Mary Ann Bartels Talks Economics with STAC Students

By Ashley Walter

          What's the future for America's economy and employment opportunities?
          On March 6th, St. Thomas Aquinas College students had the opportunity to listen to Mary Ann Bartels, who is the Managing Director, Head of Technical and Market Analysis for Bank America- Merill Lynch. She has had much success in her professional career, working for Wall Street for twenty years, and as a European qualitative strategist. A Fordham graduate, Bartels spoke to STAC students about the United States and the world’s current economic problems, as well as giving a few of her own predictions.        
          Predictions that include when the US mortgage and Real Estate market will improve, what will happen to our job market, what will happen to the US economy over the next year, and who Wall Street wants for president in this year’s elections.
          She explained how in 2008 the US financial system fell. A huge part of this was the mortgage sector of the economy. Subprime loans were given to “at risk people” who had a high probability of not being able to pay mortgage payments on time or at all and who also had lower credit ratings. Usually, mortgage companies will charge a higher interest rate on subprime mortgages than on a traditional mortgage because the company is carrying more risk with people who are considered more risky. What happened that caused the mortgage market to fall, she said, was these subprime mortgages were given a triple A rating even though those mortgages were not even close to that rating.
          Bartels feels that another main reason the US economy took a downfall was Leverage. Our economy was 50x levered. This meant that a trillion dollars turned into 50 trillion, which was too massive for the financial system to handle. The US was faced with the decision to let the system fail or to plug it. The US decided to plug the system with TARP. This is the Troubled Asset Relief Program which entailed the US government purchasing assets and equity from financial institutions to strengthen its business sector. This TARP money had an interest rate which would be paid back to the Government.
          Bartels also spoke about the European economic issues as well. She feels that they ran into a lot of problems making decisions quickly because of the European Union. They need all 17 countries to agree on each issue before a policy is put into play. Europe for many years pretended that they didn’t have economic problems, so they never did anything with their banks and their economy got worse and worse, she said.
           “The Federal Reserve that once served as the UN’s last resort for money can’t be used anymore as the last resort because it is stretched out in too many directions,” she said. What Europe did to try and help their economy is conduct the LTRO (Long Term Refinancing Operation). This is a three year lending facility that helps Europe’s major banks out financially because they started to go under.
          “It will take another 5-7 years to clear out the mortgage mess and job growth is going to level off,” was Bartel's predictions. She also feels that QE3 will be issued. This is Quantitative Easing for the third time here in the US. This is a monetary policy used by the central banks to stimulate the national economy.
          “A bull market happens every 20 years or so which I feel we are close approaching,” she added. A bull market is when there is an increase in investor confidence and the stock market and economy starts to see capital gains. Right now we have been experiencing a Bear market. This is when there is a general decline over time in the stock market and investor confidence is extremely low.
          “Most people are buying mutual funds which means most assets are in cash, and they are not growing their assets in the stock market,” she said. Bartels also predicts for 2012 that the first half of the year we will see around a 2% growth rate but in the second half of the year the rate will slow.
          Her last prediction was about this year's presidential election. “Wall Street and Corporate America are hoping for a Republican president in this upcoming election because Wall Street regulations won’t be so strict and more economic growth will happen quicker because of this,” she said.