My Union Journal

There are a couple of important websites for the American people to keep track of during this trying economic time.  These websites are managed by President Obama’s Administration and their sole purpose is to provide an informational resource for us to keep track of how our money is being spent by the bailouts and stimulus package. 

The stimulus package is supposed to be completely laid out at this site:  http://www.Recovery.gov/

The bailouts are supposed to be completely detailed at this site:  http://www.FinancialStability.gov/

Just look around you.  So many historical activities are happening right now that will be written about in history for years to come.  Yes, most of it is negative as reported by the news, but it is still very noteworthy.  I want to point out a couple of these points of interest that you may want to consider journaling about.  By chronicling your life in you own private journal you can look back years down the road and read your own writings to see exactly what you were experiencing at that time.  Here are some great things to write about:

1. The current state of our US and global economy.  We are seeing unprecedented swings in the stock market during daily trading.  This is driven by the poor housing market and the failed financial institutions.  Now, the government has stepped in to “bail out” or “rescue” these failed institutions to the tune of $750 billion dollars of the taxpayers money.  A good point of journaling is how this has affected you.  Maybe you have lost a lot of money in your 401k or perhaps you are going to have to push back retirement.  Maybe you are a student and you were unable to acquire a student loan to go to college because of this crisis.  Write about it in your journal.
2. We are in the midst of a historic presidential election.  There will be a first in 2008 regardless of who wins the election.  If the Democrats bring victory, then it will be the first time in history that a person of color (Barack Obama) will be President.  If the Republicans bring victory, then it will be the first time in history that a woman (Sarah Palin) will be Vice-President.  This is a great subject to write about in your journal to remember which ticket you voted.

With the failed banking and insurance industries, the fact exists that those mismanagement of funds by multi-billion dollar corporations has a trickle down effect on everyone, and ultimately the buck stops with us, the American consumer.   

Basically, lenders made poor decisions by selling mortgages to folks that couldn’t pay.  Borrowers also were in the wrong by taking on a mortgage they couldn’t afford.  Then, these bad mortgages were all packaged and sold in pieces as investments called “mortgage backed securities”.  Basically, these are securities sold by large investment banks to interested institutions and individuals at a discount, thinking that the housing market would recover and these low-priced bad mortgages would turn around and make lots of money.  However, that did not happen.  The investments instead started going down and all the institutions and individaul investors who bought these securities began losing their money.  However, a large percentage of these investors bought something called “Credit Default Swaps”.  These are marketed by the investment banks also as a type of “insurance” on these very risky investments like the mortgage backed securities.  However, credit default swaps are not called insurance because they are not regulated, therefore they call it swaps.  But, in theory, it works the same way and basically says that if someone buys one of these risky securities (i.e. mortgage backed security) and it loses money, then this credit default swap will be there to bail them out of their losses. 

Herein lies the problem.  The super huge investment banks and insurers (Bear Stearns, Lehman Brothers, and AIG) who sold these credit default swaps did not have the cash reserves in house to cover the severe losses.  Therefore, Bear Stearns went down, Lehman Brothers filed bankruptcy and AIG was bailed out by the federal goverment to the tune of $85 billion. 

Now, the bill was just passed last week to bailout the financial instituions to the tune of $700 billion.  This is money that the federal goverment (your tax dollars) will pay to bail out these extremely irresponsible corporations for gambling on securites that were always too risky to bid on. 

Any average Joe can tell you that if you buy a house you cannot afford, then you will not be able to pay for it.  However, these multi-millionaires on Wall Street just could not figure that one out.  Again, there is much more to the financial crisis of our current economy, but this is just a brief breakdown for you to share with your family and friends.