Responses to peer forum post (500 words total)

Ok guys. I need one peer reply to each of the 4 post at 125 words each. I know it looks lengthy, but its only 500 words today between the four responses.

These are post that other students in my class have made and I am tasked with responding to them. I’d do it myself if I wasn’t in the hospital and on heavy medications.

Post #1 (ECO203: Principles of Macroeconomics)

As a result of the Great recession, the FDIC made changes to embolden consumer confidence.  These include: ensuring in full all accounts which do not earn interest regardless of balance and raising the standard maximum deposit insurance amount (SMDIA) to $250,000 (Amacher, 2012).  Additionally, the Federal Reserve extended credit to nonbank financial firms and purchased assets and loans from firms deemed “too big to fail” (Amacher, 2012).  The Federal Reserve also instituted stress testing to assist banks and regulators with risk assessment and “force banks to use earnings to build capital instead of paying dividends as conditions deteriorate” (Weinberg, n.d.). 

The Dodd-Frank Act of 2010 created the Financial Stability Oversight Council and granted it authority to assign nontraditional credit intermediaries as a means of gaining Federal Reserve oversight (Weinberg, n.d.).    The act also established the Orderly Liquidation Authority (OLA) to control certain institutions as they proceed through the bankruptcy process (Weinberg, n.d.).  The two goals of the OLA are to “mitigate systemic risk” when institutions go through bankruptcy proceedings and “minimize moral hazard” occurring from investors actions based on beliefs a federal bailout is looming.

The uncertainty of the time resulted in consumers and investors feeling a mistrust of Wall Street and Big Businesses.  The public had to be reassured the economy was not only growing but safe-guarded from the actions which brought on the Great Recession to begin with.  I feel the actions taken were enacted to address both concerns and did so effectively.   It’s difficult to say where we would be if classic economists had their way and let the market attempt to correct itself without government intervention.

Reference

Amacher, R. & Pate, J. (2012), Principles of Macroeconomics, Bridgepoint Education, Inc.

Weinberg, J. (n.d.), The Great Recession and Its Aftermath, Retrieved January 13, 2016 from             http://www.federalreservehistory.org/Period/Essay/15

Pellerin, S. & Walter, J. (2012) Orderly Liquidation as an Alternative to Bankruptcy, Retrieved January 13, 2016 from             https://www.richmondfed.org/publications/research/economic_quarterly/2012/q1/walter

Post #2 (ECO203: Principles of Macroeconomics)

I feel the biggest issue going on in the economy right now that is influencing my life is unemployment.  This issue has the most impact on my life as well.  I say this because I still have a year left until I complete my BA with my two certifications.  There is no telling if the unemployment rates will continue to drop or if they will start to rise again.  Josh Zumbrun (2016) states that by mid-2016 the rate will be at 4.8% and by years end it will only be at 4.7% (para 4).  However, for October, November, and December 2015 the rates held steady at 5.0% with an increase in jobs at 292,000 for the month of December (Cohen, 2016).  Then in January 2016 the number of unemployment benefit claims rose to 284,000 which can still be associated with a strong labor market according to the New York Times (Reuters, 2016).  The number of seasonal and part time workers losing their jobs can be related back to that number as well.  The U.S. needs to stop outsourcing jobs to foreign countries so that our unemployment numbers will continue to drop.  This can be tied into our GDP (Gross Domestic Product) as well.  The GDP is basically an indicator of how well, or poorly, our economy is doing.  Mark Koba (2011) states the GDP affects the average citizen by writing “When the economy is healthy, there is usually low unemployment and wage increases, as businesses demand labor to meet the growing economy” (para 14).  The same is true in reverse.  This can be seen in import/export prices as well with gasoline/crude oil topping that list.  When gas prices rise, people want to trade in the vehicles for more fuel efficient ones, yet when they drop they jump back into bigger family SUVs.  To sum up, I don’t feel that these issue have affected me in the past.  With the career path I will be on once I’ve completed my degree, I don’t foresee any issues presenting themselves in the future.  I just need to prepare myself and my family financially for any obstacles that may come and this class will help me with that journey. 

References

Cohen, P. (2016). Robust Hiring in December Caps Solid Year for U.S. Jobs. Retrieved from http://www.nytimes.com/2016/01/09/business/economy/jobs-report-hiring-unemployment-december.html

Koba, M. (2011). Gross Domestic Product: CNBC Explains. Retrieved from http://www.cnbc.com/id/44505017

REUTERS. (2016). U.S. Jobless Claims Rise Unexpectedly. Retrieved from http://www.nytimes.com/2016/01/15/business/economy/us-jobless-claims-rise-unexpectedly.html?_r=0

Zumbrun, J. (2016). What Forecasters Expect from the Economy in 2016. Retrieved from http://blogs.wsj.com/economics/2016/01/14/what-forecasters-expect-from-the-economy-in-2016/