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Worry
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who know I'm an economist
come up to me and ask ques
tions,” Tatum said.
Tatum recently appeared
on the l(K'al news to talk
about these issues and said
he recently became adept at
explaining the problem. He
.said the rcx)t of the problem
began on a surprisingly gen
tle note.
'• "In the mid-IWOs, there
was easier assessment of
* credit and financial innova
tion,” Tatum said. “People
found it easier to buy homes,
C cars and so on.”
•I During this time, it was
V ea.sy to find funds and invest,
■» and the stcKk market reached
a high p5int. The bubble be
gan to burst in the beginning
of this decade, yet investors
kept buying stock because
they hoped the price would
continue to ri.sc, Tatum said.
Tatum .said this is incon
sistent with the fundamen
tals and continues to the
next phase of the problem as
financial waters begin to get
choppy.
The next pha.se began on
the housing market. Banks
actively loaned credit to peo
ple who were aggressively
investing in real estate —
buying hou.ses and turning
around and .selling them.
This pushed up housing pric
es, Tatum said.
Meanwhile, according
to Tatum, another problem
grew.
"People who had other
wise been unable to borrow
now could,” he .said.
Tatum said this is when
the borrowing prcKCss got a
little too creative.
“There were interest-only
loans for a while and there
were pick-your-payment
loans,” he said.
SUSAN TERRY - STAFF PHOTOGRAPHER
Kconomics professor Robert Tatum fielded questions from students on the economy this week.
Tatum .said .some banks
even offered low-dcKumen-
tation or no-dcKumentation
loans, which came to be
known as liar loans, where
borrowers monitored and re
ported their own loan activ
ity.
“Conceivably, you could
lie in this situation,” Tatum
said.
Tatum said he does not
like to place blame, and dur
ing this time of increa.scd in
vesting and predatory lend
ing, both the borrower and
lender were at times both
unscrupulous.
The housing price fell and
investors, as well as borrow
ers who were just realizing
they had gotten in over their
heads, wanted to walk away.
■“They dpuldn’t do that,”
Tatum said. “There was now
a stalled housing market and
people foreclosed."
Banks began selling these
bad loans to institutions like
the Federal National Mort
gage Ass(x;iation (Fannie
Mae) and Federal Home
Loan Mortgage Corporation
(Freddie Mac) in hopes of
stabilizing the problem. The
government rescued both in
stitutions last month.
The financial waters had
overflowed, and because
Fannie and Freddie couldn’t
absorb all the.se loans, they
repackaged them as mort
gage-backed securities, Tat
um said. Now, the individual
investor could buy a package
of loans and when people
paid on their loans the inves
tors made money.
"What’s interesting is that
financial institutions were
also buying the.se mortgage-
backed securities,” Tatum
said.
So the financial system
brought this risk back into it
self, which Tatum .said brings
the economy to its current
negative situation.
Budget
Continued from Page I
said.
Academic affairs will op
erate on 90 percent of last
year’s budget, meaning each
department must manage
with 10 percent less than the
2()07-2CK)8 school year.
The remaining operating
budget will be 85 percent of
last year’s budget.
“That will be tough for
departments, divisions and
areas to endure," Ponder
said.
The university employed
350 students at a cost of a
half a million dollars last
year, and maintaining these
positions is a high priority
according to Bill Haggard,
Vice Chancellor for Student
Affairs. The budget cuts will
not affect work study and
student employment.
The reduced budget forc
es departments and organiza
tions to prioritize spending.
For example, going wireless
- something many students
and faculty want - lacks the
impact updating campus se
curity would.
Pierce .said upgrading net
work and data infrastructure
on campus will save money
in terms of telephone and
other communication costs
and would allow further
security. Sending text mes
sages to students in case of
emergencies is one way an
upgraded network system
would help the university.
Stages
This year’s budget cuts
occurred in .stages.
The chancellor described
the year’s initial budget as
“modestly positive," but said
the national and state econo
mies have since changed.
A state-mandated cut at
KATIE BACHMEYER - STAIT PHOTIKIRAPHER
Chancellor .\nne Ponder speaks on the budget cuts at an Oct. 1 SC.A
meeting. All departments are being asked to make do with less.
the beginning of the year
slashed 0.6 percent of every
University of North Caro
lina .system schtxrl’s budget,
a $23(),(KK) loss for UNCA.
according to Ponder.
UNCA officials then de
cided on a 2 percent cut.
Governor Mike Easley
announced the 2 percent
budget cut for all state agen
cies in late September.
Additionally, UNCA in
dependently cut I percent as
a further preemptive move.
The two state-mandated
cuts total Just over S9(X),(XX)
for UNCA.
Solutions
The North Carolina Board
of Governors .sets individual
tuition for universities each
spring semester, and discus
sions for tuition increa.se be
gin this month.
In what Ponder calls a
“counter-intuitive" process,
reducing utility usage will
not help UNCA cope with
the reduced budget. If the
campus uses less energy than
the budget supports, the state
will reduce the budget allot
ted for utilities. UNCA man
ages energy usage well, ac
cording to officials, and has
won awards in the past.
Increasing enrollment is
a long-term strategy to help
fund the university. Ponder
said. She told SGA repre
sentatives to "crank up the
charm as ambassadors and
encourage people to enroll at
UNC Asheville.
Officials handle funding
for building projects, such
as the North Carolina Cen
ter or Health and Wellness,
separately from UNCA’s
operating budget. Reducing
costs for current and planned
building projects cannot help
the budget situation.
"You might have .specific
great ideas of how to help the
university. We want to har
ness that creativity," Ponder
said.
Pierce requested students
.send any que.stions or sug
gestions on managing the
budget to him at jpierce®
unca.edu.
“With cost-reduction con
cepts. getting a whole lot of
people thinking and a lot of
ideas is something philo
sophically I feel very strong
ly about." Pierce said.
Banks still have question
able loans and mortgage-
backed securities to deal
with, the values of which are
even more unsure.
“And when financial in
stitutions are unsure of what
the balance sheets look like,
they are hesitant to take any
more risky behavior,” Tatum
said.
Unfortunately for the
economy, that risky behavior
includes making loans to in
dividuals and to other busi
nesses. These two problems
combine to make a bigger
problem for everyone.
Tatum explained when
individuals cannot borrow
money they cannot buy
homes, cars, go to college or
make the consumer purchas
es that stimulate the econo
my. The economy asit whole
suffers. When businesses
cannot borrow money they
go under or take measures to
keep from going under, such
as production cuts or layoffs,
which makes unemployment
go up.
Enter a $700 billion bail
out, which, after some re
tooling, passed the Senate
Oct. 1 and the Hou.se of Rep
resentatives Oct 3.
According to Tatum, the
government plans to buy
these troubled assets through
a reverse auction, where the
lowest seller gets the deal.
$700 billion is the limit Con
gress wants to spend on these
purchases.
"This is not without risk
to the taxpayer,” Tatum said.
“When the government does
turn around and sell these a
few years down the road, the
taxpayers could make money
or maybe not.”
In the meantime, banks,
once free of these troubled
assets, will be more willing
to lend again, he said. Then
legislators hope the economy
will begin to recover.
Uncertainty about the re
covery process scares stu
dents like Hue.
“I have two jobs and I’m
still struggling to make ends
meet and that bothers me,”
Hue said. “Everyday ex-
pen.ses are getting harder and
harder to meet.”
Hue said she knows she
should save more, but is un
sure when she will be able to
begin.
“I do plan on going to
grad school and I’ll have to
take loans out for that too,”
Hue said.
Tatum said he hopes stu
dents will save more.
Lane Brown, manager of
the UNCA bookstore, said
he has not seen a change in
student spending habits.
Of course, students can
not avoid buying books
but they are still purchas
ing computers, pencils and
UNCA hooded sweatshirts
according to Brown. Sales'
have not slowed down since
last year. He says Rocky’s
Convenience store is doing
even better and attributes the
trend to another economic
problem: gas.
“Students aren’t driving
from campus to buy things
or eat as much,” Brown said.
“I don’t either. I’ve probably
only left campus for lunch or
to run errands during the day
five or six times this semes
ter.”
Things will not get easier,
even with smarter savings,
according to Tatum.
“It won’t be easy finding a
job in a weak market where
there is unemployment and
you’re the one with the least
experience out there,” Tatum
said about students who will
be graduating soon.
There are some things to
feel good about, he said. The
local area seems calm and lo
cal businesses have not seen
the impact they could.
“Local banks didn’t get
into the sub-prime mess, our
local banking .seems strong.”
Tatum said, although he does
note Wachovia’s recent trou
bles. Wachovia’s headquar
ters are in Charlotte.
In an Oct. 3 news release,
Wachovia announced it was
courting Wells Fargo for a
buy-out in a deal that would
exclude government regula
tion.
“This could turn into a
defining moment of this gen
eration,” he said. “It depends
on how bad this gets but look
back at the Great Depression
generation, they were forev
er affected.”
Davis
Continued from Page 1
Su-
the
been
have made phone calls and
signed online petitions,”
said Andi Mariategui. co
president of Amnesty Inter
national at UNCA.
Last Tuesday, Amnesty
organized a vigil for the
execution night. It was cut
short when the U.S.
preme Court issued
stay.
“Troy Davis has
caught up in the legal sys
tern for almost 20 years
now," said Hannah Burg-
wyn. Amnesty’s second co
president at UNCA. “After
all this time, we will hope
fully have just a little more
time to get active, write let
ters and do whatever else it
takes."
Last Friday, Amnesty
screened Rachel Lyon’s film
“Race to Execution,” fol
lowed by a letter-writing
party for Davis.
Amnesty International
state there is no physical
evidence against Davis
and that the case con
sisted entirely of witness
testimony.
International
such as 1984
Peace Prize winner Des
mond Tutu, former presi
dent Jimmy Carter and
Pope Benedict X'VI have
.spoken out against
execution of Davis.
Regardless of
with two different movies
and speakers ranging from
faculty members and stu
dents to community mem
bers.
“We have a number of
different events over the
year, but UNCA’s chapter
of Amnesty International
mainly focuses on con
scious consumption,” Burg-
44
working conditions of the
cocoa farmers and environ
mental issues on the pack
aging,” Burgwyn said.
“Our chapter of Amnesty
currently has about 15 ac
tive members. An average
of around 50 people come
to our events,” Mariategui
said.
Other events that Am-
Troy Davis has been caught
up in the legal system for
almost 20 years now.
Hannah Burgwyn
Amnesty co-president
figures
Nobel
the
1. 1 . . Katie MURRAY - Staff Photographer
claim; of in ■ r ®'■."“‘'”"‘‘'^''^^'^"‘'^P‘'^■•‘^o-P••e^identsAndiMari-
vi^m IV h Da- left, and Hanna Burgwyn, right, plan a group event.
VIS may have. It IS a basic
principle of Amnesty Inter
national to unconditionally
oppose the death penalty.
Last year. Amnesty or
ganized the largest human
rights film festival
Southeast on UNCA’
pus. From Nov. 10 to 14
this year. Amnesty wants to
revive this successful event
in the
s cam-
wyn said.
On Oct. 30, Amnesty
plans a reverse trick-or-
treating activity. They in
tend to hand out chocolate
that conforms to fair trade
standards, according to
Mariategui.
“The chocolate has in
formation on fair trade, the
nesty has planned for this
semester include a Dance
for Darfur and a teach-in
about the Israel-Palestine
conflict.
Davis can be reached at:
Troy A. Davis 657378
GDCP PO Box 3877 G-3-
79
Jackson, GA 30233