I've been a little slack

So I've been a little slack in my posts. Instead of doing a post on news from two weeks ago and another for last week, I'm gonna go ahead and write two blogs on a medley of several stories I've encountered in the last two weeks. For this first post, I want to talk about some really cool inventions that are getting some hype.





The First cool bit of technology comes from Houston, Texas. It's a website called PimpThisBum.com and its goal is to raise money to help a local homless person get back on his feet.





Sean Dolan and his father set up the website as a marketing tool to support Timothy Edwards, who had been living under a busy overpass for the last four years. Surprisingly, this idea actually workd and in two months the site rasied over $50 thousand! Interestingly, the site allows you to donate more than money; you can donate ham sandwitches, even a college education. A company in Seattle donated a alcohol rehabilitation course which Edwards is currently well on his way to completing.





Many critics of this site say that it isn't helping Edwards, but exploiting him. However, other than the name, PimpThisBum.com has consistently similar goals to HelpTheHomeless.org. While the name can come off as offensive to some, I think this is a great idea. I would never in a million years give money to a homeless person on the street. How would I know my money wasn't going to drugs or alcohol? And the cliches of donating to good will sites grow tiring. This new name, however, is designed to insult my sincerity and therefore compels me to donate.





This is a very good program that is expanding to other cities in Texas and I think it would be great to see it in other parts of the country as well. Through sites like this, we can pimp all of the bums, one at a time.



The second really cool peice of technology comes from England, but is seeing growing attention in the US. It's a virtual hospital that medical students can use to grow accostumed to hospital protocal. It runs through a program called second life, a virtual world that allows users to interact with each other in almost limitless ways. From this hospital, to buying and selling property, even buying prostitutes, almost anything is possible.

The cool thing about this program and how these medical students are using it is the game based learning it provides. For example, if a student forgets to wash his hands before seeing a patient, he won't be able to continue with his assignment. This really helps in getting students in the habit of following hospital protocol well.

While this is a really cool program, it doesn't take the place of traditional learning. Instead, it provides a refreshing break from mundane readings and other "less fun" assignments.

I think this is really neat and would love to see this in other fields. Perhaps as part of job training programs for mechanics, food service workers, or anything else that requires the ability to repetively go through a process. It would take a lot of the labor of training new employees off of the business which would make it more productive.

The third peice of technology, and my favorite so far, also comes from England, but would have huge implications here. It's something called the bionic eye (a prosthetic eye containing a tiny camera that records video that he can used to study how it intersects with humanity). While the device wouldn't actually restore his sight, it's big leap on an already existing technology found in California. There, researches have been able to restore limited sight to 21 blind people by implanting electrodes into the damaged retina and using special glasses to recieve the light.

This reminds me of The Terminator, but much cooler. The impact this would have on the US would be astounding. Especially for the wounded soldiers coming from Iraq--many of which suffer from eye damages. All in all, this a really cool peice of technology that will hopefully see further development in the years to come.

While I Was Out

So we didn't post a blog last week because of the test, so now I have two whole weeks of news to choose from. Obviously, the big economic story is the AIG bonus issue.

"Insurance giant AIG
was given $152 billion in bailout money by the federal government since nearly
collapsing in September. Now the company is planning to take millions of that
money and hand it over to employees in a program that sounds a lot like
bonuses."

In some cases, company workers were promised anywhere between one and four million dollars as part of a retention plan (a "carrot on a stick" for employees to remain with the company). As you can imagine, this has angered many people in Washington as well as many tax payers. Why should a company who was bailed out with public funds--our hard earned tax dollars-- be allowed to be so spend that money so loosely. The argument top AIG managers make is that it needs its top talent in order to run a profitable business and get back on track. The plan is to sell 65% of its business to repay federal loans. Under this light, it makes more sense. If I were a top CEO of AIG, I would want to get out of there too. Especially if the company is going under and a rival company is willing to buy me off. And naturally, AIG will want to keep its best talent because it'll go under for sure without it.

Later in the week, with much pressure from Washington, AIG executives have agreed to return some or all of the bonus money. However, at the same time, Congress was passing a bill that would tax 90% of the bonus money given to executives from bailed out firms.

Obama, who promises that his administration was not responsible for the lack of administration in the use of the bail out money, also promises to put an end to poor use of the money by possibly creating a new agency to oversee bail our spending. But didn't he promise to do that before? I could swear hearing that the spending of this money was going to be tightly monitored and that tax payers had nothing to worry about in terms of where their money was going. However, it's good that action is being taken now instead of months down the road, when the money that was given in bonuses would be untraceable. I do agree with Congress's decision to claim the money given in bonuses. It isn't right for a company that was bailed out using our money to spend it on bonuses--no matter how cleverly they're disguised as retention plans.

Also in the news, on a different note, population analysts have noticed a decrease in migration toward the Sun Belt (Florida, Arizona, Nevada, etc.). These analysts blame the downturn in the economy.

"Census data released Thursday highlight a U.S. population somewhat locked in
place by the severe housing downturn and economic recession, even before the
impact of rippling job layoffs after last September's financial meltdown."

I'm not surprised. In my earlier posts, I mentioned that certain products like T.Vs, cars, and refrigerators are good indicators of the health of the economy. Well, so are migration trends. It costs a lot of money to pick up and move, especially across the country. Many of these people rely on the money from selling their homes. However, since the housing market is so bad and housing prices are so low, sellers aren't getting enough money for their houses to move. While it's a buyer's market, it's difficult to buy a home while you're sitting on one right now. Hopefully, things will get better, but for now, people will have to sit tight in traditional cities. It's not a bad thing, it just shows that people simply can't afford to move.

update from last week (really today though)

In my last post, I talked about Obama's push to reform the mortgage and bankruptcy system. The major argument against this reform is that it would increase the costs for these companies that would transfer to higher interest rates and fees for borrowers. Since last week, however, opposers of the reform have won several concessions.

" Democrats in the Houseagreed to limit the measure to existing loans, to homeowners who sought a loan modification from their lenders before filing for bankruptcy, and to people who can no longer afford to pay their mortgages.
Democrats were forced to put off action on the measure when moderates voiced concerns last week that the bill was still overly broad. They wrote a compromise that requires bankruptcy judges to consider whether banks offered homeowners reasonable loan restructuring deals before they weigh in with their own rewrites.
Borrowers also would have a responsibility to prove that they tried to modify their mortgages with their lenders before seeking help in bankruptcy court."

While I don't like the idea of rewarding people who faulted on their loans, I do like the concessions. I think that making sure those who would benefit from this bill have tried everything else before getting a free pass is a very good thing. It would be unfair to responsible borrowers and home owners to give a free pass without ensuring they did their best not to fault.

Also last week, I talked about Obama's plan to put a down payment on health care reform. In his plan, couples earning $250,000 per year and individuals earning $200,000 per year would have an increase in taxes. These people would also recieve less of a tax deduction for donations.

Many opponents of the plan say that this will really hurt colleges and charities that are already suffering by making it unfavorable to donate.

Obama says that the nation cannot afford to wait on any longer to reform health care. "Making investments in reform now, investments that will dramatically lower costs, won't add to our budget deficits in the long term — rather, it is one of the best ways to reduce them," Obama said.

I'm a big fan of a government run health care system. As the son of two doctors, I understand the need for everyone to have insurance. One in four patients coming into the Emergency Room is unable to pay. And since it is illegal for the ER to refuse treatment, the hospitals take over the costs of providing health care. To me it seems like many people can take advantage of these laws to recieve free health care while the hospitals become less and less able to provide that care. While I don't like the idea of schools recieving less money in the form of donations, I think that any move towards the reform of health care is a good one. My generation is the one that is going to take on the cost of reform and it's only fair for the current generation to help us out, especially since they're the one's who will be recieving the benefits.

This week, Obama is pushing for tougher regulations on the finanial sector. He believes that this will protect consumers while restoring "accountability, transparency and trust in our financial markets." He says that the financial crisis occured because of a lack of risk evaluation on Wall Street.



"Let me be clear: The choice we face is not between some oppressive government-run economy or a chaotic and unforgiving capitalism," Obama said. "Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors, and ultimately to keep those financial institutions strong."



Many Republican members of Congress (who also openly opposed the $700 billion stimulus package) are openly against further regulation of the financial sector. They mainly believe that tighter regulation will "stifle ingenuity."



I'm pretty much on the fence with this issue. On the one hand, I think that things need to change. Obviously something went wrong and it needs to be fixed. The government needs to take action. Just look at what resulted from President Taft's policy of strict laise faire during the Great Depression, the economy slipped further and further into a recession. On the other hand, everything I know about economics is telling me that the markets should be free to regulate themselves. The laws of supply and demand are unbreakable and almost certainly act in our benefit. However, this debate has been going on for ages. So far, the best thing is a combination of government regulation and free market capitalism.

Also this week, Obama is seeking to raise taxes on the weatlhy in order to provide healthcare for the uninsured.

"Obama's budget proposal would effectively raise income taxes and curb tax deductions on couples making more than $250,000 a year, beginning in 2011. By not extending former President George W. Bush's tax cuts for such wealthier filers, Obama would allow the marginal rate on household incomes above $250,000 to rise from 35 percent to 39.6 percent, said an administration official."

This robin hood plan would reduce the tax returns wealthy donors revieve by donating to private institutions. Many colleges are upset because they rely heavily on private donations. As a college student, this really affects me. I would not be a happy camper if my school was shut down. While i understand the need to reduce spending and the need to amp up Medicare, I don't agree with the means we're going through with it.

Coming from a upper middle class family, the increase in taxes would definitely affect me. And since i don't recieve benefits from Medicare and Medicaid, I'd have nothing to show from these increase in taxes.

Even with these measures, "the budget will still find itself in the red with deficits remaining above $500 billion over the second half of the decade."


Thirdly this week, legislation is being pushed through congress that would , "would let bankruptcy judges reduce the principal and interest rate on a home loan. That essentially would require mortgage companies to let debt-strapped homeowners reduce their monthly payments rather than lose their main residences" Many banks are against this legislation saying it impose unmanageably costs on companies which will translate to higher costs to buyers.

While many banks are against it, they realize that this bill will likely go through and are making "least-worst" attempt to cooperate. These banks are working to modify the bill to restrict the measure to certain kinds or sizes of home loans, certain borrowers, or situations where the mortgage holder — known as the loan servicer — agrees to the changes.

I think it's important to get this housing crisis under control. However, I didn't default on my payments so why should I support something that rewards those who did. I understand the need to help these people, but that doesn't mean I like it. For me this means a higher cost to recieve a loan, something that I will inevitably do after graduation.

Stimulus Package: "Take The Money And Run!"

So this week there's been some pretty historical developments. The Stimulus Package (a.k.a. The Flagship of Obama's platform) has been passed by both houses of Congress. This is a big deal! But before it was passed, many economists took the liberty of predicting the outcome of said package. They looked at all of the provisions outlined in the package and made prognostications on the outcomes they would have on the economy. Now that the Stimulus Package is passed, the states are facing the ironic challenge of spending their money.

Early this week on Feb. 13, an article was published containing economists' predictions on the out come of the Stimulus Package.

But at the end of the day, the economists concluded that
anything pumping money into the economy will help in the near term.
“Most
economists say that [the stimulus] is so big it will have to do some good. It
will generate some GDP growth,” said U.S. Chamber of Commerce chief economist
Martin Regalia

.

I agree, $787 billion is so much money that some good has to come from it. That much money has to go somewhere. As part of the Stimulus Package, $150 billion dollars is being allocated to infrastructure. That means that new roads are going to be built, current roads are going to be repaired, and alternate modes of transportation such as railroads are going to be expanded. This is great news! Many of the roads built nearly 50 years ago are in desperate need of repair in order to sustain the increasing volumes of traffic. Not only are we going to see where the money is going, but those roads aren't going to build themselves. This means hiring more workers, American workers, to build them. This bottom up approach is going to work. As more workers are hired, they'll be able to use the wages they didn't have before to not only buy food and clothes for their families, but to also buy new flat screen TVs, refrigerators and other goods that they may have been holding back on as a response to the downturn in the economy. These "long term" goods are a great indicator of how the economy is doing. When the economy is good, people buy these goods more often. But when it's bad, since these goods can be made to last, consumers tend to deal with older merchandise in order to allocate their money to "short term" goods such as clothes and gas for work.

However, these predictions really don't matter now that the stimulus bill has been passed. As of February 16 the bill is as good as through. However, there was very little bipartisan support. No Republicans in the House approved the bill and only three Republicans in the Senate voted in its favor. Many Republicans feel that this package is less about saving the economy and more about using the Democratic Majority to push Democratic policy. They feel that there is too much government spending and not enough tax cuts. However, this battle has been long before the Stimulus Package came into play. Nonetheless, this is a major victory for Obama. To have a something this big passed so quickly is astounding. However, Obama says this is just the first step towards fixing the economy and not an instant fix--Which is understandable. No one can expect the economy to make a sudden turn around. As I've said before, this Stimulus Package is not magic. In fact, I wouldn't expect to see any significant difference until the end of Obama's first term.

Now that the Stimulus Package is passed, many states are having trouble figuring out what to spend it on. The problem lies in deciding where to allocate the money left after carrying out the projects required by Congress. As I mentioned earlier, $150 billion dollars must be allocated to infrastructure. Also, Congress is requiring states to prioritize projects that it deems most necessary.

"The law also requires that half the money be spent on projects
that have been vetted by the federal government and deemed "ready to go" in 120
days, as a way to jolt the economy and create jobs. That means state officials
are under pressure to make decisions quickly on which projects to fund and which
to bypass.
While many states have made their lists of "ready-to-go"
infrastructure projects available online for public review, others have
resisted, in part because the limited stimulus funding means only a fraction of
the projects will receive money. Watchdog groups say it's likely that state
officials fear angering constituents if a project appears on a wish list and
then is struck from the final allocation."

I don't know about you, but I'm glad that Congress is using some oversight in the spending of this money. $787 billion is an insane amount of money that, by borrowing, puts us in a debt that my children will still be paying! I want every single penny of that to go to projects that will help the economy instead of pet projects of politicians or in the pockets of greedy executives. It shows major responsibility on Congress's part to at least partially oversee the spending of this money. That being said, many states are being very careful in allocating the money. Because very few states have outlined specific projects that have previously prioritized, many states are appointing third party officials to take care of the issues while others are having fierce legislative battles to determine where every cent is going. So the states get kudos as well. It would be a very bad thing if those states without prior plans where overpowered by one party.

The next few years are going to be very exciting times where very important decisions are going to be made. The Stimulus Package was the first and the States' allocation of this money is the second.

Economic Stimulus Package on track for final votes

This week, Obama's stimulus package will be going through the final votes in the House and Senate. This article from the associated press sums up the changes to the original bill pretty nicely.

WASHINGTON – Economic stimulus legislation at the heart of President Barack Obama's recovery plan is on track for final votes Friday in the House and Senate after a dizzying final round of bargaining that yielded agreement on tax cuts and spending totaling $789 billion.
Obama, who has campaigned energetically for the legislation, welcomed the agreement, saying it would "save or create more than 3.5 million jobs and get our economy back on track."
The $500-per-worker credit for lower- and middle-income taxpayers that Obama outlined during his presidential campaign was scaled back to $400 during bargaining by the Democratic-controlled Congress and White House. Couples would receive $800 instead of $1,000. Over two years, that move would pump about $25 billion less into the economy than had been previously planned.
Officials estimated it would mean about $13 a week more in people's paychecks this year when withholding tables are adjusted in late spring. Next year, the measure could yield workers about $8 a week. Critics say that's unlikely to do much to boost consumption.
"The most highly touted tax cut in the original proposal now translates into $7.70 a week for middle-class workers," said Senate GOP Leader Mitch McConnell of Kentucky.
Millions of people receiving Social Security benefits would get a one-time payment of $250 under the agreement, along with veterans receiving pensions, and poor people receiving Supplemental Security Income payments.
An additional $46 billion would go to transportation projects such as highway, bridge and mass transit construction; many lawmakers wanted more.
Brendan Daly, spokesman for Speaker Nancy Pelosi, D-Calif., and Don Stewart, an aide to McConnell, said final votes are likely in the House and Senate on Friday.
The Obama plan offers a 60 percent subsidy to help unemployed people pay health insurance premiums under the COBRA program and divvies up $87 billion among the states to help them with their Medicaid costs for the next two years. It provides $19 billion to modernize health information technology systems, even though such funding will create few jobs right away.
To tamp down costs, several tax provisions were dropped or sharply cut back. A provision popular with Republicans and the big business lobby that would have awarded about $54 billion to money-losing businesses over the next two years was instead limited to small businesses, greatly reducing its cost.
A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August. Car buyers could deduct the sales tax they paid on a new car but not the interest on their car loans.
But nothing could shake negotiators from insisting on including $70 billion to shelter middle- to upper-income taxpayers from the alternative minimum tax, originally passed a generation ago to make sure the super-rich didn't avoid taxes.
The move is aimed at easing headaches that would follow if Congress passed it later in the year — rather than creating jobs. The Congressional Budget Office estimates that provision will have relatively little impact on the economy.
In late-stage talks, Obama and Senate Majority Leader Harry Reid, D-Nev., pressed for $8 billion to construct high-speed rail lines, quadrupling the amount in the bill that passed the Senate on Tuesday.
Reid's office issued a statement noting that a proposed Los Angeles-to-Las Vegas rail might get a big chunk of the money.
Scaling back the bill to levels lower than either the $838 billion Senate measure or the original $820 billion House-passed measure caused grumbling among liberal Democrats, who described the cutbacks as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are feeling heat from constituents for supporting the bill.
Specter played an active role, however, in making sure $10 billion for the National Institutes of Health, a pet priority, wasn't cut back.
After final agreements were sealed Wednesday afternoon, staff aides worked into the night drafting and double-checking in hopes of officially unveiling the measure Thursday.

All I can say is finaly! In my opinion, it really doesn't matter what
the stimulus package contains. Much like FDR's immediate action after his
inaugeration, Obama today just has to do something. The American people need to
see action. That's what's going to get us out of this recession--a leader to give us the hope we need to increase productivity. It seems that it wasn't until the media began warning of a recession that people scared themselves into one. Once there was a threat of a recession, consumers began spending less and actually increasing the rate of economic decline. So, this stimulus package is exactly what we need to get our economy back on track. Not because it is full of magic legislation that suddenly lift us out of recession, but because it will show Americans that the Government is doing something for our benefit. Consumers need that confidence in order to start spending again, which will increase demand (causing producers to increase their output to meet that demand). This increase in output will require manufacturers to hire more people to either make the product or service the machines that make the products. Either way, jobs will be created.