念五年級的大小子喜歡關心時事，這半年來對有關金融危機的消息很感興趣。去年十月，我讓他寫下他從網上電視上學到的關於金融風暴的消息, 說完我就把這事給忘了。最近在他的電腦上看他寫的幾段，和他爸大笑不止。

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October 2008

                                  The Economy

Current rating in my opinion: stupid！

The cause, according to several radio shows, are corrupt politicians, sub-prime loans.

The stocks have had their biggest plunge in years. The Dow has dipped below 8000 at times.

Lehman Brothers has gone out of business; Morgan Stanley might be next; and AIG had to be bailed out twice, the second time because 100 employees went on vacation with government’s money.

The government has called for a $700 billion bailout plan several times. In other words, a bailout of $700,000,000,000. that’s a lot of cash! The presidential candidates have different ideas. John McCain plans to decrease government spending; on the other hand, Obama plans to raise government spending along with taxes.

The economy might have a depression again, right now it’s a recession.

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於是我靈機一動, 何不把家教金融常識當成孩子日常課外學習的一種： 音樂，美術，運動，中文，金融。。。。。。只要他感興趣。

以下是他交的功課：

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May 15,2009

                              How a bank makes and loses money

When working normally, a bank would operate like this; Depositor 1, Depositor 2, and Depositor 3, deposit $100,000, $200,000, and $1,000, respectfully. Then Borrower 1 and Borrower 2 borrow $150,000 and $151,000, respectfully. The Borrowers pay 5% interest on the amount they borrow; the Depositors get 1% interest on the money they deposit; and the bank gets the remaining 4% interest. But, say Borrower 1 or Borrower 2 can’t pay back their loans, because they lost their job or income. The banks would lose the deposited money. When Depositors 1, 2, and 3 want to withdraw money, they cannot withdraw because the bank already lost their money. Then the FDIC steps in and makes sure they get their money back. Then the FDIC takes over the bank because they have no money.

Here is another example of how the banks can lose money: Someone borrows $600,000 to buy a $700,000 house. He has to pay a monthly loan payment, a year later he lost his job. The bank takes back the house to try and sell it; however, the house value decreased by 30% to $490,000. Since the house is worth less, the bank loses $110,000. It may not seem to be a lot for a billion dollar bank, but, when 2,000,000 people are doing the same, the losses can add up to $220,000,000,000 (two hundred twenty billion) or more.

The banks could fix the problem by letting people borrow less, and only if it does not look like they are going to lose their jobs.

The government can help by reducing their spending to a certain level so they are not spending everyone’s money in 2 years, then cutting taxes, and help create jobs in companies. One job created won’t make a difference when 8.9% of the population is unemployed.

If I can make decisions, I would suggest that all parents buy a DS for their children to stimulate the economy. :-))

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