Nexus: Chapman's Journal of Law and Public Policy

As noted in the Special Report on Regulatory Reform by the Congressional Oversight Panel, “[f]inancial crises are not new.” Beginning as early as 1792 and continuing cyclically over the next 140 years, financial crises struck the nation in approximately 20-year increments.

If the American market economy is cyclical, then a depression/recession is merely reflective of the U-shaped path taken by the economy after coming down from its upside-down parabolic high. For cyclical-economists, the downward-pointing parabola does not shoot toward negative infinity as it appears to do in abstract mathematics; rather, while coming down from its vertex, the economy ...

After the great depression of the late 1930's, Americans learned a hard lesson. Thrift, fiscal responsibility, and savings replaced the rampant speculation and frivolous spending of the roaring twenties. It was also in large part due to the massive deficit spending of the second world war that helped to pull America out of the great depression.

Today, massive federal government intervention in the marketplace in the form of bailouts has for the most part staved off a potential financial recession, but like an overprotective parent who shields their children from the consequences of their actions, are they really acting ...

Although 115 banks have failed this year, the government decided against bailing out any more banks. Last years $700 billion taxpayer bailout of banks caused a political uproar. Instead Congress is encouraging banks to modify the terms of their loans. Congress is trying to extend the first-time homebuyers tax credit which was part of the economic stimulus program. It was set to expire this month, but the Senate approved the extension and the President is expected to as well. To qualify, buyers have to sign a purchase agreement by April 30, 2010 and close by June 30. The measure will ...

For the majority of the twentieth century, the United States took pride in having the best-educated workforce in the industrialized world. Over the past 30 years, however, its dominance as the center for a highly educated workforce has steadily declined. Thirty years ago, the United States maintained 30 percent of the world’s college-educated population. At present, the United States has less than 14 percent of the world’s college students.

Not only are many industrialized nations, such as India and China, besting Americans in the percentage of college-educated individuals placed into the workforce, but those countries are also outdoing ...

It’s the 80th anniversary of the 1929 crash. It’s no doubt that the economy is suffering, but more importantly, the people of the United States are suffering.

While analysts have the luxury of spitting out ideas and theories that led to this financial catastrophe, most working Americans don’t really care why the economic crisis occurred. They are more concerned with how things will be fixed.

My mother, who left Vietnam in the midst of the Vietnam War in 1975, came to this country with the hopes and aspirations of attaining the so-called “American Dream.” My father, who ...

The economic downturn that started with mortgages has slowly shifted its way to the credit-card industry in a way that affects all consumers. And this is not in a positive way. Card balances have been at record highs, with consumers still struggling to pay off balances from last year's holiday season. For credit-card companies, the increasing unemployment rate comes with an increasing fear of defaults. Credit-card companies say that the problem is that the weak economy and job losses have left more people unable to pay their bills, which has led to greater losses. This fear has led credit-card ...

As we all know the economy has been suffering these past few years, and although many efforts have been made to bring us out of this recession, all efforts have failed. This failure can be shown mainly from the fact that unemployment rates continue to increase. For example, in California the unemployment rate has increased to 12.2% in September 2009 from 7.8% in September 2008. This shows that over the past year, more Californians are looking for jobs, and therefore unable to support the economy with their disposable income.

Although California as a whole is struggling, Northern California ...

After the financial meltdown of the last year and a half we stand at the edge of a crossroads in American ideals and goals. The failure of the large financial institutions was largely the result of politicians and lobbyists working together to allow banks and other institutions to operate relatively unimpeded. I believe that this is due in large part to the revolving door in politics and the huge amounts of money that are necessary for a successful bid for election and/or reelection. Fixing this problem is neither going to be easy or quick.

Taking the money out of ...

Many residents of California do not know that their state is home to the world’s second largest port, in terms of tonnage handled, just behind Singapore. Even some that know that trivia do not know what that means to the economy of the state. It means money, big money. California and California companies in the logistics business get a piece of 50% of the imports for all of the United States.

There is no surprise that many have seen opportunities for rent seeking in connection with the port. The latest move has been a Baptist and Bootleggers move, or ...

Immediately before the crash of 1929, the stock market boomed. Wall Streeters and ordinary Americans alike invested in the stock market. Stock could be purchased with only ten percent down. Yet, the playing field was far from level. For example, the price of RCA stock soared from 85 to 420. However, the price was artificially driven up by only a handful of investors who bought stock to increase its demand, leaked favorable reports to news media, and then sold to the eager public. Eventually, the house of cards fell down.

Congress stepped in to regulate the securities markets, and out ...

On October 8, Federal Reserve Chairman Ben Bernanke warned that while the U.S. Federal Reserve may continue to “prop up” the economy for an extended period, it cannot do so indefinitely for fear of triggering an inflationary surge.

The Senate is scheduled to vote sometime soon on whether to extend unemployment benefits, possibly even up to 20 extra weeks. Policies like this one, while possibly helping the American people, cannot last forever because of the economic consequences of too-loose of a monetary policy. If we don’t tighten our monetary policies into recovery, inflation will get the better of ...

As the great Monty Python has said, “always look on the bright side of life.” While Americans in the current economy have focused their energies on the negative aspects of the recession, there is something to be said about maintaining an optimistic outlook and finding the positive facets in a dreary situation. Indeed, several pundits have likened the present economic downfall to that of the Great Depression in the early 20th Century, sparking feelings of desperation, hopelessness and fear among the population. While these feelings are certainly legitimate, Americans should not linger on the pitfalls, but rather pull themselves up ...

Decisions brought on this recession; will decisions get us out?

Bailout, layoff, unemployment rate, vacancy rate, bad loans, default, foreclosure, unlawful detainer, repossession, bankruptcy, loan modification—these are all words we hear far too often.

The recession, which began in December 2007, shifted into high gear in late 2008. The market fell—hard and fast. By March 2009 the market was down 50 percent from late 2008. Some of us were saved by stop loss orders, others awoke to find their fortunes and savings shriveled overnight.

The economy is horrific. Unemployment rate was at 9.8 percent in September, the ...

How close has the current recession come to becoming “The Great Depression 2.0?” If one accepts the premise that “depression” is a term of art used to describe a paralyzing fear of the unknown so severe that consumers, businesses, and investors panic to cause normal self-correcting mechanisms (like lower interest rates, inventory resupply, and cheap prices) to be overwhelmed by a loss of confidence, then perhaps the characterization of the current situation is crucial. If avoidance of a semantic classification can curtail a wave of scared consumer behavior, then one should proceed with caution before announcing the Great Depression ...

Experts compare our current economic downturn to the 1929 stock market crash and the subsequent Great Depression. To name a few, the fall of the conglomerate lending institutions, a rise in unemployment rate, and countless bankruptcy filings and defaults on mortgages followed by loss of homes are some of the numerous similarities we observed. If the present state of the American economy indeed does bear an eerie resemblance to the Great Depression of 1930’s - and if we could remotely make certain of what is to come based on such resemblance - there is a silver lining: a new study says ...

Economists predicted consumer confidence to rise in September, yet recently released figures show that consumer confidence unexpectedly fell this past month. American’s remain worried about the job market, causing them to stay focused on limiting spending, buying only necessities and hunting for discounts. This unpredicted drop in consumer confidence has left retailers concerned about the upcoming holiday season. Economists expect holiday sales to be flat from last holiday season, which was the worst holiday season in over four decades. Retailers are lowering inventory levels and slashing holiday hiring in anticipation of another season of bleak holiday sales. This means ...

On September 15, Federal Reserve Chairman Ben Bernanke said that the recession was “very likely over,” although this rebound would not produce many jobs. Since the crash of the financial markets, unemployment has consistently been double digits. Currently, it is reported that the unemployment rate is 15.6%. Even so, the unemployment rate only includes those who actually apply for the unemployment benefits and qualify. Basically, whether they are able and available for work and whether they are actively seeking work. Outside of this statistic, there are thousands of people without jobs, some who have just given up. These days ...

The great stock market crash of 1929 precipitated one of the worst economic depressions in United States history. In the ensuing aftermath of substantially reduced investment and spending, everyday Americans who did not speculate in the market were forced to endure a nearly decade long period of deflation and steady erosion of their assets and spending power.

Jump 80 years to the present. Does the situation seem eerily reminiscent of 1929? Americans who borrowed responsibly and continued to make their monthly mortgage payments are now dealing with a significant loss of equity in their homes. Furthermore, responsible Americans who were ...

With programs like Cash for Clunkers and the tax rebate program for new home owners, the economy is slowly turning around. However, recovery continues to depend on US consumers. Consumers need to rebuild their confidence in their personal financial situations and in our country’s economy. They need to break free from the craze that has hit many Americans- excessive saving instead of spending. Americans’ new found diligence in budgeting and cutting back slows down our much needed economic turnaround.

Jeff Gelles describes the current economic state in his 2009 article "Frugal Nation". What led to what Gelles described as ...

On Thursday, September 17, the United States House of Representative passed the Student Aid and Financial Responsibility Act. If a final version of the bill is ratified by Congress and signed by the president, the bill would completely overhaul current student lending practices by allowing the government to lend to students directly instead of subsidizing private loans.

Though reform had been suggested in the past, little weight was ever given to such a dramatic student-lending overhaul until liquidity all but vanished and jobs rapidly disappeared, leaving would be student-borrowers with a two-pronged problem: Students find it increasingly difficult to obtain ...

I remember reading about the Great Depression of the 1930s in my high school history course and considering that era, like so many other historical moments, merely a fascinating relic of American history which came and passed leaving behind its lessons and stories. The vignettes of life during the Depression were somber and dark, but they read as fiction and maintained an impersonal distance from my life as a teenager in the 1990s. After all, the economy was strong, unemployment was low, and banks were loaning money. I had no cause to worry. So why, nearly 80 years after Black ...

It has been 80 years since the United States endured the Great Crash of 1929. Although we would like to say that the market got better and that the economy is at a better place- the truth is chilling. The United States is currently undergoing the worst economic crisis of all time. The economy remains week, and the government is scrambling to create programs to control the seemingly uncontrollable economic catastrophe. However despite the government’s attempts to restore our financial situation, the economy continues to languish under weak job growth and the sale of real property.

In a recent ...

Seemingly an eternity ago now that the news is dominated by the Obamacare debate, back in March President Obama and the Democratic Congress set their sights on executive compensation as the quintessential demonstration of Wall Street greed. The House passed a 90% tax on bonuses for Wall Street firms that received over $5 billion in bailout funds. Citing concerns that the legislation constituted a bill of attainder, the White House wisely chose to oppose such a tax and let the bill die in the Senate.

However, President Obama did appoint Kenneth Feinberg as executive pay czar (one of at least ...

One common theme in the stories about the current recession is that people were living beyond their means. Individuals used their homes as ATM machines and accumulated tens of thousands in debt to fuel their unbridled consumerism. Banks practiced equally risky behavior in investing in new high-leveraged investment devices that promised unbelievable returns only to be backed by pooled subprime mortgages and inflated home values. The story goes that after years of living beyond our means collectively as a nation, reality has finally set in and brought the American financial system to its knees.

Following the Great Depression, a generation ...

On September 2, Shira Scheindlin, a U.S. district judge ordered Morgan Stanley, Moody’s Investors Service, and Standard & Poor’s to defend fraud charges in a class-action lawsuit. The plaintiffs, Abu Dhabi Commercial Bank and King County in Washington State are accusing them of masking the risks of an investment that is linked to subprime mortgages.

Since the subprime mortgage crisis began, there have been a flood of lawsuits against investors such as these, however, very few cases have actually survived. Perhaps this could be the beginning of some relief for the victims of subprime fraud. In a 68-page ...

In this economic meltdown and bailout season one forgotten segment of the world economy is the extreme poor and the issues and liabilities relating to their finances. This group may have fallen from topic of daily discussion but their affairs are concern to many economic NGO’s. Microfinance is used as a smaller scale village format of bailout in extremely poor regions in which credit is given to the community participants and thus by generating money and creating jobs the extreme poor are offered loans and relief. Microfinance is a form of outreach targeted towards villages or other groups of ...

The stock market crash of 1929 and the recent housing market crash are strikingly similar in respect to their causes and the government’s subsequent responses. In “the 1920s, banks began to loan money to stock-buyers since stocks were the hottest commodity in the marketplace. Banks allowed Wall Street investors to use the stocks themselves as collateral. If the stocks dropped in value, and investors could not repay the banks, the banks would be left holding near-worthless collateral. Banks would then go broke, pulling productive businesses down with them as they called in loans and foreclosed mortgages in a desperate ...

When did living the American Dream mean that everyone must own a house or a luxury BMW? I thought living the American Dream meant that an honest day’s work should render an honest day’s pay. I don’t want to sound cliché but there is some truth to the statement above.

Living outside our means has unquestionably been one of the main factors in causing our current economic downfall. Not only are we as people living outside our means, the businesses of America have followed suit. Large companies and banks like Bear Stearns and Lehman Brothers are finding ...