Fixed for Four is No More? What? You mean that the Georgia education system has found another way to make education more expensive? After coming across GaYoung's post regarding "Fixed for Four" tuition, I am in shock that tuition would continue to creep up as it has done during the past few years. I entered Georgia State in 2005, when tuition was $1819/semester. Now, as I graduate this May 2009, the tuition has increased to $2167/semester. To comment from GaYoung stated, I totally agree that the increase in tuition was not worth the additional facilities we see. For example, GSU improved our existing library, which was OK. However, the old library was fine. It supplied research material, facilities, and technology.
From the article "Regents suspend fixed tuition program," the board has said that tuition will increase for students who take over 12 credit hours (excluding GA Tech and UGA). In the old system, students were able to take more than 12 hours without an additional charge; however, with the new changes, students will be charged. This means for Georgia State students, they are looking at approximately $203/credit hour since our school is a research university. So if we were to assume that students were to only take 12 hours (in order to avoid the additional charge), you're looking at students remaining in school longer. This is turns means paying tuition longer. Which alternative outweighs the other?
Stephen F. Austin students will also feel an increase in tuition. Because the school built new facilities, the students can expect an $75 increase a semester for the average 15 credit hours. Compared to $203/credit hour, they have it good. I do understand that bills have to be paid and education does not come free. However, these decisions are being made by people who don't attend the school and aren't directly affected my their decisions. How do they know whether building a new library or recreational center is worth my extra $1000? For Georgia State students, not only did out tuition increase, but during this past year, we had a hefty increase of student fees for a football team that is still nonexistent. A lot of students can't afford high tuition and high student fees! And the numbers from above were for IN-STATE TUITION, without room and board! For Georgia residents who qualify for HOPE, tuition is not a big factor. But they have to remember that HOPE is continuing on its path of decreasing the credit hours they will supply for. It use to be 130 credit hours, but as I entered school, it dropped to 127.
So as I exit GSU and receive all these surveys asking me "What do you plan to do after graduation, work or further education," it seems to me that trying to afford school and utilize it at the same time is work. So, I always check "work," since I've already have 4 year experience!
Sources:
1. http://glee1102.blogspot.com/2009/04/fixed-for-four-is-no-more.html
2. http://www.ajc.com/metro/content/metro/stories/2009/04/14/georgia_college_tuition.html
3. http://www.onlineathens.com/stories/041609/uga_429685988.shtml
4. http://www.dailysentinel.com/news/content/news/stories/2009/04/21/sfa_regents_II.html
Tuesday, April 21, 2009
Tuesday, April 14, 2009
Dividends: How Beneficial Are They?
If you've ever taken a finance or risk management class, you've probably heard someone say that the purpose of the execs is to maximize shareholders' wealth AND minimize the cost of risk. Well focusing on the first part, maximizing shareholders' wealth could definitely include activities such as dividend payments. Dividend payments are small payments (although some are not so small) given to shareholders from additional funds the company has acquired. For most shareholders, a dividend payment is good and makes them feel secure in the well being of the company. In fact, Michael Brush agrees and states that firms who pay dividends are usually in a stable market. In addition, those firms tend to pay out dividends during good and bad times; who wouldn't want to be a part of that.
But how important are dividends? Is it worth still holding on to stock? Yes, dividends could be very advantageous, especially for those who participate in dividend investing. In one article, it listed 7 benefits from participating in dividend investing (holding on to dividend stocks). They are:
1. In a troubled market, dividends provide investment stability - I agree and this coincides with Michael Brush's belief.
2. Unlike earnings, dividends can't be manipulated or faked - This is true because with dividends, you either get them or you don't. Just holding regular stock, even if the price of the stock is increasing, the company could still be in financial trouble and the stock market hasn't reflected it yet.
3. Dividends provide continuous feedback - Again, another point that reiterates the aforementioned benefits. Shareholders receiving dividends, especially on a continuous basis, know the position of that firm.
4. Reinvested dividends provided a significant portion of the historical equity returns.
5. Good dividend companies grow their dividends - As a shareholder, you don't just want the same amount of dividends. Instead, you want the dividend amount to increase, showing true progress of the company.
6. Spending dividends in retirement, does not harm your principle investment
7. A dividend portfolio is relatively low maintenance.
When firms' board of directors declare a $.45 or $.55 dividend payment, I am sure that most people see this as a small payout compared to the cost of the stock. Well, those dividend payments mean more than you think. Just take a look at a person who receives dividends. Assuming dividends are a reflection of the company's progress, the stock price will rise. So not only does the shareholder receive a dividend payment, but they will earn on their stock. My position on dividends is a positive one and I value them as well. Dividends are worth the price (i.e. stock price) to you pay in order to become a shareholder. Hoping that execs are looking out for your best interest, those dividends will pay off in the long run.
Sources:
1. http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx
2. http://dividendsvalue.com/1289/seven-important-reasons-for-dividend-investing/
3. http://articles.moneycentral.msn.com/learn-how-to-invest/stocks-that-pay-you-to-own-them.aspx
But how important are dividends? Is it worth still holding on to stock? Yes, dividends could be very advantageous, especially for those who participate in dividend investing. In one article, it listed 7 benefits from participating in dividend investing (holding on to dividend stocks). They are:
1. In a troubled market, dividends provide investment stability - I agree and this coincides with Michael Brush's belief.
2. Unlike earnings, dividends can't be manipulated or faked - This is true because with dividends, you either get them or you don't. Just holding regular stock, even if the price of the stock is increasing, the company could still be in financial trouble and the stock market hasn't reflected it yet.
3. Dividends provide continuous feedback - Again, another point that reiterates the aforementioned benefits. Shareholders receiving dividends, especially on a continuous basis, know the position of that firm.
4. Reinvested dividends provided a significant portion of the historical equity returns.
5. Good dividend companies grow their dividends - As a shareholder, you don't just want the same amount of dividends. Instead, you want the dividend amount to increase, showing true progress of the company.
6. Spending dividends in retirement, does not harm your principle investment
7. A dividend portfolio is relatively low maintenance.
When firms' board of directors declare a $.45 or $.55 dividend payment, I am sure that most people see this as a small payout compared to the cost of the stock. Well, those dividend payments mean more than you think. Just take a look at a person who receives dividends. Assuming dividends are a reflection of the company's progress, the stock price will rise. So not only does the shareholder receive a dividend payment, but they will earn on their stock. My position on dividends is a positive one and I value them as well. Dividends are worth the price (i.e. stock price) to you pay in order to become a shareholder. Hoping that execs are looking out for your best interest, those dividends will pay off in the long run.
Sources:
1. http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx
2. http://dividendsvalue.com/1289/seven-important-reasons-for-dividend-investing/
3. http://articles.moneycentral.msn.com/learn-how-to-invest/stocks-that-pay-you-to-own-them.aspx
Response: Bernanke Easing Mortgage Rates for Consumer Rebound
A topic that has been major lately is the housing market. In Jessica Lewis's posting, she mentions an article where Bernanke (a guy who's no longer a stranger to my blogs) discusses decreasing mortgage rates. Both Bernanke and Jessica believe that decreasing mortgage rates will help homeowners by returning money into their pockets, thereby improving the economy. I agree with both parties; by lowering the mortgage rates, people are now able to afford their monthly payments with a little bit to spare. In addition, the housing market has been in a little bind lately, so plenty of people are seizing he opportunity of getting a home. However, people shouldn't be waiting so long because who knows how mortgage rates will move.
For example, although mortgage rates have been at record lows, they have become stagnant lately. During the week ending on April 5, rates remained basically the same with only a .01% decrease. Pennsylvania had a .8% decrease and Georgia remained the state with the lowest mortgage rates at 4.96%. Yes, these rates seem favorable, so it is only right for people to take advantage of these circumstances right now. Waiting for mortgage rates to go down even further could place you in an awkward position. Carl Walls, Florida Citizens Bank president, says "Don't wait for mortgage rates to keep dropping. Get the best you can and don't look back." I agree. In another article I read, it was noticed that the mortgage applications are increasing. This means that more people are getting bank loans to purchase a home than refinance.
Right now is a great time to use the opportunity of home buying. We have people in high places (i.e. Bernanke), financial professionals (i.e. Carl Walls), and even citizens (i.e. Jessica Lewis) who all agree that the mortgage rate decreases are creating the perfect time for home buying. I also agree with and support them all.
Sources:
1. http://jlewis45rmiblog.blogspot.com/2009/04/bernanke-easing-mortgage-rates-for.html
2. http://www.bizjournals.com/pittsburgh/stories/2009/04/06/daily20.html
3. http://www.reuters.com/article/economicNews/idUSNYS00498520090408
4. http://www.ocala.com/article/20090413/ARTICLES/904131006/0/news02
For example, although mortgage rates have been at record lows, they have become stagnant lately. During the week ending on April 5, rates remained basically the same with only a .01% decrease. Pennsylvania had a .8% decrease and Georgia remained the state with the lowest mortgage rates at 4.96%. Yes, these rates seem favorable, so it is only right for people to take advantage of these circumstances right now. Waiting for mortgage rates to go down even further could place you in an awkward position. Carl Walls, Florida Citizens Bank president, says "Don't wait for mortgage rates to keep dropping. Get the best you can and don't look back." I agree. In another article I read, it was noticed that the mortgage applications are increasing. This means that more people are getting bank loans to purchase a home than refinance.
Right now is a great time to use the opportunity of home buying. We have people in high places (i.e. Bernanke), financial professionals (i.e. Carl Walls), and even citizens (i.e. Jessica Lewis) who all agree that the mortgage rate decreases are creating the perfect time for home buying. I also agree with and support them all.
Sources:
1. http://jlewis45rmiblog.blogspot.com/2009/04/bernanke-easing-mortgage-rates-for.html
2. http://www.bizjournals.com/pittsburgh/stories/2009/04/06/daily20.html
3. http://www.reuters.com/article/economicNews/idUSNYS00498520090408
4. http://www.ocala.com/article/20090413/ARTICLES/904131006/0/news02
Monday, April 6, 2009
Response: Limit Credit Card Rates
I just got done reading GaYoung's post about the Senate's plan of action to limit credit card rates. I couldn't agree more with GaYoung nor the Senate. Credit card rates are inching up every time we look at it and it's about time that a legislative body steps in for the people. Christopher Dodd, Chairman of the Senate Banking Committee, states that the Senate's move was to protect consumers from the lenders. Lenders are increasing rates even on those people who are paying their bills on time.
There used to be a time where on time payments meant something; however, this hasn't been the case recently. Chase MasterCard holder, Mark Alexander, could be considered a perfect example of the perfect borrower. He rarely has a balance on his card and has always paid his bills on time during the past 10 years. Then why is that his interest rate increased by 40%? What does this mean for me, a student who just made her first purchase on her credit card and making a payment before they even sent the bill? What is there for me to look for when lenders are trying to raise the rates more than normal?
That's why the Senate has stepped in and began to find ways of improving the situation. They have made it where lenders can no longer increase the rate of those card holders who pay bills on time and meet all other criteria. The Senate has also made it where banks can no longer imposed penalty rates for payments late by one or two days. Borrowers still have the normal 30 day grace period.
This is what we need. Card holders need some leeway to still be able to use credit cards without having additional money sucked out of us. If I am portraying credit card companies as gougers who steal money from innocent card holders, that's not what I want to display. Because the truth is that there are bad card holders out there. There are many people who default on their obligations. But for those of us who continue to do as the lenders have asked, it's only fair that we get treated with some respect.
Sources:
1. http://glee1102.blogspot.com/2009/03/limiting-credit-card-rates.html
2. Gelles, Jeff. "Changes to credit card rules on the way." Philadelphia Business Today. 5 April 2009. 6 April 2009 <http://www.philly.com/philly/business/homepage/20090405_Changes_to_credit_card_rules_on_the_way.html?text=med&c=y>.
3. Bloomberg. "Senate panel approves bill limiting credit card rates." Gulfnews.com. 1 April 2009. 6 April 2009 <http://www.gulfnews.com/business/Banking_and_Finance/10300419.html>.
4. Associated Press. "Credit card interest rates rise marginally." Businessweek. 6 April 2009. 6 April 2009 <http://www.businessweek.com/ap/financialnews/D97D4B880.htm>.
There used to be a time where on time payments meant something; however, this hasn't been the case recently. Chase MasterCard holder, Mark Alexander, could be considered a perfect example of the perfect borrower. He rarely has a balance on his card and has always paid his bills on time during the past 10 years. Then why is that his interest rate increased by 40%? What does this mean for me, a student who just made her first purchase on her credit card and making a payment before they even sent the bill? What is there for me to look for when lenders are trying to raise the rates more than normal?
That's why the Senate has stepped in and began to find ways of improving the situation. They have made it where lenders can no longer increase the rate of those card holders who pay bills on time and meet all other criteria. The Senate has also made it where banks can no longer imposed penalty rates for payments late by one or two days. Borrowers still have the normal 30 day grace period.
This is what we need. Card holders need some leeway to still be able to use credit cards without having additional money sucked out of us. If I am portraying credit card companies as gougers who steal money from innocent card holders, that's not what I want to display. Because the truth is that there are bad card holders out there. There are many people who default on their obligations. But for those of us who continue to do as the lenders have asked, it's only fair that we get treated with some respect.
Sources:
1. http://glee1102.blogspot.com/2009/03/limiting-credit-card-rates.html
2. Gelles, Jeff. "Changes to credit card rules on the way." Philadelphia Business Today. 5 April 2009. 6 April 2009 <http://www.philly.com/philly/business/homepage/20090405_Changes_to_credit_card_rules_on_the_way.html?text=med&c=y>.
3. Bloomberg. "Senate panel approves bill limiting credit card rates." Gulfnews.com. 1 April 2009. 6 April 2009 <http://www.gulfnews.com/business/Banking_and_Finance/10300419.html>.
4. Associated Press. "Credit card interest rates rise marginally." Businessweek. 6 April 2009. 6 April 2009 <http://www.businessweek.com/ap/financialnews/D97D4B880.htm>.
Stocks vs. Mutual Funds
During these times, many Americans are afraid of the stock market. Will it go up today? Or will it go down? Since we've entered into this recession, many financial institutions have fallen, including Wachovia, Merrill Lynch, and Washington Mutual. If our money isn't safe in the banks, how about taking our money to the stock market? That's where this question arises, "Should I invest in sole stocks or mutual funds?"
Some believe that a definite answer does not exist. Instead, the answer is different for each person and is dependent on that person's answers to these four questions: 1.How much money do you have? 2. How much time do you have? 3. How much skill do you have? 4. How much desire do you have? Michael Brush, a writer for MSN money, believes this notion, especially in the line of question number 2. He states that if an investor goes with stocks, they will have to research each and every company they purchase stock in, which can be time consuming. "Well, why don't I just purchase stock in one company to prevent me wasting my time doing research?" That would be okay if you weren't lacking one thing; diversity.
Brush, among other supporters, agree that in order to achieve diversity, an investor will have to purchase stock in multiple companies. Well, that's basically the definition of a mutual fund. "A mutual fund is a diverse holding of stocks that are managed on behalf of the investors that buy into the fund. A mutual fund allows an investor to take advantage of a diversified portfolio without having to invest a large sum of money." (http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html). For me, if I'm going to tie my money to an aspect of the stock market, I would prefer to have a diverse portfolio; that way, a decline in one company's stock will not be the end of me. Plus, a mutual fund is monitored by an investment professional who have done research on the companies included in the mutual fund. It doesn't guarantee that I will be without risk, but it does give me a better sense of security seeming the answer to the number 3 question for me is "none."
Mutual funds show to have more advantages than individual stocks. Besides the well known fact of diversification, mutual funds offer benefits like a cushion in case of stock market volatility and the splitting of transaction fees (a typical disadvantage of participating in mutual funds). As stated before, mutual funds do not come without risk nor cost. However, a key topic taught in risk management is that diversification reduces the amount of risk faced.
During my internship, I heard many of my coworkers discuss the recent and dramatic decline in their 401Ks. As most of us know, that is a retirement fund that is heavily tied to the stock market. And yes, participants know the risks of this retirement option before the opt to get in; however, I'm sure that none of us were expecting the drop that occurred. So if I had to choose, in this time and day, whether to invest in stocks individually or a mutual fund...., my pick is definitely a mutual fund.
Sources:
1. http://en.wikipedia.org/wiki/Mutual_funds#Mutual_funds_vs._other_investments
2. http://useconomy.about.com/od/mutualfundsfaq/f/funds_vs_stocks.htm
3. http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html
4. http://www.401khelpcenter.com/press_2009/pr_crain_012609.html
5. http://www.fivecentnickel.com/2006/01/12/stocks-and-bonds-vs-mutual-funds/
6. Brush, Michael. "What's a P/E? (And 9 other 'dumb' questions)." MSN Money. 5 March 2009. 31 March 2009 <http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx?page=1>.
Some believe that a definite answer does not exist. Instead, the answer is different for each person and is dependent on that person's answers to these four questions: 1.How much money do you have? 2. How much time do you have? 3. How much skill do you have? 4. How much desire do you have? Michael Brush, a writer for MSN money, believes this notion, especially in the line of question number 2. He states that if an investor goes with stocks, they will have to research each and every company they purchase stock in, which can be time consuming. "Well, why don't I just purchase stock in one company to prevent me wasting my time doing research?" That would be okay if you weren't lacking one thing; diversity.
Brush, among other supporters, agree that in order to achieve diversity, an investor will have to purchase stock in multiple companies. Well, that's basically the definition of a mutual fund. "A mutual fund is a diverse holding of stocks that are managed on behalf of the investors that buy into the fund. A mutual fund allows an investor to take advantage of a diversified portfolio without having to invest a large sum of money." (http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html). For me, if I'm going to tie my money to an aspect of the stock market, I would prefer to have a diverse portfolio; that way, a decline in one company's stock will not be the end of me. Plus, a mutual fund is monitored by an investment professional who have done research on the companies included in the mutual fund. It doesn't guarantee that I will be without risk, but it does give me a better sense of security seeming the answer to the number 3 question for me is "none."
Mutual funds show to have more advantages than individual stocks. Besides the well known fact of diversification, mutual funds offer benefits like a cushion in case of stock market volatility and the splitting of transaction fees (a typical disadvantage of participating in mutual funds). As stated before, mutual funds do not come without risk nor cost. However, a key topic taught in risk management is that diversification reduces the amount of risk faced.
During my internship, I heard many of my coworkers discuss the recent and dramatic decline in their 401Ks. As most of us know, that is a retirement fund that is heavily tied to the stock market. And yes, participants know the risks of this retirement option before the opt to get in; however, I'm sure that none of us were expecting the drop that occurred. So if I had to choose, in this time and day, whether to invest in stocks individually or a mutual fund...., my pick is definitely a mutual fund.
Sources:
1. http://en.wikipedia.org/wiki/Mutual_funds#Mutual_funds_vs._other_investments
2. http://useconomy.about.com/od/mutualfundsfaq/f/funds_vs_stocks.htm
3. http://www.stock-trading-explained.com/stocks-vs-mutual-funds.html
4. http://www.401khelpcenter.com/press_2009/pr_crain_012609.html
5. http://www.fivecentnickel.com/2006/01/12/stocks-and-bonds-vs-mutual-funds/
6. Brush, Michael. "What's a P/E? (And 9 other 'dumb' questions)." MSN Money. 5 March 2009. 31 March 2009 <http://articles.moneycentral.msn.com/learn-how-to-invest/whats-a-pe-and-9-other-dumb-questions.aspx?page=1>.
Tuesday, March 31, 2009
Obama says "No More"
During these past few years, many companies have gotten financial bailouts from the government. AIG, Goldman Sachs, and Merrill Lynch are just a few of the firms who have gotten handouts from the federal government. Although there are many reasons for the assistance, one key reason is because these companies are having hard times financially and difficulty sustaining normal operations. Unfortunately, their industries are not the only ones. The auto industry has been declining for some time now. Now, President Obama has drawn the line and said that no more handouts will be given, and the auto industry will have to work for themselves.
I couldn't agree more with the President. GM, Ford, and Chrysler all have received funds before during some initial bailouts. Those funds were supposed to help them get out of the financial distress they were already in. Under the Bush administration, these firms were given a specific amount of time to improve their situation. Today, these firms are still suffering; however, President Obama has said that no more money will be given. I mean, why would we give them more money? They have already proven once that a financial aid is not going to help them any. If the first bailout couldn't remove them from their operational dysfunctions, than why would the government hand out yet another bailout? As a taxpaying citizen, I do not think I can stand by and watch one of these companies get some more of my money, especially when I see that the auto industry itself is already suffering. Personally, I think President Obama has made a good decision. He's seeing that the public has had enough and took a stand for us all.
Sources:
1. Espo, David. "Obama assets gov't control over the auto industry." Kentucky.com: Lexington Herald-Leader. 30 March 2009. 31 March 2009 <http://www.kentucky.com/103/story/743627-p2.html>.
I couldn't agree more with the President. GM, Ford, and Chrysler all have received funds before during some initial bailouts. Those funds were supposed to help them get out of the financial distress they were already in. Under the Bush administration, these firms were given a specific amount of time to improve their situation. Today, these firms are still suffering; however, President Obama has said that no more money will be given. I mean, why would we give them more money? They have already proven once that a financial aid is not going to help them any. If the first bailout couldn't remove them from their operational dysfunctions, than why would the government hand out yet another bailout? As a taxpaying citizen, I do not think I can stand by and watch one of these companies get some more of my money, especially when I see that the auto industry itself is already suffering. Personally, I think President Obama has made a good decision. He's seeing that the public has had enough and took a stand for us all.
Sources:
1. Espo, David. "Obama assets gov't control over the auto industry." Kentucky.com: Lexington Herald-Leader. 30 March 2009. 31 March 2009 <http://www.kentucky.com/103/story/743627-p2.html>.
Monday, March 30, 2009
Comment on Yu's "Insurance" blog
Yu's posting "Will insurance companies be able to compete with our government? Maybe not but should government even come in the market?" was very intriguing and mentioned key areas affecting our economy today. He argues in favor of the government backing out of the insurance industry, leaving the market to those firms that specialize in providing insurance. However, I choose to disagree. Our government is a body composed of various units that are designed to specialize in multiple areas. Its composition of those units makes it a stronger player in this health insurance "arena" in my opinion.
Yu gives great examples on why the cost of health care continues to increase. Yes, defensive medicine is one top reason, but there is another major contributor; it is the uninsured. In 2006 alone, the uninsured totaled up to 49 million people. Amongst those without insurance were elderly people, those with illnesses, people who are in between job and no longer under employment security, and those between the ages of 18 and 24. Yes, the last group is us, college students. Each of these categories in their own way explain why the government is necessary to help fix this health care situation. Let us examine each individually.
1. Elderly- The article that Yu referenced, "http://www.nytimes.com/2009/03/30/opinion/l30health.html", is composed of various letters with varying opinions about whether government programs, such as Medicare, should be in existence. As a granddaughter, I take notice to the benefits of Medicare firsthand as I assist my grandmother in improving her health. With Medicare, she is able to have routine check ups and purchase medicine, all under coverage and at a reasonable price. In the event that Medicare did not exist, for my grandmother to attain such a coverage would be extremely expensive. An 80 year old woman coming to purchase insurance....anyone can see that she wouldn't be able to afford it.
2. The Ill- Following in the same routine as the previous example, where an 80 year old woman would have to pay an expensive premium due to her age, an ill person would have to pay an expensive premium due to their health condition. Under both circumstances, insurance companies look at insurability and the probability of the insured being a high cost. People with illnesses have more doctor visits, more medication, and higher bills. Insurance companies would have a field day with a person in this condition. The government is proposing a national health care system. This would provide adequate health coverage at an affordable price. Yes, it may have some problems, but I think those with illnesses would rather have the government protect them than private insurance companies seeking a profit.
3. People in between jobs- During this economic time, many workers have been laid off. Not only does this mean no more income, but it also means that benefits are suspended, health care included. With the stimulus package under President Obama, those who have been laid off would receive assistance (up to a certain percentage) for a specified period of time. This is to keep those former employed persons from having to go without coverage for them and their families. If we do not want government programs like this to exist, then we're implying that we'd rather have thousands of laid off workers go without health care OR run to insurance companies, who will take advantage of the unfortunate situation and vulnerable people.
4. People between ages 18 and 24 - In doing a paper last Spring, I came into some statistics about the uninsured. From the 49 million uninsured reported in 2006, 29.3% of those were people who fell in this age range. After doing some research, a large population of that age group were students, people like you and me. High cost and no longer being accepted under parents' coverage were the two top reasons this demographic went uninsured. As an upcoming graduate living in this economy, jobs are like gold. Once you find it, you keep it and cherish it. Unfortunately, not every graduate will have that opportunity as quickly. The government having programs offering health care at an affordable price is what this category needs. We're not asking for handouts, just some help.
Medicare and the government programs in that likeness are not "gimme" programs. They are constructed to pull this country out of old and unresolved situations. Health care has been an ongoing issue for many years, even decades now. If the government pulled back now, we're leaving the entire market to be handle and rectified by insurance companies. Yes, they specialize in offering security, but if the government does not provide monitoring in the form of competition, who will?
Sources:
1. http://yu-rmi4350weekly.blogspot.com/2009/03/will-insurance-companies-be-able-to.html
2. http://blogs.usatoday.com/oped/2008/04/wasted-medical.html
3. http://www.nytimes.com/2009/03/30/opinion/l30health.html?_r=1
4. U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States: 2006. Aug. 2007. 24 Jan. 2008. <http://www.census.gov/prod/2007pubs/p60-233.pdf>
Yu gives great examples on why the cost of health care continues to increase. Yes, defensive medicine is one top reason, but there is another major contributor; it is the uninsured. In 2006 alone, the uninsured totaled up to 49 million people. Amongst those without insurance were elderly people, those with illnesses, people who are in between job and no longer under employment security, and those between the ages of 18 and 24. Yes, the last group is us, college students. Each of these categories in their own way explain why the government is necessary to help fix this health care situation. Let us examine each individually.
1. Elderly- The article that Yu referenced, "http://www.nytimes.com/2009/03/30/opinion/l30health.html", is composed of various letters with varying opinions about whether government programs, such as Medicare, should be in existence. As a granddaughter, I take notice to the benefits of Medicare firsthand as I assist my grandmother in improving her health. With Medicare, she is able to have routine check ups and purchase medicine, all under coverage and at a reasonable price. In the event that Medicare did not exist, for my grandmother to attain such a coverage would be extremely expensive. An 80 year old woman coming to purchase insurance....anyone can see that she wouldn't be able to afford it.
2. The Ill- Following in the same routine as the previous example, where an 80 year old woman would have to pay an expensive premium due to her age, an ill person would have to pay an expensive premium due to their health condition. Under both circumstances, insurance companies look at insurability and the probability of the insured being a high cost. People with illnesses have more doctor visits, more medication, and higher bills. Insurance companies would have a field day with a person in this condition. The government is proposing a national health care system. This would provide adequate health coverage at an affordable price. Yes, it may have some problems, but I think those with illnesses would rather have the government protect them than private insurance companies seeking a profit.
3. People in between jobs- During this economic time, many workers have been laid off. Not only does this mean no more income, but it also means that benefits are suspended, health care included. With the stimulus package under President Obama, those who have been laid off would receive assistance (up to a certain percentage) for a specified period of time. This is to keep those former employed persons from having to go without coverage for them and their families. If we do not want government programs like this to exist, then we're implying that we'd rather have thousands of laid off workers go without health care OR run to insurance companies, who will take advantage of the unfortunate situation and vulnerable people.
4. People between ages 18 and 24 - In doing a paper last Spring, I came into some statistics about the uninsured. From the 49 million uninsured reported in 2006, 29.3% of those were people who fell in this age range. After doing some research, a large population of that age group were students, people like you and me. High cost and no longer being accepted under parents' coverage were the two top reasons this demographic went uninsured. As an upcoming graduate living in this economy, jobs are like gold. Once you find it, you keep it and cherish it. Unfortunately, not every graduate will have that opportunity as quickly. The government having programs offering health care at an affordable price is what this category needs. We're not asking for handouts, just some help.
Medicare and the government programs in that likeness are not "gimme" programs. They are constructed to pull this country out of old and unresolved situations. Health care has been an ongoing issue for many years, even decades now. If the government pulled back now, we're leaving the entire market to be handle and rectified by insurance companies. Yes, they specialize in offering security, but if the government does not provide monitoring in the form of competition, who will?
Sources:
1. http://yu-rmi4350weekly.blogspot.com/2009/03/will-insurance-companies-be-able-to.html
2. http://blogs.usatoday.com/oped/2008/04/wasted-medical.html
3. http://www.nytimes.com/2009/03/30/opinion/l30health.html?_r=1
4. U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in the United States: 2006. Aug. 2007. 24 Jan. 2008. <http://www.census.gov/prod/2007pubs/p60-233.pdf>
Tuesday, March 24, 2009
Example III HW problem-new conditions
New exp. revenue = $106M
New cost of capital = 5%
New CaR of 99%, zc = 2.326
106/1.05 - 100 = .95238095
25*25 + 20*20 + 2(20)(25)(.25) = 1275
sqrt(1275) = 35.70
CaR (existing) = 2.326*25 = 58.15
CaR (new + existing) = 2.326*35.70 = 83.05
.95238095 - .11(93.05-58.15) = -$1.78714844
New cost of capital = 5%
New CaR of 99%, zc = 2.326
106/1.05 - 100 = .95238095
25*25 + 20*20 + 2(20)(25)(.25) = 1275
sqrt(1275) = 35.70
CaR (existing) = 2.326*25 = 58.15
CaR (new + existing) = 2.326*35.70 = 83.05
.95238095 - .11(93.05-58.15) = -$1.78714844
Salary Freeze: Actually Might Help
I happened to scroll across Brian Yoo's blog where there he made reference to freezing salaries not being a good way to manage a firm. This idea was from an original post made by Jon F. Both students make a good argument for their perspective; however, it seems that they might be arguing about two different points. Brian's blog gives suggestions that firms should implement to help pull themselves out of the economic pit. On the other hand, Jon is arguing about how upper level execs would prefer to take their bonuses, even when their company has had to lay off lower level workers. From that, he implies that freezing wages could assist firms in managing their company through this tough time. I agree with Jon, but not just in the company sense. If firms, counties, unions, legislation, and more would be willing to freeze their wages, each entity would be able to save more money.
I found an article on the Boston Globe informing us how two more Boston unions have agreed to freeze their wages. Unions, who fight to make their work rights heard and job conditions better for its workers, are willing to sacrifice their raises in order to protect other workers' jobs. This goes in line with Jon's post, where corporate execs would still take a larger check instead of helping people keep their jobs. Now, not everyone is willing to freeze their salary. Out of the 44 unions in the area, only 20 have agreed to the wage freeze. Others refuse to participate until they see the financial details and benefits from this offer, which is perfectly understandable. A union among those who have not yet agreed are the Teachers Union. For this particular union, I have a skewed opinion. Although I believe that freezing wages could improve the financial position of the county, if the Teachers Union agrees, they will have to let off a good number of teachers and teachers' aids. By doing this, you can save money, but you take a chance of hurting your education system. We would have to determine whether the cost savings will be equal in value to the education backslide.
Those last few comments could be seen as speculation and/or a slippery slope. True, but with the way our economy has been sliding down the recession roller coaster, I wouldn't put that option past us at the moment. In general, a freezing of the wages is another option to helping the current financial situation. Brian is correct in the fact that there are other ways for the aforementioned entities to save and manage themselves during this time. However, Jon's post puts the upper level execs on "front street" and makes us aware that there are some people who, even during this time of turmoil, still don't have their priorities in order.
Sources:
1. F, Jon. "Salary Freezes." Goldman, David. "25% of companies plan salary freeze." CNN Money. 9 February 2009. 23 March 2009 <http://enterpriserisk-jonf.blogspot.com/2009/02/salary-freezes.html> <http://money.cnn.com/2009/02/09/news/economy/salary_freeze/index.htm?postversion=2009020914>.
2. Yoo, Brian. "Freezing salary is not the good way to manage a firm or business." 20 March 2009. Online Business Advisor. "Promote An Employee Only When They Are Qualified." Online Business Advisor. 26 July 1999. Dhanil. "How to Overcome Economic Crisis."31 October 2008. 23 March 2009 <http://rmi4350brian.blogspot.com/2009/03/freezing-salary-is-not-good-way-to.html>.
<http://www.onlinebusadv.com/?PAGE=176>. <http://dhanil.blogspot.com/2008/10/how-to-overcome-economic-crisis.html>.
3. Globe Staff. "2 more Boston unions agree to wage freeze." The Boston Globe. 23 March 2009. 23 March 2009 <http://www.boston.com/news/local/breaking_news/2009/03/2_more_boston_u.html?p1=Well_MostPop_Emailed6>.
I found an article on the Boston Globe informing us how two more Boston unions have agreed to freeze their wages. Unions, who fight to make their work rights heard and job conditions better for its workers, are willing to sacrifice their raises in order to protect other workers' jobs. This goes in line with Jon's post, where corporate execs would still take a larger check instead of helping people keep their jobs. Now, not everyone is willing to freeze their salary. Out of the 44 unions in the area, only 20 have agreed to the wage freeze. Others refuse to participate until they see the financial details and benefits from this offer, which is perfectly understandable. A union among those who have not yet agreed are the Teachers Union. For this particular union, I have a skewed opinion. Although I believe that freezing wages could improve the financial position of the county, if the Teachers Union agrees, they will have to let off a good number of teachers and teachers' aids. By doing this, you can save money, but you take a chance of hurting your education system. We would have to determine whether the cost savings will be equal in value to the education backslide.
Those last few comments could be seen as speculation and/or a slippery slope. True, but with the way our economy has been sliding down the recession roller coaster, I wouldn't put that option past us at the moment. In general, a freezing of the wages is another option to helping the current financial situation. Brian is correct in the fact that there are other ways for the aforementioned entities to save and manage themselves during this time. However, Jon's post puts the upper level execs on "front street" and makes us aware that there are some people who, even during this time of turmoil, still don't have their priorities in order.
Sources:
1. F, Jon. "Salary Freezes." Goldman, David. "25% of companies plan salary freeze." CNN Money. 9 February 2009. 23 March 2009 <http://enterpriserisk-jonf.blogspot.com/2009/02/salary-freezes.html> <http://money.cnn.com/2009/02/09/news/economy/salary_freeze/index.htm?postversion=2009020914>.
2. Yoo, Brian. "Freezing salary is not the good way to manage a firm or business." 20 March 2009. Online Business Advisor. "Promote An Employee Only When They Are Qualified." Online Business Advisor. 26 July 1999. Dhanil. "How to Overcome Economic Crisis."31 October 2008. 23 March 2009 <http://rmi4350brian.blogspot.com/2009/03/freezing-salary-is-not-good-way-to.html>.
<http://www.onlinebusadv.com/?PAGE=176>. <http://dhanil.blogspot.com/2008/10/how-to-overcome-economic-crisis.html>.
3. Globe Staff. "2 more Boston unions agree to wage freeze." The Boston Globe. 23 March 2009. 23 March 2009 <http://www.boston.com/news/local/breaking_news/2009/03/2_more_boston_u.html?p1=Well_MostPop_Emailed6>.
Monday, March 23, 2009
Does the Improving Stock Market Mean Improving Economy?
Some market followers and investors believe that the stock market is improving and the US's worst days are behind them. But is it safe to rely on an "ever-so-changing" stock market as the determinant of the economy's well being? As much as we'd like to believe that a turn around in the stock market means a turn around for the country, the economy is weighted on more than our stock exchange. It is true, the market has improved since the beginning of the month. March 6 has been viewed upon as the "low" by some. Since then, the market has been improving. The Standard & Poor's Index increased approximately 14% and just this morning, the market rose 4%. To aid our increasing stock market position, the government is trying to step in and boost the rise. By increasing the spending, the government is hoping to restore some security and balance in our system. Even Ben Bernanke thinks the "recession will end this year."
Ben Bernanke? Isn't this the same guy who, although was upset about the situation, still defended the government's decision to bailout AIG once again? And wasn't it in that following week that AIG declared a $164 million payout of bonuses to its execs? Are we supposed to believe a guy who will defend a company that is hurting our economy with its irresponsibility and poor usage of federal aid? Please believe that I do not want to spoil Bernanke's name nor his reputation. However, I do not want to put my trust in such a strong and life changing declaration. I'd rather stay closer to Doug Peta, stock market strategist, and John Merrill, CIO of Tanglewood Wealth Management. Both agree that the market is doing better, but it is not a clear indication of an uphill ride. One factor they focus on is unemployment, a critical piece of our economy. Unemployment is high and will not disappear as fast as the stock market will increase. And although the stock market is an usual indicator of what the economy will do in the future months, the stock market is known to change very quickly. Remember, how the stock market moves is based on what people perceive. Until people have shown true faith in the status of the economy, we might want to keep our dependence on the stock market to a minimum and just continue to hope for even more better days.
Sources:
1. Steverman, Ben. "Stocks: Is the Worst Over?" Businessweek. 23 March 2009. 23 March 2009 <http://www.businessweek.com/investor/content/mar2009/pi20090320_846632.htm>.
2. Mohoni, Deepak. "Stock Markets Improve Further." The Economic Times. 23 March 2009. 23 March 2009 <http://economictimes.indiatimes.com/Features/Investors-Guide/Stock-markets-improve-further/articleshow/4302869.cms?curpg=1>.
3. Arends, Brett. "The Recession's Early Winners." The Wall Street Journal. 23 March 2009. 23 March 2009 <http://online.wsj.com/article/SB123758303567499201.html>.
Ben Bernanke? Isn't this the same guy who, although was upset about the situation, still defended the government's decision to bailout AIG once again? And wasn't it in that following week that AIG declared a $164 million payout of bonuses to its execs? Are we supposed to believe a guy who will defend a company that is hurting our economy with its irresponsibility and poor usage of federal aid? Please believe that I do not want to spoil Bernanke's name nor his reputation. However, I do not want to put my trust in such a strong and life changing declaration. I'd rather stay closer to Doug Peta, stock market strategist, and John Merrill, CIO of Tanglewood Wealth Management. Both agree that the market is doing better, but it is not a clear indication of an uphill ride. One factor they focus on is unemployment, a critical piece of our economy. Unemployment is high and will not disappear as fast as the stock market will increase. And although the stock market is an usual indicator of what the economy will do in the future months, the stock market is known to change very quickly. Remember, how the stock market moves is based on what people perceive. Until people have shown true faith in the status of the economy, we might want to keep our dependence on the stock market to a minimum and just continue to hope for even more better days.
Sources:
1. Steverman, Ben. "Stocks: Is the Worst Over?" Businessweek. 23 March 2009. 23 March 2009 <http://www.businessweek.com/investor/content/mar2009/pi20090320_846632.htm>.
2. Mohoni, Deepak. "Stock Markets Improve Further." The Economic Times. 23 March 2009. 23 March 2009 <http://economictimes.indiatimes.com/Features/Investors-Guide/Stock-markets-improve-further/articleshow/4302869.cms?curpg=1>.
3. Arends, Brett. "The Recession's Early Winners." The Wall Street Journal. 23 March 2009. 23 March 2009 <http://online.wsj.com/article/SB123758303567499201.html>.
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