Students ignorant about America’s economy

October 15, 2008 — by Karthik Annaamalai and Tiffany Tung

On Sept. 29, the stock market fell a record 777 points after the House of Representative failed to pass the $700 billion bailout plan proposed by President George W. Bush. However, this economic collapse had been forecast for years, and recently started to fall apart.

The situation began when companies lent money to people with bad credit. In turn, the banks sold the mortgages in bundles to such companies like Washington Mutual. After the people purchased their houses or whatever they wanted to buy, some of these people were unable to pay off their debt to the companies that purchased the mortgage bundles, and in turn they then liquidated the assets but still ended up losing money in the end. This situation multiplied by thousands is what caused the problem.

Whether or not students realize it, this sudden pitfall of the economy can and most likely will affect them. This means that the average American family will be forced to take fewer vacations and spend their money more sparingly on items like clothes, food and gas. Students may have to cut down on the lavish things they love: going on shopping sprees, hanging out at the movies or even going out for dinner at expensive restaurants.

When it comes time for college applications, families may need to be tighter with money. This will be especially important in Saratoga where most families with students are not intending to use financial aid. In a city where most people work for high profile companies based in the Silicon Valley, many don’t realize that their parents’ jobs could also be at risk. Already, many big companies, such as EBay, have been laying off workers. These layoffs, in turn, could affect almost every working parent.

Some students don’t even know about the bill, which was recently passed by Congress after minor changes, other than the fact that it includes $700 billion. This ignorance will hurt Americans in the future when they will have to rely on an uninformed working force to help fix the economic problems facing the country. Remember, it was this same ignorance and lack of basic understanding of the economic system that led to the current economic crisis we find ourselves in today.

The plan, split into three installments, was deemed necessary by President Bush, mainly because of the economy’s current situation.

Many students don’t realize that what happens with the economy in the next few years could make or break their future. If this situation is not fixed by the time students grow up, the problem will be shifted onto them. To help combat the economic crisis, students must stay informed about the current situation so that they will know what they are dealing with once they enter the work force.

In the coming weeks and months, we will see if the bailout is the solution to our economic problems.

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