Thoughts On Finance

Most American’s are thinking that with a National Debt of over 10 Trillion dollars why is this guy already spending this much money when he hasn’t even taken office yet.  Well, on some level, we all are aware that spending is actually what keeps the economy going, but let’s face it, we also know that we need our money right now, and most people are not running around spending all that they have.  So why does Obama think that his stimulus package will work when Bush’s didn’t.

The answer to that is both complex and simple.  When Bush set out to stimulate the economy, he did so by sending checks to individuals and families.  Great in theory, however most American’s who were already struggling used those checks to pay bills or stashed it away for a rainy day.  Therefore, we did not all run out and shop for new items and that in turn did not do for the economy what Bush had hoped.

In Obama’s plan, which does include checks to the American public, it however does not rely on them to be the stimulus.  It is offering a much more comprehensive and multi faceted approach to stimulating the economy which includes sizable tax deductions for businesses for each new employee they hire on.  This will help create jobs, which in the long term seems like it will have a bigger impact on people’s spending.  After all, you can’t be out spending if you don’t have a job at which you can earn some money.

If you look over the plan you will in fact see that Obama’s plan will help stimulate the economy which will not only help the individuals but also the businesses and the unemployment rate.  Overall, this plan is cheap compared to how much Bush has spent on bail outs in the last three months.  At least the Obama plan stands a chance.

Candidate Obama promised to make changes to the financial structure of the country, and mostly as a pro-consumer advocate and financial analysts are saying that he may in fact institute a credit card bill of rights.  What this basically means is that the industry has been ripping off people for years and they haven’t made us aware of any of the loopholes that they keep catching consumers in.

Obama, the candidate, put forth a pro-consumer platform that includes:

• Creating a credit card rating system similar to the five-star rating system used for other consumer products to assess card features. Issuers would be required to display the rating on all credit card applications and solicitation materials.
• Establishing a credit card bill of rights to ban universal default, prohibit unilateral changes to contracts and prohibit charging interest on fees.
• Reforming bankruptcy laws to allow families with huge medical bills to have their medical debts forgiven and allow homeowners filing for bankruptcy to adjust the terms of their mortgage so they can keep their homes.
• Capping interest rates on payday loans at 36 percent and requiring clear disclosure of loan terms.

Financial analysts, however, warn that these changes need to be made swiftly and in the beginning, as that is the platform that he ran on and that is what American’s are looking for.  If he waits too long, the excitement for change may be gone, and then it will be too late.  Many people believe that since this is what the people want Congress will probably try to get a consumer friendly bill signed by Bush before he leaves office, however there are others that think this is doubtful at best.

Honestly, we need something to help out the people in this country and although many people oppose Obama’s thoughts, especially those on finance, I think that overall we must do something to help the unemployed and the people who are losing their homes to foreclosure.  Something must be done to stop the madness, and the truth is doing something is better than doing nothing, so I guess we will see how this all pans out.  Things can’t get any worse than they are…or can they?