Saturday, May 29, 2010

Another Student Loan Nightmare

Today I read in another newspaper regarding how the Students loans are crushing the dreams of students who took them out. But it also how the parents in order for the offspring’s to get into an excellent school follow blindly into a debt trap in the hopes that if their offspring get that particular college degree, will open doors to them. But if it is true, even then it takes a lot of salary, which is rare in this economy to pay for all the debt.

Remember also those students loans are hard to extinguish even if you declare bankruptcy. And then there is the choice of the majors, if somebody is majoring in liberal arts or some other less popular or marketable major, even your Ivy League degree would not help you far enough. But you can’t say that it is entirely the fault of the students or the loan administrators, since the parents swayed with all the marketing of these prestigious schools and how much salaries their alumni commands, fall into that trap without realizing that it is just the average or the starting salaries, which can vary across majors and industries.

It is true that an Ivy League degree can open lots of doors not open to other less prestigious schools but it is ultimately your own hard work that counts in the end. An Ivy League degree can open up doors but once you are in, you have to prove your work and mantle if you want to move ahead.

Thursday, May 27, 2010

The runaway spending

The Federal Government is on a roll. Spending money like there is no tomorrow starting with the Stimulus Package (which is debatable if it was that necessary ) to the continuous stream of stimuli coming out of Washington, the latest being the business and job bill that will add almost 100 billion dollars to the Federal Debt. I don’t really understand how the hell we are going to pay for all of this when the economy is not growing that fast. We have not raised any taxes and spending has not been cut, so where is the money coming from. The answer the institutional and overseas investors (namely China and Japan) in the form of buying our Treasury securities. There is going to a time not in the distant future that our interests alone our debt will easily exceed 1 trillion dollars.

I just thought that maybe we will have a sensible government in Washington which will try to reduce the debt and the deficit but I don’t see anything of that sort yet. I am hoping against hope that somebody responsible will be able to start addressing our huge debt, unless we want to look like Greece, because even with our huge exports and resources, we would not be able to grow and continue funding our programs if we can’t find funds to pay for it from our own resources.

Death of a Metal Legend- Ronnie James Dio

A great Heavy Metal legend recently died. I was introduced to the Heavy metal genre when it was in its peak in the eighties by one of my friends and from then on I became a fan of it. Although I do listen to diverse genre buy I love the heavy metal genre the best. It is really sad that it went away long time ago. But as I was saying Ronnie James Dio of the band Dio had great albums like “Holy Diver” and “Last in Line” plus great songs like “Rainbow in the Dark” and ‘We rock”. He will be greatly missed.

Shape of Opinions

The people who are in different countries are influenced by their own media and their own environment. That is my conclusion after talking to one of the persons and reading the newspapers of different countries. It is hard to have your own opinion when the people around you keeps on churning out stories and conspiracy theories about what is going on in their country. Even if you try to form your own opinion and then air them, you are either accused of being naïve or just a puppet of foreign powers. You are shunned by your friends and other acquaintances and are in rare circumstances a target of threats.

Even so called educated people are swept away in these lies or half truths and then are ultimately convinced to join these people’s crazy theories. It is just reflection of diverting the problems of their own lives and blaming everything on other people and this obscures the real debate and no real solution is found for the problems.
It is thus this mentality of blaming every problem on others that lead to nowhere and absolves people of their actions and behaviors.

Wednesday, May 26, 2010

Oil Spill and Government

So the BP oil spill keeps on continuing and contaminating the coast of southern states. They have been trying to contain this for more a month but nothing seems to work uptil now. The Government did a mistake by not taking it over. I can understand it is a private company but when the livelihoods of millions of people are at stakes and the company is nowhere near successful to contain the leak, does it not becomes the responsibility of the Federal Government and take charge of the situation.

I mean by this time the government should have taken charge of the situation but it is still relying on the company to plug this hole and meanwhile wild estimates of oil leaking keeps on going from the low millions to tens of millions. Nobody inside or outside the government is putting much pressure on the Federal government to take charge of this situation. If the government can take over banks and put the tax payers’ money on the line. This I believe is more important since it will take years to replace the damage this oil leak has done on people, states and environment.

On the lighter Side:-Movies- Hostel Part II

Continuation of the Hit Horror film but not as great or surprising as before. The action scene takes too long a time to come and it finishes too fast with a continued ending as usual for Horror films. It is regarding three friends who go to Europe for a vacation and end up being guinea pigs for rich clienteles who kill for fun. Gore is okay and a bit graphic. Nothing special about it but if you want to continue to keep the score of how many they will make this series check it out then. Not recommended.

Monday, May 17, 2010

Is welfare state ending?

Well with the debt crisis getting out of control in much of Europe and the U.S. It is time to think if the welfare state on which these states are based on is really slowly getting eroded because I don’t see how much the taxes are going to get raised to pay for all the promises the politicians have given to the voters and how much they are willing to back it up with solid money. There is only so much the world (meaning the industrialized nations) can produce and if the population is on a decline (like that in Europe) then who is going to pay for all the benefits. Obviously you can’t keep on spending without cutting spending or raising taxes.

No body is thinking along this lines and all the politicians are doing right now is the immediate present or maybe a few years before the next election time. The xenophobic atmosphere in Europe would not allow for more immigration and the population is declining in much of Europe so the only way out is to borrow which they will have to at increasing interest rates but that is for how long. Nobody can borrow forever or the lenders can not lend for ever if they see that there is no way of getting their principal back let alone interest payments. Unless everybody from the voters to the politicians realize that we are on a collision course with uncontrollable debt, we will be in for a nasty surprise in not so distant future.

Misery Loves Company

As you all know by now that I am on unemployment line but also completing my undergraduate degree in accounting ( I already have one in Finance and an MBA in finance). So anyway I was just talking to someone at the school and he told me that he was unemployed since last year and that for some reason relieved me a little bit. Although I know that it is not nice to enjoy other people’s misfortunes but since I am in the same boat, it made me feel a much better that I am not alone. There are many people longer than me in the unemployment line.

Although we are all hearing news regarding the improvement in the economy and how such and such jobs are being created, but the truth of the matter is that jobs are being created very rarely and the employers are still reluctant to add jobs since the recovery is so uncertain and unpredictable and this European debt crisis is making them nervous and jittery. Unless we see a steady stream of good news all around in the market and for a long time, the job situation will remain very slow.

Finally the Europe wakes up

Finally after much reluctance and debate, the Europeans came out with a fund of nearly 1 trillion dollars to fund heavily indebted European countries. Although I proposed this one before with a more modest 250 Billion Euro fund but this fund money has also to be borrowed somehow. It did temporary calms the market (for like three days) but it did not camouflage the fact that the debts of the poor European countries can be pushed aside by giving them more debt which will essentially go back to the creditors and the Greeks won’t see much of the money anyway.

The basic thing that the markets are seeing is too much debt and not enough market and structural reforms. Even if you put more money into these countries, if they don’t have the means to raise their income, it will be just more debt. It is now time for Europe to figure out how to reform their job and business market because they can’t be rich always and their liabilities are increasing more than their income and this can’t continue in the long run.

The income tax trap when you walk away from your home

There are advises from some people that if are unable to pay for your mortgage and if you house is underwater (meaning you owe more than what your house is worth right now) you should just mail in the keys to your house and just walk away. But as being seen by many people, who should know better, the write-off amount of your loan is considered as an income by the IRS and you are in the hook for the taxes on that income.

A news on a website reflects on this confusion (which should not be if you do your homework and use common sense). People who thought that they can just walk away from the mortgage obligations are coming in for a surprise when they file their taxes that they have to pay for the amount of write off that the bank does if they don’t pay their mortgage . Many people are very surprised and worried about it but if you use reason and logic, there should have been no surprises. The people who are advising homeowners to just walk away from the house should also do a better job of telling them what their tax liability should be in case they do heed the advise. That is why I keep on telling people on this blog that financial knowledge and education is very important if you don’t want to get surprised on taxes and other financial matters.

Thursday, May 6, 2010

Disasters Galore

The Tennessee flood has devasted that city. Most of it is underwater and many residents’ homes have been destroyed. The mayor estimates the destruction is to the tune of more than one billion dollars. The last flood that came there was in 1976, so the new residents are not used to it.

The oil spill off the Gulf of Mexico is going to cost a lot of money in terms of environmental, livelihood of people and cleanup costs. A few months ago, the state of New York and New Jersey were hit by record snow and rainfall. How are we going to pay for all this? We are still locked in the Iraq war and the afghan war is nowhere in sight of winding down despite all the talks regarding withdrawing of troops from that place. Add to that the cost of the recession and the bailouts and we have more problems on our hands than we have resources (read money) to pay for it. Now we have to bail out Greece too (in the form of IMF loans which the U.S. is the largest shareholder).

As the folks who have been following my posts, we will eventually have to raise taxes, cut spending or both and it would not be pretty. The international obligations that we are taking on since nobody else wants to do it have left us pretty much penniless regardless of us being the biggest economy in the world. We will have to solve our domestic problem and prepare for contingencies and rainy days and for a while try to limit our international obligations for some time to come.

The Greek Drama unfolding-3

Due to the nastiness or you can say ugliness of what the Greek people will endure due to the proposed budget cuts and tax hikes and what the bailout money will carry with it the obvious penalties and pains, Greek Unions and people have come out on the streets and are waging violent protests against what they see as the failure of the government to not manage the government finances correctly. It is a sad story but I really don’t know how the increased taxes and budget cuts will raise the economy out of current problems. When the Greeks are not happy and all the violence shown around the world scares off potential investors and tourists, what other way there is to increase the revenues.

If Greeks fail to come out of the current problems then there is going to big trouble for other highly indebted European Countries, who will have high interest rates and limited access to international markets to raise funds for their economies or even like rolling over their debt with high interest rates.

Although Greece is a sovereign nation and will not run away with its debt obligations but still that is not how the international investors are seeing it now. This is a long term drama that will keep on unfolding in the coming years.

Wednesday, May 5, 2010

The failed bombing in Times Square, New York-2

The more details coming out of the suspect of the failed bombing in New York City, the angrier I am becoming. This guy had everything in his life that many people in the so called third world countries can only dream of and nobody ever did any harm to him and he wanted to blow up Times Square because he was so whacked out in his mind. It is shameful that just because a few bad apples are psycho, the whole race of one country then gets singled out.

No punishment should be small enough for this sorry excuse for a human being. I believe that if somebody is harming his country after taking an oath to uphold the constitution of the United States and defend it if necessary, there should be no mercy shown to that person. He should be given the full maximum punishment allowed under the law.
Even though I am still against racial profiling and I know that I can be subjected to it but I believe it is one of the many tools that the homeland security should deploy in order to find out who is or who wants to be threat to this country.

Tuesday, May 4, 2010

The Greek Drama unfolding-2

It is really interesting to see this whole Greek drama unfolding now even after the apparent agreement of the IMF and the European to essentially bailout out Greece by giving it more money on top of what it already owes. The unions there are threatening to give out strikes calls since they have been so used to getting easy money that now it is hard to endure sacrifices. Although the Greek government has essentially agreed to all the austerity measures that the EU and IMF has demanded, but now the hardest part comes to how to convince the Greek people that the day of reckoning has come and there is no other way out of it.

You see that even after the agreement of the bailout money, the international investors are not convinced that the Greeks will come through with all the cuts and pains that the austerity measures demands. They don’t seem to have any faith that the Greek Government will honor their agreement since it all depends upon how the unions react and how the Greek people accept this long term pain and hardship on their lives. It will be interesting to see if the Greek government succeeds in passing all the austerity measures and how far this crisis envelope other weaker European economies.

The Great Big Oil Spill

Now we have this massive oil spill off the coast of Louisiana and it does not look pretty. Although BP officials are saying that they will pay all of the cleanup costs of the spill but right now that is what they can see. But what about the hidden costs down the road. Remember the Alaska Exxon Oil spill, it has lasted more than 20 years and it is still not cleaned up environmentally.

Will the BP set up a fund to pay for the future damage to the environment and to the livelihood of the fishermen and other folks who depend on the sea for their survival and what about the costs of fishes and other seafood that millions of folks all around the United States consume every day, will BP pay for the high costs of seafood for years and decades to come. Simply cleaning up the site of the Oil spill would not do and this has to be taken into context. It is a long cleaning process that we will keep on seeing for the near future.

The failed bombing in Times Square, New York

This past Saturday, there was a failed bombing attempt in Times Square, New York. Thankfully due to the alertness of a T-shirt vendor, we were spared the worst of the casualties. Due to the diligence of the law enforcement officers of the New York city and state, we are constantly been protected by the worst of individuals who want to harm us.Despite all the efforts of the various terrorists’ organizations, we have been spared the death and destruction that accompany bombings.

In light of the fact that the terrorists keep on targeting New York City, it is now imperative on the Federal Government to concentrate more of the law enforcement funding in New York city. But the law enforcement people can’t do much if they don’t have the cooperation of the people of New York and the tourists who visit it. So we should all be vigilant and alert to any suspicious activity that we observe and report it immediately even if it is a false alarm.

Monday, May 3, 2010

On the lighter Side:-Movies- The taking of Pelham 123

John Travolta stars as a criminal out to extort 10 Million dollars from New York and is only interested in talking to a train dispatcher (played by Denzel Washington). The movie is action packed by foul mouthed with explicit language delivered by John Travolta. John is very calculated and creepy here with equal brilliance performance by Denzel but it can’t over come the shadow of label of being a remake (although it is said that they did change some stuff). Overall a suspenseful movie but if you really want to watch it then I would rather prefer The taking of Pelham One two three (with Robert Shaw and Walter Mathau-1974)- a brilliant and far superior movie with a surprise ending. This movie rated R with action and language- recommended with reservations.