With the Fed keeping interest rates low, groups of investors on the global level (which TAL refers to as “The Giant Pool of Money”) went looking for other places to invest their money at a higher return than the 1% that they were getting from the Treasury.  Investors at this level tend to put their money into things like treasuries because of the very low risk associated with them, but with rates staying put, the Global Investors turned to residential mortgages.  Residential mortgages, while not as low-risk as treasuries, were generally considered safe investments with a return of 8%-9% (much better than what they were getting from the Fed). They started buying mortgages from huge financial institutions like Bear Stearns and Goldman Sachs.  They weren’t just buying individual mortgages, but were buying groups of thousands of mortgages.  The demand for mortgages skyrocketed.  Local mortgage providers started mass selling of their mortgages to the Bear Stearns types and then they turned around and sold the mortgages to the Global Investors.  This process wasn’t necessarily new, but the amount of mortgages that entered into this chain skyrocketed. For the end consumer, it meant if you took out a mortgage from Joe’s Loans, you found out that suddenly you didn’t owe Joe’s Loans anymore, you owed Bear Stearns, and then later it turned out you owed your money to a fund operated by the Global Investors.

This wouldn’t have been all that bad except that Joe’s Loans made so much money off the deal that they started looking for new ways to give loans. Traditionally when you went to get a mortgage, the loan officer would sit down with you and go over your finances to see how much of a loan you could actually afford based on how much money you had in the bank and how much money you made.  Since Joe’s Loans was making so much money by selling loans to the Bear Stearns of the world, they started giving loans to people by only looking at how much money they had in the bank and not verifying income.  Then they started giving loans based on how much people said they made and how much they said they had in the bank without verifying anything at all.  There were companies even going door-to-door in poor areas of town selling loans. Because people were getting approved for loans that they had no hope of paying back, foreclosures started rising.

This didn’t even slow down the process because lenders sold the high-risk mortgages in groups with low-risk mortgages to decrease their undesirable appearance.  Housing prices were rising and the investors figured that even if they did have a few extra foreclosures, they’d own a house that had gone up in value since the loan.  The turn around time on selling the mortgages was so quick that Joe’s Loans made money on mortgages that even missed their first payment.

Then the housing market fell.

With prices dropping, investors found themselves with lots of foreclosures on houses that suddenly were worth less than the original mortgage.  They immediately put a halt on buying new mortgages…any new mortgages.  The Bear Stearns types and Joe’s Loans suddenly found themselves with lots of mortgages with no one to sell them to.  Complicating the matter was the fact that most of the mortgage companies had borrowed the money that they turned around and lent to homebuyers.  Finding themselves in debt with a seemingly endless supply of depreciated homes, many companies went out of business overnight.

When the new homeowners started defaulting on their mortgages, whose monthly payments had increased by as much as $2000 because of variable interest rates, they stopped paying their other debt, too.  Faced with large losses, car lenders, credit cards companies, and even student loan companies started cutting back on the amount of credit they started issuing.  Which brings us to the situation we are in today with a slow economy and high fuel and food costs.

Because of the greed of the mortgage companies and their unethical lending practices as well as the dishonesty of the borrowers who misrepresented their incomes, a crash in one sector of the economy has caused a slowdown of the entire U.S. market as credit companies scramble to recover.  Gen-y isn?t immune to the crunch, but hopefully as the rising generation in the workforce, we can learn from the mistakes of those ahead of us and move past them.

Thanks to a war, a crappy economy, and karmic supply and demand, gasoline is now shooting above the $4 mark with no sign of stopping anytime soon. That sport utility in the driveway is probably now looking about as welcome as a polygamist compound in Texas. For those trying to bust their 2 gallon a day habit, here are a few suggestions.

1. Join the Masses
I know what you are thinking, mass transit is for poor people. Well, guess what? That ginormous hunk of metal out front has you one step away from the welfare office. Public transportation can actually be a lot more convenient than it used to be. Many transportation systems have online maps that allow you to type in an address and will give you detailed instructions on how to arrive at your destination by using your city’s mass transit. Some systems even have GPS enabled buses that allow you to estimate your wait time from your internet-enabled PDA. Do a Google search for your city’s public transportation system to see what services they offer.

2. Make a Friend
If the train or bus just doesn’t go where you work, you can try carpooling. Try asking around at work or posting flyers on the break room bulletin board to see who lives in your area. Some larger companies may have a carpool matching system or you can try an online service like eRideShare.com. Some cities even offer monetary incentives to start carpooling. Atlanta awards carpoolers $40 or $60 gas cards every month depending on how many people share the vehicle.

3. Dust off the Huffy
Riding a bike to work will not only reduce the time you spend behind the wheel but it will also help you to get rid of that other spare tire you have going on. (Wait, did he just call me fat?) If you aren’t sure you can make the entire trip try parking and biking in part way. There are even websites devoted to tips for bicycle commuters.

4. Curb the Durango
You could just get rid of the car altogether. Not only will you save on gas but you will save on maintenance and insurance. For those times when you still need a vehicle, you may have a car-sharing service like Zipcar available in your city. Zipcar has a tiered pricing plan based on usage with hourly rates starting at $7.65/hour and daily rates starting at $56.10 (rates depend on the car and the location). Aside from an application fee, that is all you pay – Zipcar takes care of the gas, insurance, maintenance, and parking.

With all this talk of economizing, I decided to put my money where my mouth was. I used to spend from $250 to $300 on gas every month because of my low mpg Jeep Grand Cherokee. About a month and a half ago, I started taking MARTA (Atlanta’s mass-transit system) to work and anywhere else I could. Most systems have a frequent traveler program and I ended up buying a month pass for $52 that gave me unlimited use of the trains and buses. This month I have spent less than $100 in gas and with the $52 added on top, I have saved $100 in transportation costs. I’m now looking for ways that I can whittle that cost down even further.

For me, the benefits weren’t only monetary. I started downloading podcasts and audiobooks to listen on my iPod during the train ride and I found myself looking forward to the walk through the green spaces in Inman Park after a long day at work. Before I had dreaded fighting traffic and often arrived at home more stressed than when I had left the office.

So, break yourself from the habit! I stood up and said, “Hello World! My name is Clint and I’m a gasaholic!” The first step is recognition; the second step is action.  (The third step is finally watching that Netflix that has been on my DVD player for, like, ever.)

Meebo

Nothing kills time like IMing other people who are at work and actively pursuing distraction also.  What?  Your IT department won’t allow you to install programs on your computer?  Well, that’s where Meebo.com comes in.  Type in the login of the IM program you use (they support AIM, MSN, Yahoo!, Gmail/Jabber, and ICQ) or if you create a meebo.com account (frizzle) you can sign into multiple IM networks at the same time.  The site will pull in all your buddy lists and works like any IM program complete with a soft chime when you get a new message (which you can turn off).

PANDORA

This web based radio station works like real radio should.  You start by creating a “station” based on what you want to listen to.  Instead of selecting a genre, however, you type in an artist or even a song your in the mood for and Pandora will start throwing songs your way that are in the same vein of the song or artist you typed in.  Give songs a thumbs up or thumbs down to let it know what you like and what you don’t, which will make the station better over time.  Death Cab For Cutie radio is awesome, you know, FYI.

Google Reader

We know that you check for updates on the four bajillion blogs that you follow, like, every five minutes.  Wouldn’t it be great if you could check all those blogs and websites all in one place…every five minutes?  Google Reader is an RSS feed aggregator that allows you to do just that.  You’ve probably heard of RSS feeds.  Feeds are a way for people to have content from their favorite websites delivered to to them.  Just sign into Google reader and click the “Add Subscription” button (don’t worry, it’s free).  Type in the address of the blog or website you want it to check for updates and bam, the site now comes to you.  Almost all blogs have RSS feeds (even yours) and most regular websites now do as well.

Digg

Digg is a social news website (add “social” to your webspeak to make the kids think you are cool) in which the users of the site select the most interesting stories that appear at the top of the list.  It can have a heavy nerd slant at times, but more recently it has a nice mix of general news, politics, tech, weird news, and funny pictures involving kittens.  Great time suck.

UNBLOCK.BIZ

Have a website you want to visit (like your Gmail), but your company’s firewall has blocked it?  Well, you could try using a proxy server like Unblock.biz.  It’s basically a go-between between you and the site you are trying to visit.  As long as Unblock.biz isn’t, well, blocked by your company’s firewall, you can type in any address into the box on the site and surf away.  Your company will only see that you visited Unblock, but not what site you used it to see.  It is a little slower than visiting the site directly and it generates pop ups ads every few minutes or so, but if you need to do a quick webmail check or something, it’s definitely a good tool to have.