same. Moreover, Lehmans’ stance of posting jobs give an optimistic outlook that change for the better is soon to come thus installing more confidence in the markets and economy.

Although comforting for graduates to know that major firms are still hiring despite their times of hardship, recruitment for many of these vacancies are usually first done within the corporations themselves. However, graduates need not to worry as recruitment for first year positions are of the lowest professional level and will always begin with graduate students. These positions remain to be filled by graduates as firms understand that experienced workers are unwilling to take up first year positions due to the lower pay. Therefore, as long as firms are still posting positions for firs year positions, there will always be a demand for graduates. Those who are seeking higher senior positions as an outsider to the company must worry about companies recruiting from within. Furthermore, during the course of this summer, many firms including Lehman Brothers, Citigroup and Merrill Lynch laid off several executives and directors. By laying off just one director or executive, firms could hire at least two or more graduates at a lower cost. Thus, with the unfortunate dismissal of thousands of senior directors, firms are able to maintain the recruitment of these lower level jobs.

Lastly, other firms and banks have taken the fall of the Lehman Brothers as an opportunity. On September 22^nd, Nomura bought out Lehman’s South-East Asian sector and European share. At the same time, “Barclays Capital completed its acquisition of Lehman Brothers’ North American Investment Banking and Capital Markets businesses” as stated on Lehman’s website. This potentially saves “roughly saves at least nine thousand jobs” as stated on Forbes’ website thus keeping many from having to look for new jobs. Lehman is an example to graduates that firms can revive extraordinarily quickly so that recruitment for graduates in the long run will not be hindered. Furthermore, the bankrupt state of the Lehman Brothers has forced the overall financial system now to mitigate through the crisis making itself and the markets more viable.

The Lehman Brother’s filing although a crisis itself, is an opportunity for graduates. Graduate level positions are not directly affected by the crisis. Although many businesses on the whole may be reducing their current recruitment, this is done to ensure that their company is stable and will not fall into a ‘Lehman crises’. A Forbes financial analyst states that the "demise of Lehman is a good sign for the industry". With financial firms recovering, Wall Street too will follow and thus so will businesses and firms of all industries. Therefore, in the long run, they will continue to be able to continually hire. There are still an abundance of graduate level positions and with the acquisition of Lehmans’ this creates an opportunity for new jobs. Prospects for graduates are clearly not wilted by the fall of the Lehman Brothers and instead a window of opportunity has been created for those who are at last departing from institutes of education. However, with inflation at a twenty seven year high, senior students may have to quickly learn how to really budget.