September, 2009 Housing Crisis

Dru McInerney

2/27/2014

Collapse of the Housing Market

In September of 2009 14.4% of all United States mortgages were delinquent or in foreclosure. The current percent has dropped lower then 12% and has improved since 2009. Several contributing factors have lead to decrease in delinquencies and foreclosures. The United States treasury has implemented Troubled Asset Relief Programs (TARP). Additionally there has been a decrease in the need for Subprime Mortgages and Credit Default Swaps.

            Subprime Mortgages contributed to the housing crash of 2009. Subprime mortgages are loans and mortgages that are given to people with bad credit. The interest rate on Subprime Mortgages is higher then normal rates because of the risk. These rates are given to people who would not normally qualify for a mortgage. Many foreclosures took place in September 2009 because Subprime Mortgages were given to people who were proven that they couldn’t keep good credit, and ultimately were unable to pay high interest rates that come with the Subprime Mortgage. Many of these Subprime Mortgages were also Adjustable Rate Mortgages. Since they were adjustable the interest rates sky rocketed and made it hard for many Americans to pay there interest and keep their head above water. These Mortgages were run mostly by investment banks, which were able to use a Shadow Banking System that allowed them to mask the risk taking from investors.

The United States Treasury started several programs through TARP to help decrease the chances of foreclosure in the housing market. Initially, congress budgeted for $700 billion for TARP. However, due to the consumer protection act this amount was reduced to $475 billion dollars. This money was allocated to several different places. Percentages when to help the auto industry recover and even help stabilize certain banks. $46 billion of TARP did go to struggling families that had to prevent the homes from foreclosure. Currently, these TARP investments are becoming to be close to complete. The treasury has said they will continue to make TARP initiatives to help prevent home foreclosures.  There are currently two TARP programs that are implemented to help alleviate foreclosure on families. The Hardest Hit Fund and Making Home Affordable have both been used to help lower foreclosure rates since September 2009.

            

Survey On Money

Dru McInerney

Gov 490 Professor Miller

2/6/14

Survey On Money

I interviewed a panel of my friends that were mostly students in the George Mason business school. Their majors consisted of Economics, Accounting and Business Management. I felt out of the three majors that the economics major gave me the most detailed answers and I honestly had to look up several terms they used in there responses. The Accounting major seemed to give a very straightforward answer to my questions. And the Business Management Major fell somewhere in between.

The first question I asked was who invented money? The accounting major jumped in straight of the bat saying that Phoenicians were the first civilization to use money. The economics major danced around question not giving me a very straightforward answer, he wanted me to elaborate on the question apparently it was too broad. Business management major said people have been using all sorts of things such as livestock and coinage for money since the beginning of time.

Next question was what turns an object into money? The Economics Major described it as anything that has worth and a universal value. Something that can be used anywhere in the world. This reminded me of when Seaford described money as “Providing a measure of value.” Seaford also references how Greek coinage is what separates primitive and modern money.

Do you imagine a time where people don’t believe in money? The accounting major answered this question by referencing Germany post world war one. The Frank became completely worthless because the Germans were attempting to pay off their war debts. They most likely didn’t believe in the system of money when they had to cart thousands of dollars to the market to pay for bread. We then started to debate about whether in times of religious dominance did people believe in money or religion. The business management major referenced that even though religion was a huge factor during medieval times priests were still getting paid to save people. If you sinned you could use money to cleanse yourself.

My first question was how did the development of online banking change the money system? The economics major said that it changed everything and made money way more accessible and international. The accounting major said how actual paper money and coinage have become way less prominent because of online banking. This made me think back to Seaford saying that coinage made money modern. Could one day you make the argument that coinage is primitive and online banking is modern money?

Final question was what would a world without money look like? My panel all joked that they would definitely need a new major if that were the case. They then said it would be anarchy there would be no way of interacting and exchanging with each other. This made me think of the philosopher Pythagoras; Pythagoras had a philosophy that everything is made up of numbers. Numbers are everywhere you cant go anywhere without interacting with numbers. This made me think can you go anywhere in our world today without some sort of transaction that could be considered money?

Survey On Money Interviews

Person 1:

Name Jorden

Relationship: Friend

Age: 20

Major: Economics

When was money invented?

-it started when civilization started in the middle east.

What turns an object into money?

- Objective value of society

Can you imagine a time in which people might not believe in money?

- Yes, when it was direct exchange of goods and services. Goods and services are main exchange.

What effect did the Internet boom and online banking have on the way we perceive money?

-People use to not have as much faith in banks. People feel banking is safer and more involved

With mo money is there mo problems?

-yes, there is but also more luxuries.

Person 2:

Name Alex

Relationship: Friend

Age: 20

Major: Economics

When was money invented?

-Objects have been used as currency for thousands of years.

What turns an object into money?

-If it removes the coincidence of double wants and carries value to a group of people.

Can you imagine a time in which people might not believe in money?

-It will never not exist.

What effect did the Internet boom and online banking have on the way we perceive money?

-Mad it more virtual and much more liquid. Which allows for more transactions.

With mo money is there mo problems?

- No

Person 3:

Name Great Nate

Relationship: Friend

Age: 21

Major: Accounting

When was money invented?

-Phoenicians invented coinage. Bartering has been around since the time of man.

What turns an object into money?

-The perception of it value

Can you imagine a time in which people might not believe in money?

-Yea, it’s a time when people don’t see a need to base there self worth on coinage.

What effect did the Internet boom and online banking have on the way we perceive money?

- It made it more liquid

With mo money is there mo problems?

-Yea, people derive self worth from what money they have accumulated. More responsibilities

Person 4:

Name: Susan Stone

Relationship: Mother

Age: 54

Major: Art therapy

When was money invented?

-It has always been around, in different forms.

What turns an object into money?

-How a certain person perceives it

Can you imagine a time in which people might not believe in money?

-Yea, even right now there are communes and places that don’t use it

What effect did the Internet boom and online banking have on the way we perceive money?

- Made money more accessible

With mo money is there mo problems?

-Yea, brings out greed