current macroeconomic situation in the U.S
Project description

Question: What is the “current macroeconomic situation” in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.)? What fiscal policies and monetary policies would be appropriate at this time?
1. Write your individual answers to the questions listed above together in essay format (minumum of 300 words combined in APA style), using correct economic terms covered in the discussions. If you only write 300 words, you probably won’t be able to fully answer the questions. Use the APA Template in Doc Sharing as a guide. You will also find the grading rubric for this assignment in Doc Sharing.
2. Key concepts to include in your paper–data trends on unemployment, inflation, GDP growth, expansionary fiscal policy tools, FOMC, easy money policy tools and other terms from this class.
3. You must use at least one article. Note: The textbook is not an article and cannot be the only source for the assignments. Use the DeVry Library as a resource for finding your references.

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• Safety in turbulent times: upgrading Europe’s rules on default and collateral protection.
• Authors:
• Levin, Mattias1
Wezenbeek, Rogier1
Hrovatin, Sebastijan1
• Source:
• Law & Financial Markets Review. May2009, Vol. 3 Issue 3, p218-223. 6p.
• Document Type:
• Article
• Subject Terms:
• *FINANCIAL crises
*STOCK exchanges
*SECURITIES markets
*COLLATERAL security
*FINANCE — Law & legislation
*LEGISLATIVE bills
*BUSINESS cycles
• Geographic Terms:
• EUROPE
• Company/Entity:
• EUROPEAN Commission
• NAICS/Industry Codes:
• 523210 Securities and Commodity Exchanges
523110 Investment Banking and Securities Dealing
• Abstract:
• In April 2008, the European Commission presented a proposal to amend the 1998 Settlement Finality Directive and the 2002 Financial Collateral Arrangements Directive. These two pieces of legislation provide essential rules on default and collateral protection. The value of clear rules in these two key dimensions have been amply illustrated by the ongoing financial crisis. This article argues that these rules needed to be upgraded to fit an evolving market place and outlines the major changes agreed upon.[ABSTRACT FROM AUTHOR]
• Copyright of Law & Financial Markets Review is the property of Hart Publishing Ltd. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.(Copyright applies to all Abstracts.)
• Author Affiliations:
• 1Financial Market Infrastructure Unit, Internal Market and Services DG, European Commission
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• more money and buys bad debts. The problem with this is that printing more money can cause inflation concerns. The government needt to outweight the cost and decide what level of inflation is necessary.

Economist with an emphasis in Macroeconomics study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the economy functions as a whole. Models are developed to explain relationships between these factors. Macroeconomic models and their forecasts are used by both governments and large corporations to assist in the development and evaluation of economic policy and business strategy.
Comment »For the past few years many people (no economists) have thrown around all sorts of phrases and economic and financial jargon like supply and demand, inflation, money supply, GDP, etc. that they heard a reporter rattle off on the nightly news (as if those things actually mean something) as causes of the current world financial crisis and the current economic situation in the United States (as well as the global recession). Yes, those terms are important, but only in other contexts! They are not causes of the financial crisis at all. Keep reading and you will see why.

In short, the primary root cause of the current recession and economic crisis was the huge increase in the issuance of subprime adjustable-rate mortgages and the CDO’s (collateralized debt obligations) that they made up. The amount of subprime mortgages issued in 2005 and 2006 increased drastically, while the issuance of prime mortgages actually decreased. Basically, banks loaned money (more than ever before) to people who would obviously default on those loans. People bought houses with these loans expecting housing prices to increase, but that didn’t happen.

 

Mortgages are securitized by the American government; they are pooled together and sold off in sections, which obviously spreads the risk and uncertainty to those who take part in purchasing them. This created a large, widespread web of risk, if you will, in that the securities are dependent upon their underlying subprime mortgage values. The value of the CDO’s and their securities decreased and were miscalculated to begin with. Ratings agencies could not accurately determine their value, thus more uncertainty existed. This is why so many Americans lost their retirement, which was largely based on these mortgage-backed securities.

 

Worst of all, the federal government encouraged the purchasing of these securities without knowing the underlying risk involved. The web of risk was not limited to the US; it was worldwide (and still is). Major corporations like AIG, Citi, Chase, Bear Sterns, etc. held many of these risky CDO’s and when they failed, everything that depended on them failed (many asp