Tag Archive | "Finance"

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Stimulus Package Deal: Did Partisanship Stop at the Water’s Edge?

Posted on 29 January 2009 by Jacob Jasperson

The “American Recovery and Reinvestment Act” of 2009, the proposed government stimulus package,, is set to be introduced sometime in the very near future. The legislation is supposed to focus on job creation, state and local stabilization, infrastructure and energy efficiency, among other things. How effective was the new administration at getting what they wanted into the proposed legislation?

Some brief points of the bill are as follows:

$454 million aimed at modernizing Agriculture Research Facilities
$350 million for Watershed and Flood Prevention Operations
$2.825 billion for broadband loans and loan guarantees
$3 billion for the Edward Byrne Memorial Justice Assistance Grant (anyone know what that is?)
$400 million for “Science” (that’s really what the bill says)
$4.5 billion to improve, repair, and modernize Department of Defense facilities
$250 million for the Mississippi River and its tributaries
$335 million for HIV and sexually transmitted diseases prevention programs

The bill isn’t all pork, however. There are several good provisions, including money allocated for small business tax relief. But the real question you probably have right now is, “so what?”

I don’t know how many of you are planning on getting jobs in the next 6-12 months, but if you are than this bill will directly affect you.
I don’t know how effective this piece of legislation will be at increasing jobs or capital. I don’t know how effective it will be at lessening the burden that many American’s are shouldering right now. I don’t know how effective it will be at increasing government transparency (another main portion of the bill). That is all to be determined, based on the final language of the bill and the response of the market. But if the aim of the Obama Administration is to create jobs and lift us out of this recession, I doubt that increasing our funding of “science” is going to accomplish that.

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Top five reasons the auto industry is insoluble

Posted on 21 November 2008 by Jacob Jasperson

With news in the past week that GM, Ford and Chrysler, the big three, would be seeking part of the financial industry bailout to stay afloat, one has to wonder what exactly is going on right now in this economy. This economy that was built on the foundation of “life’s tough, so what?” This economy that manifests itself in profits and losses, every man, woman and child for themselves, take what you can get and give nothing back. When did we let ourselves get to the point of having companies that were “too big” to fail?

I know there are many out there who feel the auto industry deserves to be saved; we can’t afford to lose all those workers, those workers can’t afford to lose their salary and allowing the big three to go under will devastate the economy.

All valid arguments, but I would like to add something to the debate. The auto industry is insoluble. I’m sure if you’ve been watching the news or reading a newspaper you’ve heard that argument. I would like to outline here the five reasons the auto industry in the United States cannot be saved.

1. In a global economy, let others do it better. Adam Smith would be rolling over in his grave if he heard about the auto industry in America. Capitalism is all about the most efficient producer producing (i.e. absolute advantage). Let’s be honest here, Japan makes a darn good car. And they can do it for relatively cheaper than here because they don’t have to pay union wages or benefits. This does not mean, however, that they cheat their employees or deny them a fair wage; for one thing, Japanese wages don’t have to include healthcare costs.
2. U.S. auto makers make bad cars. Gas guzzlers, poor designs, unreliable. The last few models to come through the big three have been better, but you can’t make up for years of poor manufacturing. People have a much longer memory when it comes to bad products. This is the U.S. auto industry reaping what they’ve sowed.
3. Pension costs add $2500 per car. I can buy a car cheaper than that! OK, maybe not, but still, you get the idea. Pension systems are terrible and not built for long term use. Any normal business would see that IRA and private accounts are clearly the way to go, and make the transition. The big three wasn’t able to do that.
4. GM has 7,000 dealers compared to Toyota’s 1,500. This goes hand in hand with my second point: not only do domestic auto makers make bad cars, they make them in all varieties. Toyota’s small numbers of large dealers make them better equipped to advertise, market, and sell their product. Why doesn’t GM simply close some of these stores? Many of them are protected by state laws, making them very expensive to close.
5. Ford burned through $7.7 billion in cash in the third quarter. Does anyone think another $25 billion is going to make any difference?

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What does the Federal Reserve do anyway?

Posted on 06 November 2008 by Jacob Jasperson

Last week we saw the Federal Reserve taking greater steps to try and stem the tide of economic decline here in the United States. Interestingly, we also saw central banks around the world taking similar actions, with China and Norway cutting rates along with the United States.

It is also interesting to note that the Federal Reserve did not consider high inflationary pressures as a concern while cutting rates. It was the first time in months that inflation was not mentioned. Immediately following the rate cut, we saw the Dow Jones gain almost 300 points and the Nikkei up almost 3.5 percent. The Fed also indicated that there would be more rate cuts to come, saying “the downside risks to growth remain.”

What does all of this mean? Does the Federal Reserve really have any control over the stock market? How can rate cuts here affect the Nikkei index in Asia? What rates are we cutting? And who is this Ben Bernanke character? With rates approaching historic lows and the economy still on a slide, we at The Warrior thought it would be a good time to educate our readers on what exactly the Federal Reserve does.
Let’s start with rates. The Federal Reserve has direct control over two rates; the federal funds rate and the interest rate. The federal funds rate is the rate at which private depository institutions can lend federal funds to each other overnight. Banks are required to maintain a certain level of federal funds at the Federal Reserve. In essence, this rate is the rate at which banks can trade federal funds overnight with each other.

The actual rate is determined by the market; the rate the Fed sets is the target rate. The Fed will try and align the target rate with the actual rate by adding or subtracting from the money supply.

The interest rate is the rate at which banks and private depository institutions can borrow from the Federal Reserve. This rate generally follows exactly with the federal funds rate, but at 100 basis points (1 percentage point) above. This encourages private institutions to seek all other forms of borrowing before coming to the Federal Reserve.

So what? What does any of this have to do with the stock market? The amount of money in the economy and the availability of that money to consumers has a direct impact on consumer confidence and spending.

If banks are not encouraged to lend money to consumers, consumers will have less money to spend. If consumers have less money to spend, there will be less of a demand for many goods. Lower demand equals lower prices. Lower prices are good in a robust economy, but when people are looking for work it’s not such a good thing. So the Federal Reserve cuts interest rates when the economy is in a slow down.
You might be asking, what’s the downside to cutting rate? Well, if banks are encouraged to lend money, more consumers will have money. Take the train of thought in the above paragraph and reverse it; you’ll end up with higher prices at the end. Inflation is the major downside, and it’s something the Fed watches closely.

Now that you have a better understanding of how the Federal Reserve works, you can apply it to your life. Keep an eye on what the Fed is doing; it will have a direct effect on your life now and after graduation.

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Election 2008: Political economics 101

Posted on 23 October 2008 by Jacob Jasperson

With the election drawing near, and many voters still undecided (even here at Marquette) the Warrior thought it would be a good idea to shed some much needed light on the two candidates, particularly their economic policies and the impact it would have on Marquette students. All information and statistics has been taken entirely from the two candidates websites, unless otherwise noted.

Perhaps the focal point of Senator Obama’s economic plan has been tax cuts for the middle class, not the wealthy. In fact, it’s in the first paragraph of his economic plan, along with stagnant wages and rising prices. There are several points to Sen. Obama’s plan; in the interest of time, I chose the three points that I thought most directly pertained to Marquette students:

Windfall profit taxes on big oil
$50 billion to jumpstart the economy
End tax breaks for companies shipping jobs overseas

The windfall profit tax he proposes would tax excessive profits that oil companies make in order to fund his $1,000 emergency energy credit. This credit would be given to “American families” (though this term is not clearly defined) to help pay for rising energy bills. While the $1,000 may be a nice supplement for families, the tax used to pay for it would drive up the cost of oil, leaving American families with higher bills to pay in the end.
Senator Obama’s $50 billion plan to jumpstart the economy is actually a plan to protect one million American jobs that are in danger of being lost, according to his website. It is broken into two parts; $25 billion for a State Growth Fund, and another $25 billion for a Jobs and Growth Fund.
Senator Obama also mentions later in his website the need to create a National Infrastructure Reinvestment that would be in charge of funding road, bridge, and other infrastructure repairs. Senator Obama plans on allocating $60 billion over three years, which would negate the usefulness of the Jobs and Growth Fund (designed to do the exact same thing, as per his website).

The last point I want to talk about is a little misleading. Senator Obama wants to end tax breaks for companies that ship jobs overseas. While I agree that we need to encourage producers and manufactures to keep jobs in America, I don’t think we will be successful by taxing them more than is fair. The tax break Sen. Obama is referring to is the difference that companies need to pay when they ship their products from other counties into the United States. If the tax on the country of origin is less than the tax rate in U.S., the company must then pay the difference between the two – but not the whole tax. Ending this practice would in essence be an over taxation, and would discourage trade with the United States. On the other hand, one part of Senator Obama’s plan that makes a lot of sense is his worker retraining program. He wants to increase funding for worker retraining, which will be crucial in this age of globalization.

Much as the focal point of Senator Obama’s plan is middle class tax reform, Senator McCain has preached tax cuts across the board, in conjunction with decreased government spending. This is perhaps the single largest ideological difference between Senators Obama and McCain – big vs. small government. The three main points of Senator McCain’s plan that I want to talk about are:

Government reform
Better Healthcare
Supporting Small Businesses

Government reform has been a hot button topic in the campaign cycle. Senator McCain states on his website that he wants to bring the budget to balance by the year 2013, before the end of his first term in office. He cites several ways of doing this; reasonable economic growth through lower capital gains tax rates and corporate tax rates (to keep jobs here in America), a one year spending freeze on all non defense, non veterans discretionary spending, and fiscal discipline. The one year freeze I find particularly interesting; a good idea perhaps in theory, with question marks on the application side.

Another hot topic in the campaign has been healthcare. Senator McCain seeks a market approach to fixing healthcare; he wants to lower costs through competition and technology improvements. He also specifically cites smoking on his issues page, stating that he wants to increase smoking cessation programs – perhaps an unpopular idea among hard line conservatives, but one I find to be intriguing. He also talks about transparency in healthcare costs. This is something you can appreciate if you’ve ever received a hospital bill.

Finally, Senator McCain talks about supporting small businesses. One of the main points he makes in his small business section is that by lowering the costs of energy, we can eliminate much of the overhead these small businesses pay. He goes into greater detail in his energy section, but does strongly support drilling domestically for oil, along with increased nuclear energy and clean coal. Senator McCain also supports decreasing the corporate tax rate from 35% to 25%, a move he says will help American stay competitive in this global economy. While I agree lower corporate tax rates are essential for growth here in the U.S., it certainly isn’t essential for small business growth, as many of these businesses are organized as a sole proprietorship or LLC. He also takes time to mention free trade in his small business section, which he feels will open the United States up to more business opportunities, rewarding the small business owner looking for that niche.

Senators Obama and McCain have economic plans as different as any I’ve ever seen; both have good points, and both have bad points. We have two very different approaches to solving our economic crisis, and you as the voter get to decide which one is the best. Don’t take that responsibility lightly. Get informed on the issues that matter to you; the economy, trade, labor, social issues, whatever you are passionate about. Apathy in life will only get you so far; to quote an episode of the West Wing, “Decisions are made by those who show up.”

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Broke? A few simple ideas that will have you having fun without spending a lot (or any) money

Posted on 23 October 2008 by Victoria Caswell

If the economic slump has got you down, there are several ways to have fun for very little while staying around campus.

Late night is always a good option when you want to do something for free. A few weeks ago I made caramel apples, listened to a ghost hunter, ate popcorn and carved a pumpkin. Although there isn’t always this much to do (there was also a Haunted Marquette ghost tour, but it started way too late for me), it is always a good time.

Bingo is also completely free. I haven’t gone yet this year, but there are always some pretty good prizes and at least there is popcorn. The only downside is to get the good prizes you have to spin a wheel. The one time I did this I spun men’s socks and was understandably upset.

Another option is movie nights in the Varsity Theater. With a MarquetteCard, movies are only $2, but without it’s still only $3. I wouldn’t recommend this for a first date, but when gong out with friends, it’s pretty fun. I saw Wall-E a few weeks ago, and I admit I would not have paid $10 or however much it costs to see a movie at a real theater, but it was well worth my $2.

Lectures are also a great place to get free food. I recently went to a lecture that was pretty boring, but the cheese platter and juice afterwards were enough to make me happy after a long day of work. Information sessions are also home to smorgasbords of free food. I mean, what is one way to draw in students to join a club? Free food. The downside to this is ending up on an e-mail list for all eternity, much like the ones that I am still on from using this strategy my freshman year.

This might be a stretch, but if there is anything else I enjoy, its free furniture. Whenever buildings are remodeled, tons of furniture is marked for discard. It is at that point that I swoop in and take a free chair, or more recently a free desk. Although there might be some defect, and this can also lead to pulling a chair several blocks (in my case eight, all uphill), it is very fulfilling to know that it probably cost less to furnish my apartment then it costs for some people to eat for a month or drive across town.

If getting things for free doesn’t work out, the next option is taking full advantage of getting a student discount. The Rave offers $5 off if you buy your tickets there a few days before the show, Dragonfly on Brady Street gives 10 percent off each purchase if you show your id and this also works at most movie theaters, including the Oriental.

Have fun and I hope that these tips work.

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Tough Economy…Maybe I’ll Go to Grad School

Posted on 09 October 2008 by Jacob Jasperson

Most of us have invested a great deal of time and resources into our continued education with the hope that when we graduate it will return great dividends. And since we all attend Marquette University, we have invested significantly more than others; again with the hope that, in the long run, it will pay off.

And now, for some of us, the hour is at hand. The real world beckons. Just one little problem…well, maybe not so little…the economy stinks. Investment banks are collapsing, mortgages are defaulting, companies are laying off employees left and right. Not the image of confidence you want in your head when you go in for an interview. To give you a bit of an idea about how rough the market is, here are some facts:?

According to the Bureau of Labor Statistics, in the past three years 8.3 million people have lost their jobs. 43% of those lost a job they had held for at least three years, and compared to the previous three year period, a significantly smaller percentage of those workers found jobs again.

Wisconsin lost 23,000 private sector jobs in the past year, according to the Wisconsin Department of Workforce Development.
According to the Economic Policy Institute, 8.4% of Wisconsin is underemployed (which includes unemployed residents seeking but not finding work, discouraged workers, and part time workers trying to find full time jobs).

Ok that’s the bad news. And while you can’t single-handedly turn the economy around (contrary to the belief of everyone that runs for president), the good news is you can do something to prepare for it and make sure the time and money that you, or your parents, invested in yourself does not go to waste.

1. Plan, Plan, Plan. You need to be actively following market trends, figuring out what careers are hot (health care, computer programmer, teacher – surprised?) and which ones are not (anything at all related to investment banking…just kidding). Careers with a lot of potential and room for growth are the ones you want to be pursuing.

2. Double Major. This is so easy to do in the College of Business, and it can be extremely helpful down the road. At the very least, it makes you more marketable to employers.

3. Market Yourself Effectively. Revise your resume; talk about your skills. You need to be able to quantify to employers why you are an asset to the company. You need to show the company that you are more than simply a labor expense, especially in a tight economy. Point out your strengths, skills, and what you bring to the table.

With a little extra work, you will be able to conquer the job market and start getting that paycheck in no time.

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Nowhere to run, nowhere to hide: How the economic crisis could affect Marquette

Posted on 09 October 2008 by Cathleen Bury

This past Friday afternoon, President Bush set a historic precedent when he signed into law the Emergency Economic Stabilization Act of 2008. The bill, referred to by many as the “bailout bill”, is the culmination of two weeks of bipartisan work in both the House of Representatives and the Senate. It allows the federal government to purchase up to 700 billion dollars worth of troubled assets, specifically mortgaged-backed securities, in hopes of stabilizing the economy and improving investor confidence. Ultimately, the government hopes to resell the purchased assets at a profit ensuring, according to President Bush, that “the cost to taxpayers will be far less than the initial outlay.”

But what exactly is “far less” than $700 billion? And as a Marquette student, who does not own a home nor have significant amounts of money invested in freefalling stocks, you may ask yourself, why am I being asked to pay to stabilize a situation in which I seem to have so little invested?

Many students at Marquette recognize the transient nature of their residence in Milwaukee, so they rent apartments, rather than purchase homes. They take on demanding course loads, which leaves few students time enough to maintain full-time employment. The lack of a full-time job certainly leaves most students without an excessive amount of disposable income, but it also means that they don’t have life savings, our future children’s college funds or our own retirement funds tied up in plummeting stocks.

So, as someone who is not watching their home value decline or their life savings evaporate, as someone who could have very well continued on with daily life oblivious to any sort of fluctuation in the stock market, turning on the television and hearing President Bush proclaim that America was in an economic “crisis” seemed a bit dramatic. Few Marquette students, if any, were glued to the television as the bailout bill was debated in the Senate and the House of Representatives, and very few singled out the bill as their sole topic of conversation. Blame what some students and faculty refer to as the ‘Marquette bubble’, but around campus, there did not seem to be an extreme amount of concern for recent economic events, and certainly nothing approaching panic.

However, the contents of this bill and the precedents its passage has set are of grave importance for all Americans. Never before have taxpayers been asked to become so deeply involved in the events of Wall Street. To many Americans, intense government participation in the private business sector seems fundamentally against the principles of capitalism upon which this country’s economic system are founded. Yet this bill forces all Americans to become invested, through their tax dollars, in the fates of private businesses, and in doing so sets a dangerous precedent for future levels of government involvement in the private business sector.

Most Marquette students are at the mere dawn of their tax-paying careers; for many, their investment in the federal government will only increase. With the federal government long operating in the red, the passage of an additional $700 billion bill adds further burden to the already unenviable position of young American taxpayers. However, the real issue is not the $700 billion check that Congress just forced taxpayers to sign. Unfortunately, this piece of legislature is a mere symptom of some fundamental problems in this country’s economic system.
According to Dr. Abdur R. Chowdhury, professor of economics in Marquette’s College of Business Administration, the current economic problems were created by inadequate regulation of private businesses. “It started with the housing market. Lenders gave out mortgage loans without looking at buyers income or wealth.” And although there were laws that regulated the actions of these lenders, “…they were never effectively enforced.” Thus many Americans were approved for loans on homes that they could not really afford. The lack of oversight allowed lenders to make these risky loans, which lead to an increase in demand for mortgages and an apparent increase in property value.

However, most lenders knew and chose to ignore the fact that the recipients of their loans would not be able to pay them back. These lenders accumulated millions of risky mortgages and used falsely inflated property values to back up the assets of many non-housing related companies. Many unqualified buyers soon began to default on their loans, increasing the number of foreclosures. Property values began to decline as more and more homes became available, leaving many homeowners owing more on their mortgage than their house was actually worth.
Furthermore, the investments backed by these mortgages began to collapse and affect assets of non-housing related companies, such as Lehman Brothers and AIG. The decline of mortgage-backed assets has drastically decreased these firms’ capital and liquidity. Across the country, banks have become wary of lending money and often impose extremely high interest rates on the loans that they do grant. The recent sudden withdrawal of credit has paralyzed businesses that rely on daily credit use, and driven many into bankruptcy. The entire financial institution is currently taking the hit for the reckless business strategies of mortgage lenders. The federal government has tried to remedy the situation by buying up the mortgage-basked assets from banks. This will release banks from their ties to these impaired assets and hopefully encourage further lending between banks to eventually stabilize the financial market. Ultimately, the sheer enormity of the $700 billion bailout bill is indicative of just how grave America’s economic troubles have become. To Americans heavily invested in the fate of the market system, the bill still does little to soothe the well-founded fears about their investments. To every American, the passage of this bill should drive home the message that this country’s future economic security is far from guaranteed.

Though many Marquette students are not part of the group that is heavily invested in the fate of the market, we will still see the effects of the current economic situation in many different areas. Marquette students nearing graduation will enter a job market drastically different from just five or ten years ago.

According to Chowdhury, “Business firms have been affected by the lack of liquidity. Firms will take on a waiting attitude; they will not invest, expand, hire.” Indeed, a government report issued last Friday reveals that September was the ninth straight month of job loss in the United States, and the largest monthly job decline in the past five years. This means that unemployment rates, already at 6.1%, will likely continue to rise. For companies looking to scale down their budgets, paid internships are usually the first things to get cut. That means many of the jobs Marquette students held last summer might not be available come this May, or might not be paid positions. Marquette seniors graduating this year will likely find themselves entering a job market with fewer opportunities and far more competition. This trend will also affect graduates applying to graduate school; as fewer people are able to find jobs, more and more will choose to go back to school, increasing competition for entry into the school, for scholarships and for grants.

One of the more immediate and most relevant concerns for many Marquette students will center on student loans. Recently, there has been a drastic decrease in the market’s liquidity. This means that banks are unable to or are extremely cautious about lending money, which is typical behavior in a recession. As credit institutions become increasingly wary of lending money, the opportunities for funding student loans diminishes. Students receive either federal loans, such as a Stafford or a Perkins Loan, or private loans, from private banks or companies such as Astrive Student Loans and Sallie Mae. Of the two, private loan institutions are the first to be affected by changes in the market. The federal government does not guarantee these private loans, so banks run the risk of students defaulting on their loans. Companies like Sallie Mae, which grants both private and federally backed loans, grant private loans by borrowing money from other investors and lend that money out to students. The companies make a profit when students pay back their loans plus interest.

However, with less money available for lending, there is widespread fear that the initial rate at which these companies borrow money will be higher than what they will earn from lending this money out to students. Investors in these private companies are becoming increasingly unconvinced that companies like Sallie Mae will be able to turn a profit, and thus increasingly unwilling to invest in them. Indeed, Sallie Mae reported over 1.5 billion dollars in losses at the end of last year and, despite a stronger performance this year, has still watched its market value plummet over 50 percent in the past four months. To address these investors’ fears and the financial losses these companies have experienced over the past months, many companies such as Citigroup, Bank of America and Wells Fargo have made large cuts in the number of student loans they grant, or have stopped making private student loans entirely. The companies that continue to grant students private loans are raising interest rates and tightening restrictions on which applicants receive loans, decisions that will no doubt affect Marquette students who rely on private loans.

However, even Marquette students who rely on federal, not private, loans to assist them in paying for tuition may eventually feel the effects of the nation’s economic situation. These federal loans are far more common than private loans. In some cases, the loans that Marquette students receive passes directly from the federal government to the university and then to the student. In 75 percent of cases, students receiving a federal student loan receive a second type of loan, one that is funded by private capital and made available through private companies such as JP Morgan Chase or Citibank. However, the federal government guarantees these loans, so banks assume no risk of student default. Furthermore, the federal government guarantees the interest rate on these loans, so any change in the rate would require a change in federal law. This further removes their interest rates from influence of the market, and makes it less likely that student with federal loans will see increased rates. Last year, Congress approved legislation to secure money for federal student loans through the 2009-2010 academic year, so students relying on these loans appear to be safe for now. However, if the national trend of decreased capital availability continues, even federal loan lenders could find themselves unable to secure money for student loans. For Marquette students with federal loans who will not graduate before July 2010, the fate of the federal loan program remains an issue.

The recession will undoubtedly be felt right here on campus as well. Many states are already trimming down educational costs by cutting courses, programs and other student activities. As a private university, many of these government cuts will not have an effect on Marquette. However, that does not mean the university will not be influenced by market changes. On the contrary, Marquette’s status as a private university requires that it rely heavily on private donations. Though many of the large donations that we hear about—the $25 million and $50 million donations to the engineering college this past year, for example—are made in anonymity, it is important to remember that these donors are not just nameless entities, infinitely wealthy and impervious to economic changes. They are real people, Marquette alumni and friends, and their gifts create the experiences that all current Marquette students share. Their donations cover the 38 percent of the cost of education not covered by yearly tuition. They have created and continue to sustain scholarships like the Raynor and Ignatius Scholarship, as well as Marquette’s student-athlete scholarships. These donations also contribute to campus safety programs and access to and improvement of student computer labs, as well as sustain numerous extracurricular activities.

From just that brief, incomplete overview of how donations benefit the lives of Marquette students, it is obvious that the extent upon which the university relies on the generosity of these donors cannot be overstated. As the country’s economic situation continues to decline, these donations will unquestionably drop. Speaking at the MUSG-sponsored forum on September 30, Father Wild acknowledged the donors’ vital role in maintaining and developing the university, and admitted that the “environment for fundraising is a lot tougher than it’s been.” To the many Marquette students who benefit from the university’s current donor-sponsored programs, that is an extremely concerning statement. Obviously, the university will have to respond to the decrease in donations, and how they address the situation will assuredly impact the lives of students However, Marquette University has weathered troubled economic times before, and for all those students anxious about how the university will address the problems of the coming recession, it is reasonable to examine how the university handled itself in a previous financial crises.

In 1931, the university was set to celebrate the 50th anniversary of its founding. Father William Magee, president of the university since 1928, was in the midst of planning a large celebration and a fundraising drive when October 24, the infamous black Thursday, came and sent the country spiraling into what is now known as the Great Depression. Federal student loans as most Marquette students know them had not yet been created, and as more Americans fell upon hard times, many families could not afford full tuition. Thus the number of full-time Marquette students decreased. The rise in unemployment also meant increased competition for any work, and the part-time jobs once available to students became scarce. As private donations used to fund undergraduate scholarships decreased, the awards and the students who relied on them disappeared from campus.

The decrease in students put further financial strain on the private, tuition-dependant university. Aside from canceling both the celebration and the drive for funds, Father Magee was forced to take other actions to keep the University from closing. Cuts were first made in the arts; the College of Music was officially closed in the summer of 1930 and the radio station disappeared in 1934. Student publications, including the Marquette Tribune, the Hilltop and the Marquette Journal were more than once threatened by a lack of funding, and all were forced to significantly reduce their size. Periodical subscriptions and the amount of new book purchases in the library were slashed, as were faculty salaries. As the budget grew increasingly tight, Marquette began to hire more and more Jesuit priests to save money on faculty salaries.

Since the nature of Marquette University as a private, tuition-dependant institution has not changed, previous responses to an increasingly tight budget are still relevant to students today; if the University falls upon hard times again, students can expect to see the same sort of actions taken in the past. Ultimately, it seems increasingly unlikely that students and the university will remain unaffected by the current economic troubles. Certainly those poised to graduate and move beyond the Marquette campus will be forced to address those troubles sooner than some other students. However, this recession will eventually have profound affects on all of us, and the university, as well as each individual student, must be prepared to address what are sure to be difficult times ahead.

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Stop keeping money under the mattress

Posted on 24 September 2008 by Jacob Jasperson

Financial instability, turmoil in the market, rising prices, falling stocks, mergers, foreclosures, the Four Horsemen of the Apocalypse; all signs of a market on the brink of the R-word. We won’t say the R-word here at “The Warrior”—it’s never a good idea to mention it out loud. But if you watch the news at all or listen to the radio or really are alive in any way you’ve heard analysts mention their likely dooms day scenarios.

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Most economists would agree that we are currently not in a recession. The generally agreed upon definition of a recession is an overall slowing of the economy. We run into a few problems here because there are many measures of the economy and hardly anyone can agree what a slowing is. So we turn to the National Bureau of Economic Research, a non-profit, non-partisan organization which assigns dates and lengths of recessions in U.S. history. They define a recession as, “a period of declining output and employment.” Whether we are currently in a recession, sliding into a recession, or coming out of a recession is really all semantics at this point; if you polled Americans they would all agree the economy is somewhere they don’t want it right now.

Therein lies the problem: consumer confidence. One of the key indicators of economic well-being, it has been far from stellar the past few years. Blame it on whomever you like, but it needs to change. We at “The Warrior” want it to start right here at Marquette. It’s no secret that the key to success is buy low and sell high, and what better time to buy than right now. Stock and home prices can’t get much lower, and every indication is pointing towards the economy rebounding in a few years or so. That makes this the perfect time to invest. But what to look for in an investment?

Real estate, despite what the market experts are telling you, is a good investment opportunity. There is a limited supply, and even though demand is down now it has to pick up eventually. Real estate is a great long term investment; that is if you have a couple hundred thousand dollars lying around. On second thought, don’t invest in real estate unless you have a lot of capital.

When looking for stocks, you want a stock with a high yield and low price. You also want a stock that gives out dividends. Why? The same reason money now is worth more than money in the future – you can reinvest. Diversify, diversify, diversify. You don’t want to put all your money in tech stocks and then find out that Silicon Valley burned down last night.

Finally, look down the road. It’s not a bad idea to start a Roth IRA account now, even if you can only afford to put a little in at a time. That’s the beauty of compound interest.

Don’t listen to CNN or CNBC all the time. Remember, they get paid to tell people what they want to hear, and for some reason people want the end of the world scenario right now. You can get a leg up on everyone else if you start now.

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New meal plan: do the numbers add up?

Posted on 10 September 2008 by Jacob Jasperson

Marquette has finally implemented a new meal program, due in large part to the fervent and consistent complaints that students brought to the Office of Residence Life. The Marquette meal plans represent a fairly competitive market, if we assume that each individual meal plan represents an actual firm (setting aside for the moment that we, as the consumer, actually have no choice who the University chooses as its food service provider). Students, as the consumers, must make a determination on the pros, cons, costs and benefits of each meal plan. Too many students, and in many cases parents, select a meal plan based on flat cost, without calculating the actual relative value per meal swipe. Now, although it’s too late to change which meal plan you have purchased, keep the following calculations in mind for next year.

By the numbers:
Carte Blanche: $1800 per semester, $50 Dining Dollars
Block 175: $1620 per semester, $100 Dining Dollars
Block 125: $1490 per semester, $150 Dining Dollars
Loyalty 50: $285 per semester, $0 Dining Dollars

If you do the math, the Block 175 shakes out to about $8.68 a meal, factoring in the dining dollars. The Block 125 is about $10.72, and the Loyalty 50 is about $5.70 per meal. The carte blanche is, quite obviously, impossible to calculate since you can eat as much as you want.

As with any all-you-can eat option, this is clearly the best choice if, a.) Money is no object, and b.) You make sure you use it enough. If you purchase the Block 175 or Block 125, bear in mind you are paying an outlandish premium for meals. At $8.68 or $10.72 per meal, respectively, you’re better off investing $40 at Sabor and eating all you can there. Considering what your swipe gets you with the new Meal Exchange program and the overall quality of residence hall food, the cost-per-swipe of both block plans seems outlandish. The Loyalty 50 is a nice choice for upperclassmen who don’t like to cook; $5.70 is a little more expensive than what you could make yourself, but not unreasonable as dining out comes.

Ultimately, the Carte Blanche is the best deal, if you can afford it, as it is a much more economical allocation of your resources. The Loyalty plan isn’t bad either if you’re a junior or senior, and with the Meal Exchange option and the new Café Italiano in Schroeder (see Arts & Entertainment for a review), these two plans are solid options for anyone looking to dine on campus. For underclassmen who purchased either block plan, my advice: go big or go home, get the all you can eat carte blanche next time around.

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Buy or rent?

Posted on 16 April 2008 by Barrett Willich

The vast majority of Marquette students has or will rent an apartment for their junior and senior years. Every month, students write a rent check to the slumlords who make a huge profit off of their condemnable buildings. After graduation, as students move off campus and into the real world, they need to think about whether to buy a home or keep writing rent checks. There are many advantages and disadvantages to each option.

But first, for those of you who are leaving the friendly confines of Schroeder, Straz, Mashuda, or Carpenter and moving off campus for the first time, here are a few things to keep in mind when renting. Find out what utilities are included. Does it include water, garbage, heat, electricity, or cable? All of these things add a substantial cost to the apartment. Also, be sure to read the lease. Many landlords have huge restrictions on the number of occupants, kegs/parties and pets (which I find ironic, because four guys can do much more damage to a place than a Labrador).

Now, for those of you who are moving to the real world, there is more to consider than just pets and kegs. Personal situations must be assessed to determine if it is appropriate to buy or rent.

First, can you afford to buy a place? Purchasing a home involves fees, down payments, taxes, mortgage payments, repairs, and more. Typically, renting is much cheaper and assumes less risk. As a side note, if you find a rental that is just a little out of your price range, you can try to haggle. If a building has lots of vacancies, landlords may lower their prices to fill the space.

Second, you need to assess your time horizon. If you are going to spend one or two years in your new location, then move somewhere else, renting is your best choice. If you are staying for a longer time, more than three to five years, buying may be a better choice. Some reasons to hold off from buying short term are fees and the mortgages payment structure. The longer you live in the house, the more those fees are mitigated over the years. Mortgage payments are structured with high interest payments during the first few years. This means you are not building up as much equity in the first few years as you do later on.

If you determine that buying a place is appropriate, you should hire a real estate agent and look for a mortgage broker. A real estate agent will know the area and can show you homes in your price range. Find someone you like who comes across more like a professional than like a used car salesman. A mortgage broker will help you set up the financing. Usually you should go with the mortgage broker who can find you the lowest rate.

Both of these people are salesmen and they work off of commission (meaning they only make money when they close a deal). In their eyes, it is always “A great time to buy.” Therefore, you should learn about the market on your own to decide if it is a wise investment. Research the local housing market, the general housing market and the financing market.

Buying a house is the biggest financial decision most people will make in their whole lives. Educating yourself is paramount.

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