GAE Members to Ask Obama for Piece of Stimulus Package for Georgia's Public Schools

The Georgia Association of Educators (GAE), realizing the urgency of the ongoing economic climate and its impact upon Georgia¡¯s families and public education system, has developed a plan to help Georgia obtain a piece of the economic stimulus package being proposed by the incoming Obama Administration. Its members will be asked to lobby their U.S Senators and Representatives on behalf of Georgia's families and public schools.

"Our students, our educators, and their respective families, like all Georgia citizens and their families, are living with the realities of today's economic difficulties," said GAE President Jeff Hubbard. "These difficulties, which are forecast to only worsen, will continue to have an impact upon our state's ability to fulfill its budgetary obligations, which will impact public education both directly and indirectly....More

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Georgia State Panelists Discuss Economic Crisis

In the midst of worries about the U.S. economy, Georgia State faculty members from various disciplines came together Wednesday to discuss the crisis and its impact on Americans.

“More than anything, it’s a crisis in confidence,” said Carter Doyle, visiting assistant professor of economics. “Fear is what’s driving this. Yes, things are bad, but the fear is greater than the reality.”

Michelle Brattain, associate chair of history, said that while most of the attention thus far has been on big business, it’s everyday Americans who are facing increasing worries about high gas, home heating and health care prices, unemployment, foreclosure and high debt.

“There’s a kind of populism and a kind of anger and frustration with Wall Street that I haven’t seen in a long time,” she said. “Working people in this country have to deal with economic crises on their own. They’re angry that Wall Street people have not taken on these kinds of responsibilities.”

Another consideration is this year’s election cycle. Jeffrey Lazarus, assistant professor of political science, said that although citizens are largely upset with the recently passed $700 billion bailout measure and candidates are doing a lot of political finger-pointing, it’s hard to pin the crisis on the government. Even so, he said, the Republican party will bear the brunt of voters’ anger.

“Absolutely there will be punishment at the polls,” Lazarus said.

All three panelists said that in the midst of trouble, there is still some opportunity. Americans are now monitoring financial institutions and government more stringently and may play a bigger role in shaping policy so that future generations can enjoy a more stable economy.

“The smallest silver lining, if we don’t get anything else, is in lessons learned,” Lazarus said. “How will we shape our financial and regulatory systems to prevent this from happening again?”

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Two-Thirds of Struggling Homeowners Meet Key Criteria for Housing Bill Relief, According to Survey by CCCS of Greater Atlanta

PRNewswire/ -- Almost two-thirds of homeowners who called Consumer Credit Counseling Service (CCCS) of Greater Atlanta for foreclosure prevention counseling in recent months appear to meet the threshold requirements for relief under the new federal housing bill that took effect Oct. 1, according to a recent survey of those homeowners.

Of 591 people surveyed in late September, 381 of them, or 64.6 percent, said they met five key eligibility criteria for the mortgage refinancing program.

On July 30, President Bush signed the Housing and Economic Recovery Act of 2008. The law created a new program called Hope for Homeowners intended to help families save their homes from foreclosure. Mortgage lenders participating in the program can allow "at risk" borrowers to refinance their current mortgage into a new fixed-rate loan insured by the FHA. Lenders' participation in the program is voluntary.

"Our survey results indicate this new FHA program holds the potential to help a large number of Americans struggling to pay their mortgage," said Suzanne Boas, president of CCCS of Greater Atlanta. "Not everyone will be able to meet the terms. But if someone meets the basic criteria laid out in the housing bill, it would be worth a phone call to their lender to ask about the FHA program."

Homeowners must meet several requirements to be considered for the program. People who called CCCS of Greater Atlanta in July and August trying to avoid foreclosure were surveyed about these requirements by email from Sept. 19-23.

To be counted among the 64.6 percent of survey takers who appear to meet the threshold criteria, people needed to indicate that they live in the home with the problem mortgage; their mortgage was originated before January 2008; they didn't have an existing home equity line or other second mortgage; they did not own another home and they spend at least 31 percent of their gross monthly income on mortgage debt.

From those surveyed, the top challenge to participation in the FHA program is paying off a home equity loan or second mortgage. Thirty-five percent of respondents reported that their home secures more than one loan.

A second mortgage or home equity loan must be paid before a homeowner can qualify for the refinance program. It is possible to pay off the second mortgage through proceeds from the new FHA loan. That could be difficult if the first and second mortgage are held by different lenders because only the primary loan qualifies for the FHA program.

Also, nearly 20 percent of respondents say they don't spend at least 31 percent of their gross monthly income on their mortgage -- a threshold required by the FHA refinance program.

Borrowers who qualify for the FHA program are responsible for paying loan origination fees, as well as an insurance premium to FHA equal to 1.5 percent of the principal annually.

There are several other conditions:

-- The borrower must certify there was no misrepresentation in their application for the existing loan.

-- The borrower must agree to share both initial equity and future appreciation with The U.S. Housing and Urban Development Department (HUD).

-- The equity sharing agreement provides that if the house is sold within the first year, 100 percent of the initial equity (generally 10 percent of the value of the property at origination) will go to FHA. After 1 year, FHA is entitled to 90 percent of the initial equity. The percentage keeps dropping in 10 percent increments to 50 percent after the fifth year, where it stays.

-- In addition to the initial equity which is a fixed amount, 50 percent of any future appreciation of the property must be paid to HUD when the property is sold.

-- The FHA loan will be a 30-year fixed rate mortgage and may not exceed 90 percent of the current appraised value of the property. An additional 3 percent mortgage insurance premium will be financed in the mortgage making the initial loan to value 87 percent.

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Household Health Largely Immune to National Economic Shocks, Study Finds

GFP Note: This is an interesting find. There is another article out today which suggests that Americans' sense of well being correlates with the rise and fall of the price of gasoline. Price goes up, wellbeing drops and vice versa. You can check out the other article on the Fayette Front Page under the Fayette Fitness and Health Blog.

When a national financial crisis strikes, ordinary citizens are adept at mitigating its effects on their health and long-term well-being by adapting their household spending, according to a study by researchers at the Motu Economic and Public Policy Research institute in New Zealand and Duke University.

The study, “Nutritional Status during an Economic Crisis: Evidence from Russia,” was published online Tuesday, Aug. 19, 2008, in The Economic Journal. The findings have implications for how governments and international donors respond to large-scale shocks, such as financial crises, said the study’s authors, Steven Stillman, a senior fellow at Motu Research, and Duncan Thomas, a Duke economics professor.

“If there is a major economic crisis, policymakers are under pressure to respond. The appropriate immediate response is not necessarily to blanket the entire country with resources, be it income or subsidized food, but to target resources to those people who need them the most,” Stillman said. “Apparently, the average person is able to do quite well in the face of economic shocks that are relatively short-lived.”

In their study, Stillman and Thomas examine patterns of spending and food consumption among Russians between 1996 and 2000 using population-based data on about 18,000 people interviewed in the Russia Longitudinal Monitoring Survey. From 1996 to 1998, economic turmoil sent average Russian household incomes plummeting 40 percent; incomes more than fully rebounded by 2000.

The researchers found that while household spending on food declined then rose in line with income, the average family’s intake of calories changed little during the four years. Families accomplished this by relying more on lower-cost, higher-calorie foods during economically difficult times.

“Quantities of starches and dairy are essentially unchanged across the entire sample period. In contrast, fruit and vegetables consumption appears to have adjusted entirely (to income variation) in terms of quantities,” the researchers explained in their paper. “In the case of meat, however, the picture is more nuanced: expenditures declined throughout the 1990s with a large decline in 1998; in 2000, expenditures rose but remained below their level in the mid-1990s.”

The study also looked at adult weight and child height as indicators of nutrition, and found that they changed little in response to income variation.

“Overall, the evidence suggests that individuals and households are very resilient -- even in the face of major economic upheavals -- and that they optimize over many dimensions of well-being,” the study concludes.

“The kind of household adaptability we find in the emerging economy of Russia could be applied to more advanced (nations) and to developing nations as well,” Thomas said. “We would expect American households to make similar lifestyle changes in response to rising gas and food prices and we have seen similar responses to the Asian economic crisis by Indonesian families.”

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