LaxTV Forums | A Forum About The MCLA

Wondering how "true" this really is. As I plan my near future and graduate in May (hopefully), all I hear about is how the economy is going into the toilet.

Any of the intellectual geniuses on these boards have insight?

I wouldn't believe all the gloom and doom coming from various politicians (both sides of the aisle) or the media. They are all trying to buy votes, sell newspapers, and get better TV ratings.

You may not make 6 figures your first year in the business world, but if you have a decent degree and a good work ethic - you should have no trouble succeeding in this economy.

Just don't overextend yourself (No Range Rovers or Large Houses or Trips around the World). That is the biggest thing I see younger people doing wrong (financially) these days.

Ah, Sonny, the Looney is worth more than the Greenback. I call that a recession, nee a national outrage.

The market is going to have to absorb all those mortgaged backed securities that are out there, most worth nothing on the dollar. Not to mention that the government is considering issuing tax rebates. Now when has our government had to do that in a time other than a recession?

Usually there are always jobs out there. Unless you happened to pick a field that is putting out too many grads and is in a segment of the economy that is hurting. Many companies are very leery about additional staff right now though.

To add to both Sonny's and Knox's comments, the other big indicator for both lines of thought is the current personal credit situation. We are a consuming nation where vast majorities fall into two parts. In two ways: by living pay check to pay check and the use of credit cards (above their means). Additional personal lines of credit are starting to tighten and availability will tighten further. This will add to the economic downturn.

Some of the biggest mistakes I see people making when they graduate (assuming this is after getting a job) are over estimating how much money they will have. Locking in larger school loan payments because on paper this is what they can afford, buying big ticket items, etc....I would play it very conservative the first 6 months and then reexamine your finances. There may be some "hidden" things that you just can't account for. IE) housing and living regional costs, employer health care, moving expenses if employer doesn’t cover them, some have to spend a large sum just getting work clothes, you may have to pay for parking, utilities (you rent an apartment that has zero insulation, leaky ducts, isn't air tight and your 700 sq/ft flat will have a gas bill of 250/month). Then you want to start saving ASAP.....a 401k contribution comes out of your check. This is money you should forget you have. You may need to rack up some credit card debit upon graduating just to get your feet under you.

I really like Suzy Orman’s approach to young finances.

Zeuslax wrote:I would play it very conservative the first 6 months and then reexamine your finances. There may be some "hidden" things that you just can't account for.

I was just about to say this. Being 1.5 years out of school I can attest to it. Any fields that are in demand during a recession are always good routes. Consolidations, efficiency, anything that helps a company saves money, etc etc.

The other plus for recent graduates is that they are less expensive to hire than more established talent. While a recession would make the job market tighter, if you've got the credentials you should be able to find work.
It really helps to be creative - getting your foot in the door at a good company, even though it may not be your ideal job - is always a good plan. If you work hard you will get recognized and promoted in short order.
I would recommend reading a book like "What Color Is Your Parachute" - there is a ton of good advice in there - highly recommended.
On the personal finance side - lay off the credit cards!!!! You may want to get one to help establish your credit, but if you find you are not paying it off every month - beware!
Once you get a job, DO take advantage of the 401-K plan, and do the max you are able! When it is taken out before you even see it you won't miss it, and you will thank yourself to the heavens not too long down the road. The controller at my company is always amazed at the number of people that don't participate at all, even though there is a company match on the first X percent!! You're doubling your money instantly - risk-free!! Duh! But don't stop there, do at least 10%, and 15% if you can. Don't look at the market and say "it sucks" - NOW is the time to be a buyer, and if the market continues to slide - KEEP ON BUYING!
I also recommend looking into buying like a two-family house when you are able. There are lots of tax advantages to home ownership, and with the rental side your cost of housing is very low. You are also investing in your housing (and it will eventually go up) rather than just paying rent to another investor.
This may all seem unattainable when you are still in college, but keep these principles in mind and you will not regret it. Word.

I heard this afternoon that GM is offering buyouts to 10's of thousands of employees, so that they can hire lower-wage replacements - so there are some openings out there...
As far as imminent recession, it's here - but unfortunately we're not close to the bottom. Some striking numbers today from an NYT article...

The credit crisis is no longer just a subprime mortgage problem...As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists.
The running turmoil is also stirring fears that some hedge funds may run into trouble. At the end of September, nearly 4 percent of prime mortgages were past due or in foreclosure, according to the Mortgage Bankers Association.
That was the highest rate since the group started tracking prime and subprime mortgages separately in 1998. The delinquency and foreclosure rate for all mortgages, 7.3 percent, is higher than at any time since the group started tracking that data in 1979, largely as a result of the surge in subprime lending during the last few years...
The default rate for prime mortgages is still far lower than for subprime loans, about 24 percent of which are delinquent or in foreclosure...
And it is not just first-mortgage default rates that are rising. About 5.7 percent of home equity lines of credit were delinquent or in default at the end of last year, up from 4.5 percent a year earlier, according to Moody’s Economy.com and Equifax, the credit bureau.
About 7.1 percent of auto loans were in trouble, up from 6.1 percent.
On Monday, Fitch Ratings, the debt rating firm, reported that credit card companies wrote off 5.4 percent of their prime card balances in January, up from 4.3 percent a year ago...

Not a pretty picture. I think the bad news in the financial industry from bad debt hasn't all come out yet, people are very nervous, cutting back on spending, which will only accelerate the downturn.
Let's get out there and spend!

It's kind of amazing how companies that you've never heard of could have a potentially huge impact on our current financial crisis.
Ever hear of monoline insurers? I never had. I read the linked story yesterday, and then in the online news this morning it mentioned that Warren Buffet was willing to back up three insurance companies (for a steep price)- two of whom are in the attached article and were unknown to me.
An interesting read for those who care about such things...

http://www.newyorker.com/talk/financial/2008/02/11/080211ta_talk_surowiecki

LaxFan with the triple post!

In regards to the GM buyouts...I thought this was a good one:

http://www.theonion.com/content/news/gm_introduces_new_2008_line_of

It's kind of amazing how companies that you've never heard of could have a potentially huge impact on our current financial crisis.
Ever hear of monoline insurers? I never had. I read the linked story yesterday, and then in the online news this morning it mentioned that Warren Buffet was willing to back up three insurance companies (for a steep price)- two of whom are in the attached article and were unknown to me.
An interesting read for those who care about such things...

http://www.newyorker.com/talk/financial ... surowiecki

Can anyone speak to the mention of the "rogue French investor" without Googling it? Sounds like a super rich nudge of the market....ala George Soros and Buffet.

Beta wrote:LaxFan with the triple post!

As I've heard many times in my career - "I got three posts! It's gotta be a goal!!"

Laxfan,

If you think about what could happen to those companies should their credit rating go down, The Oracle's request looks pretty reasonable.

Sonny wrote:I wouldn't believe all the gloom and doom coming from various politicians (both sides of the aisle) or the media. They are all trying to buy votes, sell newspapers, and get better TV ratings.

You may not make 6 figures your first year in the business world, but if you have a decent degree and a good work ethic - you should have no trouble succeeding in this economy.

Just don't overextend yourself (No Range Rovers or Large Houses or Trips around the World). That is the biggest thing I see younger people doing wrong (financially) these days.

To add to Sonny's post:
-Take advantage of 401K plans ASAP( or an IRA if your company doesn’t have one)....Put the money away so you wont spend it. AND put it in multiple areas such as bonds and mutual funds (all your eggs in one basket is hardly ever sound financial advice). The earlier you invest the earlier you can retire.

-Buy a car with high MPG! Save the world and save money on gas. The car doesn't make the man...the man makes the car. Plus, ladies like guys that care about the environment.

-Eat healthy and exercise before work.....Your productivity will be through the roof, especially if you don't drink and stay out late during the week. Also helps with the ladies!

-Education, education, education!...Many companies will pay you back for post grad work. Do it! They can take away your car and your house, but not your degree. AND, the ladies like brainy guys.

-Health savings plans aren't a bad idea: a little pre tax money could help you out when you hurt yourself playing for your Men's club team.

-Ref or coach on the weekends for extra money...and a little extra excersise (more money in officiating). Money for the ladies.

-The US economy will always go through dips but has consistently been on the rise. Low dollar helps our exports.....we will bounce back from this sub prime mess.

- Good time to buy a house....low interest rates and bargains. Do it only if you are capable of taking care of a house!!!

-Lastly....have fun! Some of the best years of your life are ahead of you!

Adam Gamradt wrote:Laxfan,

If you think about what could happen to those companies should their credit rating go down, The Oracle's request looks pretty reasonable.

Yes, except he put one major stipulation on his offer - he won't back ANY investments tied to securitized mortgages - so all he's looking to do is back up their traditional markets of municipal bonds, which are exceedingly safe, but are not the root of the insurers' current problems. (He is a very smart man, you know?)
I don't know the ratio of muni bonds to morgage-based products for these companies - that would tell us a lot.

Low dollar = increase exports and more US jobs....reversing the effects of Clinton's China policy

http://www.cnbc.com/id/23163409

BUT...without high oil prices, the annual U.S. trade deficit likely would have shrank further. The petroleum deficit accounted for more than 40 percent of the total deficit in 2007 and hit a record $293.5 billion. We must do something about our addiction to foreign oil!

Initial claims for state unemployment insurance aid fell for the second straight week, slipping to 348,000 in the week ended Feb. 9, down from a slightly upwardly revised 357,000 for the prior week, the Labor Department said.

Add this to strong Jan retail data and Recession may be avoided.

AND Bernanke and Paulson agree.
http://money.cnn.com/2008/02/14/news/ec ... /index.htm

At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt. At the same time, overall consumer price inflation should moderate from its recent rates, and the public's longer-term inflation expectations should remain reasonably well anchored.