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Archive for News – Page 2

The Market is Reaching the Bottom

By Matt · Comments (0)
Friday, October 10th, 2008

I’m no economist, but I think it’s a fun game to play.  So, I’m going to make a prediction: we are likely within 1,000 points of the market’s (Dow Jones Industrial Average) bottom.  Now, the recent financial roller coaster isn’t anything to sneeze at:

  • The Dow has fallen 39% in the past year
  • The S&P 500 has fallen 42% in the past year
  • In the last six trading days, the Dow fell 20.8%. The definition of a bear market is when markets fall 20%.  And we lost that amount in just six days. Six days, sheesh.
  • There’s general panic all around. Newspapers, TV shows, and radio shows are all talking about how bad things are.

We are also at the point when people say they can’t see the bottom, which usually means we are at the bottom.  But, I think there are actually some key indicators that we are very close to the bottom:

  • Price/Earnings ratios are very low right now.  The lower the P/E ratio, the “cheaper” stocks are.  Since 1950, the average P/E ratio of the S&P 500 is around 16.5.  In bear markets, ratios can fall as low as 7-8.  Right now the P/E ratio is 9.5, and there’s good reason to think they won’t get down to the 7-8 range, but I won’t get into that right now.
  • Home inventories are falling.  That means more homes are selling, signaling the housing market is close to a turnaround.
  • The average investor is bailing out of the market.  Two weeks ago, investors pulled $7.2 billion out of stock mutual funds.  Last week, they pulled $43.3 billion out, a 500% increase in one week.  Panic like this is a sign we are reaching a bottom.
  • The government will start acting on the $700 billion bailout soon, taking some of the unpredictability out of the market.
  • It’s very likely we are in a recession right now.  Believe it or not, in most recessions stocks reach bottom during the recession. That means, stocks start rising in price before the recession is over.  I don’t expect this recession to last very long. Inflation is low and unemployment is low.  What is driving this recession is fear and home prices.  With home prices likely to stabilize soon and the government buying up the scary investments, the fear will subside and we’ll be on the other side soon.

The Dow closed yesterday at 8,579.19, so I’m guessing we won’t go below 7,500.  That’s still room for a loss of an additional 12.5%, but along ways from the 39% we’ve lost already.

It looks like the market is on sale.

Comments (0)
Categories : News
Tags : economy, stock market

Powers of the President

By Matt · Comments (0)
Monday, October 6th, 2008

Thinking about the upcoming election, I was trying to think about what the really important and powerful roles of the president actually are. I came up with my top three:

  1. Commander-in-Chief: Obviously, the power to command the United States troops is a significant role of the president, especially as we are at war in Iraq and Afghanistan.
  2. Appointments: Cabinet members, judges, ambassadors, etc. Who a president surrounds himself with is fairly significant. What might the “bailout” have looked like if Henry Paulson wasn’t Secretary of the Treasury?  It could be significantly different.  And of course, you have Supreme Court Justices as well.
  3. Veto: The threat of a presidential veto holds legislative power in moderating Congress’ wishes.

Here’s how I think about those three things and what I’m looking for in the next thirty days:

  1. Honestly, I don’t think Obama or McCain are really that much different on the big issues.  The democrats grandstanded and won back the Legislature in 2006 based on their promise to get us out of Iraq, but once they were in power didn’t do a whole lot with that.  Neither president will get out of Iraq so quickly as to leave a cesspool.  And, both want to move out of Iraq and into Afghanistan.  I honestly don’t expect strategy will differ in the next 24 months with either president.  What might be different between the two is their response to new crises.
  2. We don’t know much about appointments of either candidates.  We can kind of guess at the kinds of Supreme Court Justices they would appoint, but Cabinet members are pretty open right now.  I would be interested in the kind of people they are thinking about, but we may never really know that.
  3. If you want the president to retain the power of the veto, then McCain is the only guy.  It’s pretty obvious the democrats will still be in power when the next president takes office.  If you like a split power between the executive and legislative branches (history indicates that Americans prefer such split power), obviously Obama doesn’t help there.

So, that’s my top three issues at this point.  Did I leave something really important out?

Comments (0)
Categories : News
Tags : 2008 election

One for the History Books

By Matt · Comments (0)
Saturday, October 4th, 2008

Will October 3, 2008 go down in the history books?  Will this be the day our country was fundamentally changed?

Yesterday was my day off, and I spent a lot of it listening to radio shows and watching news coverage of the bill passed by congress that will supposedly help out the economy.  It will be left to the academics to argue over time if the bailout helped or hindered the economy.

One thing is certain: people are angry.  People are fed up with their government.  Thankfully, I have a Congressman who listens to his constituency and stands on his principles.  I wish I could say the same for my senators.  All of the presidential candidates voted for the bill.  Great.

It was surreal how, regardless of party affiliation (although perhaps for fundamentally different reasons), the American people opposed this legislation.  Depending on who you read, the American people were against this at a rate of 80-95%.  America hasn’t been so united about their opinion since 9/11.  And what does the government do?  Goes against the will of the people.  From listening to the passion in people’s voices today, some incumbents will have longtime supporters voting against them and taking as many people with them as they can.

Time will tell about the way this bill helps our economy.  If it does not help in the way we were promised by our elected (and unelected) officials, there very well could be an uprising.  Even if the bill soothes the financial situation, October 3, 2008 will likely be the day we mark that our country was fundamentally changed. It will be up to the people of this country if we allow this change to be for the worse or for the better.  This election just got even more interesting.

Comments (0)
Categories : News
Tags : bailout

Public Service Announcement: (Some of) Your Money is Safe

By Matt · Comments (3)
Monday, September 29th, 2008

Since most people reading my blog are youth ministry folk, I’ll assume you have less than $100,000 in the bank.

If you have money at a normal bank, you don’t need to worry about it.  It is safe.  The FDIC insures accounts up to $100,000 dollars.  If you bank fails, you will get your money.  Stop panicking.

Investments are another story.  Looks like it will be a bumpy ride in the foreseeable future.  The S&P 500 lost 8.8% today.  Ouch.  The market has lost around 28% in the past year.  If you are someone who likes bargains, the market is on sale.

Comments (3)
Categories : News

The Bailout, Education, and Youth Ministry

By Matt · Comments (5)
Friday, September 26th, 2008

[Note: If your head is in the sand and don't know what is going on in the economy and the government right now, go to your favorite news website.  It will be on the front page.  I promise.  Read up.]

On Sunday morning during Sunday school, I asked my high school students, some of whom are seniors taking Government, if they had heard anything about the $700 billion dollar bailout plan currently in the news.  A few of them had heard something about it.  I asked if any of them had talked about it in school, and they said no, which was understandable since the Treasury didn’t get their plan to Congress until Friday.

So, I told them that they needed to ask about it in an appropriate class this week at school.  Wednesday night I asked again if they had talked about it at school, and the answer was no.  One girl who asked her teacher about the plan said that her teacher said, “Yeah, I’ve heard about it,” and that was it.

My seniors who were taking Government still hadn’t talked about it.  They were busy talking about John Adams or something.  Riveting.

Does this bother anyone else?  Regardless of the actual peril that our economy may or may not be in if Congress does not act, Congress is acting in ways that I have never seen.  And Treasury Secretary Henry Paulson sent a proposed bill to congress that included some crazy propositions:

(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States…

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

If I was a government, economics, or history teacher I would have had printouts of the bill submitted by the Treasury (you can read the text of the bill here, it’s only two and a half pages long) on the desks of my students on Monday morning.  In economics, we would talk about free markets, investments, supply and demand, regulation, and such.  In government, we would compare the powers requested by the Secretary and the proposed involvement of the government in the financial markets to the powers enumerated in the Constitution.  In history, we would compare our current situation to the Great Depression, which has been thrown around a lot in the news but is probably very overblown.

What should youth ministry’s role be in situations like this?  When significant things are happening in our society and aren’t being covered by the schools, should we step in?  Why aren’t schools addressing this?

Some of our students will be voting in the election on November 4th, but they don’t even know about what is happening in our economy.  Do we in youth ministry have a role in this?

Comments (5)
Categories : News, Youth Ministry
Tags : bailout, education

More on the Economy: Home Prices

By Matt · Comments (0)
Friday, September 26th, 2008

I’m fascinated by the current news happening in the financial markets right now.  For some reason it’s all very interesting to me.

One of the most telling article’s I’ve read in recent days is this article from the Wall Street Journal that shows the ratio of median home prices to median incomes.  From 1981-2000, the ratio held fairly constant around 2.66.  So, a family with an income of 37,600 would have owned a $100,000 house.

Starting in 2001 that ratio started to skyrocket until it peaked at around 4.10 in October 2005.  That same family making 37,600 would have owned a $154,000 home.  Quite a jump in only six years.

After the peak, home prices started falling, and we’re now around a 3.30 ratio.  At current rates, home prices won’t get back to normal until around January 2010, and aren’t likely to hit bottom until April 2010.

For fun, I calculated my ratio of house price to income: 2.79.  Looks like I wasn’t a dufus.

What would be interesting is to see a ratio of mortgage value to income, since people were not only buying houses at a higher price, but they were going from putting 20% down on a house to 0-down 100% financed loans.  Taking that into account, my ratio falls to 2.21.

Or maybe another fun statistic would be monthly mortgage payment to monthly income ratio.

If you don’t like numbers, sorry for boring you.

Comments (0)
Categories : News
Tags : economy

An Alternative to the $700 Billion Plan

By Matt · Comments (0)
Tuesday, September 23rd, 2008

I don’t much like the idea of the government playing in the markets with $700 billion.  For a possibile alternative, check out this link.  Let me know what you think.

Comments (0)
Categories : News
Tags : bailout

Democratic and Republican National Convention Analysis

By Matt · Comments (0)
Monday, September 8th, 2008

The best I have read thus far (and I have read quite a bit) comes from Inhabitatio Dei.  A quote:

As far as I can see there is little, if any possibility of a truly non-messianic politics in America, at least on the macro-scale. Our work in our wider communities must, I think take some other form in the years to come, focusing on fostering local economies, generating local bodies of political discourse, and fostering community development initiatives that take place in concrete and sustainable ways.

Check out the whole post here.

Comments (0)
Categories : News
Tags : DNC, Politics, RNC

Jesus Made Me Puke

By Matt · Comments (0)
Wednesday, April 30th, 2008

Such is the title of a new article on Rolling Stone’s website; the full title is “Jesus Made Me Puke: Matt Taibbi Undercover with the Christian Right.” In the article, Taibbi goes undercover and attends a three-day retreat with Cornerstone Church in San Diego Antonio, the church of John Hagee. I always find it interesting when non-Christians write about us, and this article is no exception. Even if you don’t go to a church like Hagee’s, chances are Taibbi would have similar quips with certain aspects of your community. Enjoy the read.

Comments (0)
Categories : Christianity, Ecclesiology, News

Is Barack Obama the First Postmodern Presidential Candidate?

By Matt · Comments (2)
Wednesday, April 16th, 2008

I was listening to the end of the presidential debate on the radio as I was driving home from church tonight and the thought in the title popped into my head. I didn’t think too deeply about it, but there were a few things he said that sounded a bit “postmodern.” It could explain a lot.

Maybe more later.

Comments (2)
Categories : News
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