US Economy

US Economy is the topic which is hitting the headlines in every nook and corner of the world, so thought why not voice out my opinion about the current scenario in USA. No wonder this recession is talked all over the world as this being the worst after second world war with worst holiday sales ever in USA, Auto industry worst hit, Job loss which is beating all old records, USA’s GDP to go further down by 1.4% in 2009 and worst of all is the Mortage crisis. Even the layman would be educated by reading news like “Toyota has reported loss after 50 years” . To add fuel to the burning fire companies file for bankruptcies which has become a routine these days. Even though they file under Chapter 11 which provides a process for rehabilitating the company's faltering business the interest among the General public and stockholders slowly seems to wither away.

The main reason for this recession started with the Mortage industry. It is the “Greedy” attitude by some of the leading lenders in the country which paved way for all these problems. Money is being given to people who do not deserve a house, the lenders were able to charge higher interest rates and make more money on sub-prime loans. If the borrowers default, they simply seized the house and put it back on the market. On top of that, they were able to pass the risk off to mortgage insurer or package these mortgages as mortgage-backed securities. Easy money uhhh!!!! Same is the case with Credit card companies , I do not really understand what do they really do with our credit score. One of my friend recently got a new credit card approved for 10,000$ having 0% APR on purchases and balance transfers and he has got his SSN card just a few days back. A guy who used to think twice before buying a Cricket bat back in India is now on a roll touring Las vegas and spending money like anything …Thanks to credit card…. Another reason for the country’s struggle is we produce less than what we consume …. It has been said that America is a paper economy. We can’t go along producing nothing and consuming everything for long until things start to get out of whack. But that’s exactly what Americans have been doing. We tend to go to Walmart and Sam’s club for all our needs and they in turn go towards China to procure everything ….By doing this we have been running a trade deficit for years and it only seems to get worse not better. As a result nations like China have all our money. We send it to them in the form of the trade deficit. Producing less than we consume explains why we borrow more than we can responsibly pay back.

Well the situation is like an eye opener to many ..so lets march towards the new year with a positive attitude …Personally I believe bailout is not a good option simply being the money the government is paying is our money …Why should the government pay our money when companies are making some greedy moves just to stay alive in the competitive market? Well that being said we have no other solution at this point of time atleast to my knowledge …. First and foremost the people in the country should come forward and spread the positive energy …Government should recapitalize the financial sector by a transfer of wealth from the taxpayers to banks and brokers .. Also the government should Implement a massive monetary stimulus, such as taken by Japan at the start of their dark decade (I am happy the Indian govt led my Dr.Manmohan is making this move). Also it is high time companies start investing in Manufacturing and create tons of new jobs. Also the country has to control the balance of Trade deficit as this is the only means by which foreign companies will be able to accumulate funds to purchase our best companies.

Also people should not consider the word “Savings” as a bad word, I see every American living his/her life to the fullest. I do not get a parking lot in any malls during a weekend. There is no harm in enjoying life which everybody loves to do; the only thing is they should understand it is not only important being smart in your physical attire but also being smart intellectually.