As Barack Obama tours the White House and entertains thoughts about life in Washington, one cannot help but wonder how he will face the economic shambles that will welcome him in January. Blows to the US economy have remained in full-force over the past couple of weeks, allowing for even more disheartening news about the finances of firms, homeowners, and schools throughout the nation.
The prevailing instability of financial institutions will prove to be a huge concern for Obama and his administrators as banks and mortgage companies seek more monetary help. American Express has joined Goldman Sachs and Morgan Stanley in changing from investment banks to bank holding companies in order to access government funds. A.I.G. has received a government assistance package worth $150 billion after losing almost $25 billion in the third quarter. Fannie Mae, after losing $29 billion in the third quarter, claims that it may need more than the $100 billion the Treasury Department has already promised.
Homeowners throughout America are witnessing further decreases in their homes’ values. First American CoreLogic, a real estate data company, has determined that 7.6 million properties in the US were in negative equity as of September 30, with another 2.1 million not far behind. This is almost a quarter of all homes with mortgages in the US. In the hardest hit zip code, Mountain House, California, 90 percent of its homeowners owe more than their houses are worth.
In education, all universities, rich and poor, are suffering because of the crisis. Even Harvard University is struggling, forcing it to halt plans for expansion and instead discuss the topics of financial restraint and endowment loss. Both Brown University and Cornell University have stopped hiring for a period of time and paused construction projects due to reductions in funds. Need-blind institutions such as Vassar College and Tufts University are fighting to keep their promises to fully meet students’ financial need.
These points provide only a brief description of the persisting economic issues that Obama will face when he takes office. The whole world will be watching to see how well this beacon of hope and change will actually improve the dreary global financial scene.
