1. The Household Debt Bubble Abstract: Comments on the decline in real wages & paradoxical rise in consumption in the US, arguing that the potential exists for particularly negative consequences. Data on the family debt burden indicate the class nature of the distribution of household debt, with mortgages, credit cards, & installment buying the areas of highest debt for most families. It is argued that low-income families are prime targets for predatory lending, eg, payday loans, subprime mortgage lending. Of greatest macroeconomic significance is home-secured borrowing, & it is contended that the housing bubble & strength of consumption in the economy are linked to the "household debt bubble," which could burst if interest rates rise & housing prices stagnate or decline.
The global financial crisis started in the USA. The bursting of the housing bubble led to falling real estate prices, which caused considerable problems to major U.S subprime lending outfits. This prompted extreme problems for large financial institutions and a heavy credit squeeze; which in turn had a devastating effect on the global economy. According to many economists, the recent global financial crisis of 2008 is arguably the worse financial crisis since the great depression. Globalisation of trade and investment has increased the likeliness of a financial crisis in one country spreading to many different countries around the world.
Considered that the financial crisis has started from the USA, its effects were quickly and strongly felt beyond the country, too. The crisis is still a challenge for the Euro zone’s unity and its economic and financial stability. Since 2008 the unemployment there has been rising, many of the countries have a huge public and private debt. The economy in the Euro zone has been developing so bad that experts and economists doubt if the euro currency can survive. One of the Euro zone members which used to have one the most powerful economies on the continent is Italy.
The United State’s international status as a world superpower is typically associated with a thriving economy, and while American business is expanding, there exists a bubble of uncertainty which surrounds the future of retirees. Present day American retirees tend to rely on financial systems such as Social Security, pensions, and a 401(k) plan to fund their retirement. However, in today’s economy, the increasing number of retirees, coupled with a steady number of workers, has began a trend of deficit spending by the Social Security system. Furthermore, the increasing deficits of state legislatures owed to participants of pension plans present the issue of how to both reverse the current trend, while simultaneously continuing to provide for
This policy found itself in trouble on a few occasions but during the 1970’s there was a worldwide crisis and Britain asked the IMF for a large loan. This loan had conditions which the Conservative Government had an obligation to follow. Margaret Thatcher then began to implement policies to reduce welfare spending which did reduce it in one area but had consequences in another. The welfare state has survived this time but in many areas has been changed and/or reduced in size. “Welfare policy successfully weathered an economic hurricane in the mid 1970’s and an ideological blizzard in the 1980’s” (Le Grand, 1990, p350) The above quote was in reference to the robustness of the British Welfare state according to Julian Le Grand (in Barr et al, 1990, p350).
Many may argue that the falling economy and the wealthy not wanting to share their shares is to blame for the raising rates of poverty here in the states. Poverty of course, has a lot to do with money and income but underneath that it is has a deeper story. Stories of how different people are suffering from it and how they are managing to live day by day. It almost seems as if it’s a foreign nation of its own and you only understand the concepts if you are in it. There is no doubt that here in America we are dealing with one of the greatest economic downfalls.
The U.S Auto Industry: Factors to Consider in a Bailout With continued uncertainty in the economy, and U.S. businesses collapsing all around, another tough decision game recently for the federal Government: Do we, or do we not provide taxpayer dollars to bailout the failing American auto industry? With supporters both for and against an auto bailout, Congress had to make a decision based upon what was best for today’s tough economic times. Recently, two publications, The Nation, and The Pew Research Center, took a closer look at the potential bailout. They examined, very differently, a few of the many factors involved in an auto bailout, but ultimately left the decision up to the reader. I seems that the most heavily weighted subject of the auto bailouts is the concern about the enormous numbers of jobs that would be lost if a bailout is not approved.
Dichele Parker Introduction to Business Controversial Issue Project – Does Government Spending Help Alleviate Our Recession? From the research I have done my theory is that the government not only can help, but can alleviate the current recession we are in. In the course of a recession, a government can try to increase economic growth, employment and motivate the economy by spending the taxpayer’s money on government plans. This approach is based on Keynesian economics, famously utilized in Franklin Roosevelt’s New Deal in 1937 during the great depression, and now resurfacing in the eye of our global crisis. Economic growth is defined as the increase in the quality and quantity of goods and services, which results in hundreds of thousands of entrepreneurs hiring more workers, presenting technological innovations and improving worker productivity.
According to Paul Alexander Gusmorino, the main cause of the drastic downfall was the combination of unequal distribution of wealth and the extensive stock market speculation that took place in the later years of that decade. Speculation is a key term in this area of history. To put it simply, speculation is an involvement in risky business transactions in an attempt to quickly gain large amounts of wealth. The imbalance of wealth led to an unstable economy, while the stock excessive speculation kept the stock marker falsely high, eventually leading to a large crash. Authoritative figures tried to help out the economy in any way they could, but not all ended up helping.
These institutions impose harsh conditions, like budget cuts, in order to obtain a loan. In regards to the debt crisis in Latin America in the 1980s, foreign debt in these countries increased greatly. Institutions such as the World Bank and the International Monetary Fund enacted financial regulations in exchange for loans. This caused mass unemployment and stagnant economic growth in these countries. Although countries in Latin America and East Asia have fallen on hard times, they have managed to overcome the obstacles associated with development.