Economic Plebeian and Ask Me a Question!

This post is old, so what you see here may not reflect my current opinion and mindset, certain information may be outdated, and links may be broken.

So I actually read up on the Lehman situation and the global credit crunch fiasco. As pathetic as it is to admit, I am absolutely lost and confused at the current state of the world’s economy. Buh? Then again, it doesn’t help that I do not, even for a minute, comprehend the stock market and how it bloody works. I read about how land prices had fallen, and all I can think of is if the land prices have fallen, then doesn’t that simply mean it’s cheaper to buy land?

. . . Somehow, I expect that logic to be bashed very, very badly. Ugh. Give me a bloody Hemingway book to analyse and I can do it. Better yet, ask me to de-construct a poem, and I can do it, too. However, ask me a simple economy question and I am at a loss for words.

On a side note, Amanda did this Ask Me a Question meme, and after seeing Lexie’s responses, I decided to follow suit.

So ask away! You can ask me more than one question, but no more than three. As long as it’s not too personal (depending on how personal the question is!) I’ll answer them to the best of my ability. XD

Comments

  1. Okay. Not that I’m much better at understanding finance, but since I work in the financial industry in New York City and am the child of two bankers, I will do my best to explain. (No, there is too much, let me sum up.)

    The stock market. Let’s say you have a company that sells cookies (hypothetical example). You pump your own money into your company to buy flour, sugar, milk, eggs, rent for the store, paying the employees, utilities, etc. and invest part of your profit from selling your delicious cookies on keeping the business open. And wow, your cookies are such a success you have to start expanding! Should you take your company “public?” Taking the company public means that you “issue debt” or sell shares in the company (stocks). What taking the company public does is it basically parcels off your business into little bits and sells them to a buyer. The buyer now owns part of your business (has “equity”) and can affect (depending on how many shares s/he holds) decisions made, etc. You can now take that money the buyer paid you to expand your business (you’re essentially “borrowing” his/her money) and in return, the buyer gets dividends (sometimes monthly, usually quarterly), which is a share of the profit you make.

    Make sense?

    As for the Lehman crisis, well, that’s a little trickier. It has to do with subprime mortgage crisis, I think. But what part Lehman played, I have no idea. I could probably expand on this some more, but honestly, despite the fact that I work in this sector, finance sometimes gives me a headache.

  2. Hrm…. 1 question. I better make this good. Do you believe in Santa Clause? Hehe.

  3. Hmm. My questions… what’s your favorite color?

    I see from your about page that you play the alto saxophone. My dad plays the saxophone for a living so I always get excited when I meet other people who play it as well. Consider this another question: How long did you study the alto sax and how did you like it? :)

  4. I’ve been following primarily the American economy for a while now since the rest of my family, except my dad, are clueless about it. It’s also one of the few things I can have a deep discussion with my dad about. JJ has a pretty good explanation on the stock market.

    As for your logic, it’s true that houses are much cheaper now, but only if you have the money and good credit for it. However, you are right about how it certainly is a buyer’s market.

    For the many many people who bought houses during the housing bubble (including my family), if they weren’t careful with what they can afford and what kind of mortgage they signed up for, a lot of people are going into foreclosure and aren’t able to pay the bank back. Now the banks are in debt since they’re not getting money back. So in order to make money, the banks rise interest rates on mortgages with varied rates and for a lot of people, their monthly payment became too high for them and could no longer afford their home.

    A lot of people shouldn’t have even gotten a loan in the first place because they have a history of being a little reckless with money and so therefore, they are ‘subprime’ and traditionally, banks wouldn’t really give most of them a loan. So this whole mess is both on the banks for giving out these loans and on the people who weren’t really ready to buy a home yet.

    Also another thing for the banks, you can start with a subprime loan on one bank, and then another bank will buy that loan but for a higher interest and the cycle goes up the latter to the big banks, expecting to cash in on the huge interest rate. However plan fails when the home owners fail to pay their mortgage.

    You probably know some or all of what I just told you, but that’s my little brief summary of the root of the mortgage crisis to my understanding. Of course, there’s other factors such as peak oil, food shortages, natural disasters, etc.

  5. OOooh my question to you: What is your favorite dish to make quickly and easily? And what is the recipe? =]

  6. Do you have any plans to travel outside of Korea any time in the near future?

  7. All that stuff is very complicated and hard to figure out, especially if your not dealing with it just yet. I’m going to have to learn some things about it because I have a 401k now. When this lady came in to ask me questions about it, and figure out what I wanted to do with it, and were I wanted my money to go, I was so overwhelmed with the information that I sort of had to trust her to help lead me the right way. I didn’t like having to do that, fortunately she did a wonderful job in helping me because when I mentioned it to my boss and co-workers they told me I had some good choices. In fact my boss got all excited about it. He thinks starting my 401k at 21 was is a really awesome thing, haha.

  8. Are there any trivial (to others) things that you absolutely cannot stand, e.g. people not squeezing the toothpaste tube right, not leaving the toilet seat up/down, warm seats, etc.?

  9. I know it’s silly and trite to idealise about the “perfect guy” as I myself don’t believe in creating a shopping list of features that someone needs to satisfied, but as a non-serious question, what would your “ideal” guy (or girl!) be like? I mean romantically. xP

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