Economic Recession Much Worse Than Expected
The recession will last at least 24 months, and possibly 36, causing economies to worsen abroad. America might be at high risk of a Japanese-style L-shaped stagnation, which means that there will be little to no economic growth for a prolonged period.
According to Prof. Roubini, U.S. GDP shrank 6.2% in the fourth-quarter of 2009, which is worse than in the fourth-quarter of 2008. He predicts that recession will last 24 months and maybe 36 months, causing economies worse abroad. He is very much concerned that this economy slowdown will cause economy activity in a terrible shape for the rest of the world. While mentioning about stimulus package, Fed policy and bank bailouts, he says, “the rest of the world is way behind the curve,” while confronting with the worst economic crisis since the 1930s. He also raises his concern that America might be at high risk of a Japanese-style-L-shaped stagnation, which means that there will be either little or no economic growth in a prolonged period. Watch the video here to grab more details.
Meanwhile, the stocks are predicted to constantly fall and various stocks markets will melt away. Unemployment is forecasted to increase the next few years. Many housing areas may be doubled but they will be left vacant. Basically, our economic framework is empty and rotten away; it needs to be reconstructing for the economy recovery. Since its structure is badly wrecked, why don’t it be left collapsing, and then we can build a new firm one?
In regards to the American economic failure, many are directing blames towards Obama Administration. I think this is not logic. He’s just came into office for few months and he’s not a person who brought mess to America. The economic meltdown is a direct result of 8 year’s Bush Administration, who did nothing productive to raise the GDP of the United States. In contrast, he spent his time and money he could use to reconstruct America to chase around Osama bin Laden and Saddam Hussein by ignoring the advice from the finance world.
Bush was elected as the President of America even he couldn’t read well. His administration exposed more on corruption and unethical morals. We had read on 6 Republicans were jailed for being guilty of greed and committing serious criminal acts.
Americans made a mistake again when Bush was re-elected for another 4 year’s presidency in the United States. There was not a concrete reason that Bush sent troops to accomplish damn war in Iraq. The Iraq war didn’t even benefit America as it consumed lots of taxpayer’s hard-earned money. Nevertheless, the war has caused the rise in the price of gasoline, and when the war was held in Iraq, the price of transportation soared to almost 350%. Since then, all transportation related items (such as mail, food, and etc.) went up in order to compensate the higher transportation cost. It means America seemed to spend excess money on gasoline in the past. Additionally, Bush had squeezed billions of tax payers’ money on this damn war. Now, it’s turned the financial community into panic as they knew that they’d allocated much money on things that were meaningless.
Bush was the person who caused this fiasco not Obama. Obama and his advisors are cracking their minds to clear off a bag of mess left behind by Bush. Bush was smart as he saw this immeasurable damage but he kept Americans blind with all his promising political strategies. He went ahead by signing on the sub-prime lending practices. The 8-year-war expenditure was a huge wastage and incompetent Bush Administration had failed to portray a good outcome of expensive war which has taken away surplus budget of Clinton Administration. Bush strategy in the issues of unregulated banking industry and held hostage to foreign oil companies, and to regulate large insurance companies like AIG had further suffered the America’s economy. He left Obama a heap of shit to handle. Obama is misfortune to inherit the carcass left behind by Bush Administration.
Seeing that the economy is down and down, Obama is spending money to help relieve the “freeze” condition in the United States. He’s the only president who stands up for the middle class and the poor. Well, since the economic failure in America is at its “chronic stage”, the quick economy recovery cannot be expected within a short period. No one can tell you when the recession will actually end as it may take longer period to recover from the Republican Depression. Obama’s policies cannot be seen as wastage as he’s trying to save America from a complete meltdown. Of course, you can’t see an immediate effect right now. It might get 3 or may be more years to heal the situation. Though his act might not be able to fix the economy, it does help to stabilize the condition.
Nevertheless, dumping billions of money to help stabilize the economy situation should only come as a temporal solution. That concludes that no matter how much money is allocated to aid the US financial slow down, it can only help to solve the economy crisis in a temporal term as the economy has been very unstable, and uncontrollable. It’s just like US is digging a pile of sand to bury an old hole that cannot even solve the economic problem since the act of “digging” has created another new hole. It’s also irrational to dump billions of dollars into the automobile industry since no one can afford to buy a new car. Obama should realize its long-term effect. This is obviously not an ultimate way to solve the economy problem. So, the US has to find another way to create another economy bubble that will stimulate the world economy.
If Obama continues to inject a huge amount of money into the economy system, America will one day experience what the Japan went through in the past recession. When this happens in America, the rest of the world will lost confidence in the value of dollar. Before recovering to the level it should be, America will have to compete for very scarce natural resources. The dollar will be weakened. As a direct result of deficit and poor currency, the inflation is on the way. This will chase the investors away from investing in America and in the share markets. The current situation shows that the investors have completely disappointed with US financial system. America should be alerted by this reality.
We’re now living in an environment that is pressed with high cost. The price for almost all things has increased gradually. To help solve problem, the related party or administrative should bring down the prices of everything. When the price is so high, people will start tighten up their wallets and this will worsen the situation. When there’s no money keep flowing, the market will soon die out.
Americans should quit using credit card to bear on their spending pattern. They should see that the credit card companies have incurred high interest rates upon them. In this icy condition, they should only purchase things that are necessary. It’s sad to learn that some greedy parties want to grab more houses, more cars and more mortgages to satisfy their instincts; but in fact, they’re unable to afford to pay off. So, why not just get a fixed asset and mortgage that is affordable?
Obama Administration should stop bailout the dying companies like GM, AIG and other financial institutions. The bailout just doesn’t make sense here since the tax payers have to bear on their failure. That means the people in America will have to bear on their huge debts. Also, this doesn’t make the debt go away. How much money that the government will have to place on tax payers to compensate the failure of these organizations? They’re still millions of failure institutions with bad mortgages worth about 4 trillion dollars which are going bad, and how could the government bailout these institutions? They should learn how to reorganize and solve their own mistakes by lending money to people with bad credit, bankruptcy, no legal citizenship and no credit. This mess was said to be set up when Clinton created mergers between the Wall Street and the banks, and “stated income” loans that needed no verification at all.
Obama should also stop rewarding tax breaks and money to companies that get people in America lay off by employing cheap labor from other countries. At the same time, Obama should ensure that every American has a job to survive as they need to eat and to earn for basic needs too.
I strongly agree to the Quote by the late Dr. Adrian Rogers (1931 – 2005), who said, “You cannot legislate the poor into freedom by legislating the rich out of freedom. What one person receives without working for, another person must work for without receiving.” Obama Administration should know that they cannot simply multiply the wealth by dividing, and they cannot give to anybody as this will increase the national debt while worsening the currency rate.
The economy recession is not wholly owned by America, but it’s a global recession that is unavoidable. In this case, the world leaders should co-operate to think of appropriate measures to bring the economy back to its right track. They should know that if America collapses, they’ll also die out due to the domino effect. No one can survive alone in this global meltdown.
Well, our economy hasn’t reached to the bottom line yet. I may expect a prolonged L-shaped for less than 7 years before the economy rises again. This is common in the economy cycle. And I think the media has exaggerated the actual economy situation, in which I believe this will scare the consumers from spending in order to stimulus the growth of economy. In this case, the media should always be optimistic in reporting the economy situations, instead of exposing more on the pessimistic side of Dr. Doom! Franklin Roosevelt had once said, “We have nothing to fear, but fear itself.” This is not a moment for us to think negatively, but we should focus on efforts that could kick the mess away. It’s very hard to tell what’s going on in our economy system right now. It might unexpectedly go higher or lower.