Wall Street crisis affects college students too
(Last updated: 09/30/08 6:45pm)If you aren’t scared, you’re not paying attention.
Monday, a $700 billion deal to bail out Wall Street and attempt to solve the United States’ current financial crisis failed in a Congressional vote.
Its failure is widely attributed to widespread unpopularity with the bill, with members of Congress reportedly having received numerous calls from their constituents urging them to vote “No.”
The root cause of the unpopularity is likely the fact that congressional leaders and the president — despite numerous public addresses — did an extremely poor job explaining exactly what is happening to our economy and how this particular bill was supposed to solve the problem.
What people — and especially students — need to understand is this crisis is having a direct effect on their lives. As long as the mess continues, all lines of credit will dry up.
Although few students will have to worry about getting a good mortgage any time soon, many do have to worry about buying a new car, getting a credit card or, more importantly, getting a student loan.
The nature of the crisis is such that financial institutions are increasingly deciding they can’t afford to lend out money, especially to those with poor or nonexistent credit histories — a group which overwhelmingly includes college students. As this calamity continues, many who depend on private student loans to bridge the financial gaps will discover they can no longer afford college.
That’s not to say this particular bill was the solution.
The truth of the matter is it probably would have led to profits for several people who might have had a hand in crafting the whole situation. The vast increase in the deficit would probably cause some pain for the average American.
But the impact of doing nothing will likely lead to greater pain in the long run. When the choice is between two bad options, a person must choose the lesser of two evils.
There are those who may preach we should take our time and try to carefully craft a better solution. However, the longer this situation goes on, the more foreign investors will be reticent to invest in the U.S., the more jobs will be lost as companies find they cannot afford to purchase needed materials and the more banks will hesitate to loan money.
What the president and leaders of congress should do is directly address the average American to carefully and thoroughly explain why they should care about the fate of Wall Street and how the whole situation affects them.
It’s not enough to say we’re in an economic crisis — you need to show people what that means. They could even break out charts and graphs, if that’s what is needed.
MSU students should be hoping a solution is found quickly. It won’t be too long now before people will have to begin applying for loans for the next school year. Anyone depending on a loan will want the banks to have had as much time to recover from these times of trouble as possible to ensure the maximum amount of money is available.
This is definitely one problem that should be keeping you up at night.
Originally Published: 09/30/08 6:36pm
Ricky F.
09/30/08 10:34pmYou are not your credit score
You are not the house you own, the school you attended, the clothes you wear.
You’ll never win the lottery and you’ll never lead the world by climbing the ladder like a good boy scout.
Until you realize that the hex “May you live an interesting life” is not a curse but a fulfilling destiny will you understand your potential.
The ephemeral lives of affluent but empty traders who lost it all betting on greed and subprime morals will never amount to that of the meager man who lived a life in pursuit of the higher ideal of his fellow man.
The Stock market is not America and its fall will not end the ideal.
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Bright Side
09/30/08 10:36pmI hope more students have trouble getting loans.
College degrees are a dime a dozen these days and the surplus is lowering the value of a degree. If less people hae degrees in the future those with degrees will be able to expect higher salaries.
I worked through college and was able to keep my total outstanding balance less than 10K throughout my 5 years.
Patriarch
09/30/08 11:58pmHere’s the truth that’s come from this most recent “economic crisis”; the “Free market works”, and will always repair itself over time, of its own unique eccenticities, one by one, provided,that is, the Government stays as far away as possible from attempting to either shape it or fix it. When a politician tells you that “he’ll fix it” watch out; he’s either a fool or a demagogue.
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Uh .. loans have to be repaid?
10/01/08 6:12amHow much simpler does this have to be?
You cannot lend money to people who cannot afford, in the long-run, to repay it. Your economy collapses.
That is just WELFARE. Like the alleged “grants” that MSU keeps announcing — tax money whose payback is very rarely accounted for.
Well — that dog don’t hunt anymore. It has just blown up in our faces. And look at the got-dang mess.
MSUAlum2001
10/01/08 7:52amSo it’s all the government’s fault eh? Do you guys not realize that in actual numbers we are talking about less than 1% of the houses that started this mess? Think about that for just one second. Less than 1% of the nation’s houses brought this country’s financial system down! That should tell you that the entire system was way too leveraged and corrupted.
Matthew
10/01/08 7:58amUh . . . private banks loaned the money. That is not welfare, it’s the almighty free market behaving stupidly. A $700B government bailout . . . that’s welfare. And, yes, the market may correct itself, but the great depression was an example of market correction. Would you like another one of those?
What has been proven by this mess is that Wall Street is not to be trusted. We’ve been “trusting” the free market since 1974. What is it going to take to convince you that trickle-down economics do not work? How many businesses have to crumble under their own greed before you consider the possibility that some, reasonable government regulation is needed?
Worried?
10/01/08 8:16amI’m celebrating. There’s been way too much credit around for too long.
ACORN + OBAMA = FINANCIAL DISASTER
10/01/08 8:40am“ .. That should tell you that the entire system was way too leveraged and corrupted ..”
Uh .. so you’re for people not repaying their loans? You do that in Cuba — Fidel cuts one of your hands off.
“Uh . . . private banks loaned the money. That is not welfare, it’s the almighty free market behaving stupidly.”
WRONG, WRONG, WRONG!!
The got-dang Community Reinvestment Act, idiot Slick Willie, and idiot GWB PRESSURED banks to either lend for “affordable housing” — or get a regulatory boot up their arses.
Try reading and thinking. It hurts, only for a little while.
Ricky F
10/01/08 10:04amWhy is is that Conservatives, who often deny the science of evolution, the big bang, global warming, and tobacco links to cancer, suddenly believe that economics is this great science? It’s not.
There is no natural law saying that the markets always work and free markets are the ebst solution. Basic observation would say, to any rational observer, no!
Free markets often lead to competition busting monopolies, suppressed new technology and research,and infringement on individual rights.
This doesn’t mean that we should drop the markets.
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ACORN + OBAMA = FINANCIAL DISASTER
10/01/08 10:18amMAJOR SCREW-UP
“ .. were from the private laon (sic) companies who saw a way to package these to investors and rate them AAA ..”
Borrowers do not rate themselves AAA. Separate companies — e.g., Moody’s, S&P — issue the ratings.
Why Democrats and Obama should never be allowed near tax money, Chapter 700,000,000,001.
God, how much simpler can it be?
Government orders “more affordable housing” — “affordables” default and economy nearly collapses.
Get a clue. And a dictionary.
MSUAlum2001
10/01/08 10:28amACORN, wow you really don’t get it either do you? You can say, “God how stupid are you?” all day but the fact remains, you really haven’t done much either. First off, the Community Reinvestment Act was passed in 1977! Second, your buddy Greenspan (at Bush’s insistence) kept the Fed. funds rate too low for too long allowing this cheap credit to propagate.
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Tim
10/01/08 10:44amACORN- I did a little research and it says that most subprime mortgages were given out by banks and private lenders that were not under the CRA.
http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html
Try reading. It won’t hurt….much.
Pete
10/01/08 11:26amUmmmm, the whole thing happening is proof that the free market DOES work. Banks loaned money without having the money to back it, and were giving those loans to recipients with poor odds to repay it. And now that has come back to bite them on the ass. That is the very definition of the free market – you gamble and mess with the rules, you get burned. Minimal regulation is necessary to encourage fair practices in markets where resources can be monopolized. But to say that this financial “crisis” is proof that things are broken is just foolish. The only thing being proven is that greed and poor lending practices aren’t a sustainable business model.
Tom W.
10/01/08 12:49pmPete: What do you mean by “proof that the free market DOES work.”?
If you mean that it will correct itself (eventually) on its own, then yes. But market economic should work to benefit society, and unregulated free markets have proven time and time again to not benefit society.
People are greedy and corrupt, there’s no way around it.
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Bill Lumberg
10/01/08 1:03pmThe Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities
...There have been changes since 1977 MSUAlum2001 that have impacted the CRA such that it is the underlying problem.
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Bottom Line
10/01/08 1:15pmWe’re all to blame for this mess. The government for setting up the CRA in one administration and then not regulating lending practicing in another. Greenspan for keeping interest rates too low for too long and the current Fed for not acting before a point of crisis. The American people for consuming things we cannot afford. Studies show Americans have been spending $101 for every $100 made for almost a decade. Clearly, the only way people were able to do this is because credit was easily available in housing, automobile, electronic markets, etc.
We don’t need to find blame since we’ve all been complicit. We need to find our way out.
ACORN + OBAMA = FINANCIAL DISASTER
10/01/08 1:38pm“ACORN- I did a little research ..”
yeah — on DEMOCRAT KOS.
No sale. Keep trying to grow a brain.
“First off, the Community Reinvestment Act was passed in 1977!”
Yeah — and jacked-up by Slick Willie and that idiot GWB.
“ .. so complex nobody knew what they really contained.”
Then why did Goldman Sachs, Morgan Stanley, and moi avoid them?
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MSUAlum2001
10/01/08 2:08pm“…Then why did Goldman Sachs, Morgan Stanley, and moi avoid them? BECAUSE WE HAVE BRAINS!!!”
-Are we really to believe that you deal in mortgage backed securities? Additionally, the system got so wrecked that Goldman and Morgan Stanley, while not directly complicit in this mess, damn near fell anyway.
And really, where were my mistakes?
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Bill Lumberg
10/01/08 2:26pmMSUAlum2001 would you care to show/prove “[p]eople were going to make a lot of those loans anyway…”?
And Bottom Line is completely wrong. I have a mortgage that I continue to make payments on for a house that was not out of my price range. I have no car payment and a moderate amount of credit card debit that will be paid off next March/April. This is not my fault at all, however I am going to suffer more then the people who created this mess; as I will not see any “bailout” money nor will the value of my house be restored.
Bottom Line
10/01/08 3:03pmBill,
I was using the royal “we.” Of course, there are plenty of people out there who have been 100% financially responsible (you and I, both.) There are also those who have been irresponsible in only one of the areas you mention and can still find their own way out. BUT there are those who have completely screwed up by taking too much on too many things they could not afford.
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Tim
10/01/08 3:46pmACORN- *“ACORN- I did a little research ..”
yeah — on DEMOCRAT KOS.*
Umm..reading not a strong suit? The link was to the Business Weekly.
I’ve honestly never read anything from the Kos and certainly wouldn’t go there for information on economic issues.
obama for president
10/01/08 4:37pmsome people think that the way thing are are for the better, but think about how many college studients would not be able to even dream about college. Sure the 17 million doller quick fix thing will not salve all the problem put it is something that will help us for the now. It might put a little dent in the lack of studient lone and isn’t that what most important. The studients that need these lones really want to go to college and everybody that really want to go to college should have the means to go
MSUAlum2001
10/01/08 6:00pmUmmm..Bill did you even read the article you linked to? I took that directly from that! And I’m glad to see you won’t suffer one iota because of this…but in all honesty I bet there were a lot of those same people in 1929/1930 who thought the same thing. Obviously you don’t really have a clue as to how bad this could get. Do you not realize that as the credit market dries up that businesses who rely on short term credit (which are a majority of them in this country) won’t be able to buy inventory to sell or make something else or even meet payroll sometimes?
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ACORN + OBAMA = FINANCIAL DISASTER
10/01/08 6:48pm“ .. could very well lead you to the unemployment line.”
No — that’s OBAMA’S job.
“The link was to the Business Weekly (sic).”
Business W-e-e-k. Biased op-ed, written by a DEMOCRAT.
- “Are we really to believe that you deal in mortgage backed securities?”
Hey, Jed Clampett — yeah, brokers used to call about REITs, etc.
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Losers for Obama
10/01/08 6:50pmI amm for Obama becuz ther be no stannnards when get in. I kin watch ESPN all day.