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Financial crisis impact on economy essay
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Financial crisis impact on economy essay
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The biggest financial issue that the United States is facing is the current recession we are in. By and large, a recession is a decline in any given country's Gross Domestic Product (GDP), or negative real economic development, for two or more consecutive quarters of a year. During a recession the economy stops rising and starts working in reverse. Instead of adding new jobs, there are jobs being lost. Instead of companies making a capital gain, suffer a loss. Consumers spend less because they have lost their jobs, and have nothing to spend. Companies are finding that their inventories are not going down and they are selling less. Therefore they are making less products, which is causing job loss across the US. The explanation is widespread and that could only mean one thing: Layoffs.
Well know companies have already started plummeting and their workforce is diminishing. I definitely don’t think that the trend will stop with the larger companies. The economies recession is also taking its toll on the smaller companies. Plenty of the small companies will also feel the heat of a deteriorating economy. .
Hiring freezes, layoffs and even eliminating entire departments to spread the work load throughout the organizations are ways that companies may try to stay afloat during this hard time. Current employees quit also play a dominant role in an agency's new budget. Anything that a company can do to reduce their expenses can improve their gross margin. My employer is on a hiring freeze, wage increase freeze, has done lay offs, and is trying to save every penny possible. Even down to the toilet paper costs.
During a recession, companies should restructure their organization to get rid of the things that are not priority. Even the way ...
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...percent of the premium cost—far too expensive for the average person. COBRA is available to workers in companies that have 20 or more employees. The average cost of COBRA premiums for a family is $1,106 a month. For some, it may be cheaper to go to the doctors and pay for the visit with no insurance.
There are other benefits that are offered to families that are un insured or underinsured. The programs are there, however they are often abused because of the rising cost of health care. There are those families that really do have the need for the services because of accidents or lost wages. Then there are other families that have the working parents, but it cost so much for them to be insured they work the system so that they will be able to save money by paying the lower rates. This is an unethical decision, however; people will do what ever they can to save a buck..
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
Many people today would consider the 2008, United States financial crisis a simple “malfunction” or “mistake”, but it was nothing close to that. Contrary to what many believe, renowned economists and financial advisors regarded the financial crisis of 2007 and 2008 to be the most devastating crisis since the Great Depression of the 1930’s. To make matters worse, the decline in the economy expanded nationwide, resulting in the recession of 2007 to 2009 (Brue). David Einhorn, CEO of GreenHorn Capital, even goes as far as to say "What strikes me the most about the recent credit market crisis is how fast the world is trying to go back to business as usual. In my view, the crisis wasn't an accident. We didn't get unlucky. The crisis came because there have been a lot of bad practices and a lot of bad ideas". The 2007 financial crisis was composed of the fall of many major financial institutions, an unknown increase in mortgage loan defaults, and the derived freezing up of credit availability (Brue). It was the result from risky mortgage loans and falling estate values (Brue) . Additionally, the financial crisis of 2007 was the result of underestimation of risk by faulty insurance securities made to protect holders of mortgage-back securities from risk of default and holders of mortgage-backed securities (Brue). Even to present day, America stills suffers from the aftermaths of the financial crisis.
In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of Americans. The real blame for this crisis rests on the heads of the managers that attempted to play the financial system through securitization, and forced the American government to “bail out” their companies with taxpayer money. These managers, specifically the managers of AIG and Citigroup, should be subject to extreme pay caps for the length of time that the American taxpayer holds majority holdings in their companies, as a punitive punishment for causing the Great Recession.
Health care inequality has long been customary in the United States. Those in lower classes have higher morbidity, higher mortality, higher infant mortality, and higher disability. Millions of low-income families and individuals have gone with out the care they need simply because they cannot afford it. Denial of benefits due to pre-existing conditions, outrageous deductibles, and unreasonable prescription prices are in large part why the low-income class suffers. In addition, not receiving preventative health care, lack of access to exercise equipment and lack of availability to fresh foods all create health problems that become to expensive to fix. Low-income families need to have better, more affordable access to health care, specifically preventative health care, and be more educated about the benefits of health care in order to narrow the gap of inequality. The new Affordable Care Act under the Obama administration expands heath care coverage to many low income families and individuals by lowering the eligibility requirements for Medicaid, although it is not mandatory for individual states to make this expansion for Medicaid coverage.(CITE) It also requires that preventative health care be included in coverage by insurance companies. So with all the benefits the expansion of Medicaid could offer, why would some states choose not to offer it?
As technology advances jobs, and the employment rate decrease due to the use of computerized equipment. Computers are now able to complete task that otherwise would be done by employers. An example would be the shutdown of a corporation know as Toys R Us. Toys R Us filed for bankruptcy. Toys R Us will be open for the holiday season, but as soon as the holiday season is over, they will be shutting down. This will affect millions, the current employees who depend on their income, will be struggle for awhile. So basically people are losing jobs, which means they are losing their income. Toys R Us also said that in the future they would like to reopen smaller stores, as part of their long term plan. (Verdon, Joan. “Toys R Us Store Closings Expected after the Holiday
Luckily under the new health care reform law, most people will receive help paying for their healthcare premiums and cost-sharing expenses that people with insurance have to pay out of pocket for doctor visits, and prescription medicine. Families and individuals will be able to receive this assistance with incomes between one hundred and four hundred percent of the federal poverty line. One hundred to four hundred percent makes up at about $23,000 to $94,000 a year assume this is for a family of four.
According to the most recent numbers posted by the Census Bureau, an estimated 47 million Americans are uninsured. But let us examine these numbers closer. Of this 47 million, roughly 7 million are illegal immigrants, 9 million are on Medicade, 3.5 million are eligible for healthcare but do not pursue these available health services, and approximately 20 million families have incomes above the poverty level ($41,300 for a family of four) and can afford regular healthcare services with more coverage. Government tries to add all these factors together to make the numbers higher, in an attempt to gai...
An option for folks who have no money is Medicaid. Medicaid is designed for the very poor people. Unfortunately you must meet Medicaid guidelines in order to be eligible for it. “In order to be eligible you must make below the poverty level that the government allows, this is about $1,497 a month for a single person, also if you are a child who is under 19, if you are pregnant, if you are out of work for a long time, or if you are HIV positive, you may be eligible to apply.” These guidelines alone generally rule out many of Americans. “The U.S. Census reported young adults (18-to-24 years old) remained the least likely of any age group to have health insurance in 2001.” More than 28% of this group does not have coverage.
Have you ever went without health insurance between jobs, or while working part time or because you just couldn?t afford it? No having health insurance is a big risk in a time where medical costs are sky high, Prescription drug prices are outrageous and when your paying your family doctor $50 for a office visit. Fifty dollars represents a full 8 hours of work for many Americans.
Health Insurance is essential to your Personal Well Being and your Health. For a large proportion of uninsured people, health insurance can and is most often a matter of choice. Uninsured Americans normally tend to delay and even go without doctors' visits, prescription medications, and other effective treatments, even if they know they have a serious or life-threatening condition. Institute of Science and Technology (Institute 2009). 20 to 30 percent of uninsured children are more likely to need certain shots, prescription medications, asthma care, basic dental care and other things that we would consider a must have.
The beginning of 2014 is when everyone in the country started being required health care. The Affordable Care Act has made the rule of 80/20 which means that insurance companies have to cover at least 80 percent of the cost for a patients care, and the rest of the 20 percent would go to profits and other costs. However, the Affordable Care Act can have higher costs for some people. Some people have had to pay more than their previous plans of private healthcare. According to Kaiser Family Foundation, 39 percent of people ended up paying more with the ACA. Although, as
Health insurance facilitates entry into the health care system. Uninsured people are less likely to receive medical care and more likely to have poor health. Many Americans are foregoing medical care because they cannot afford it, or are struggling to pay their medical bills. “Adults in the US are more likely to go without health care due to cost” (Schoen, Osborn, Squires, Doty, & Pierson, 2010) Many of the currently uninsured or underinsured are forced accept inferior plans with large out-of-pocket costs, or are not be able to afford coverage offered by private health insurers. This lack of adequate coverage makes it difficult for people to get the health care they need and can have a particularly serious impact on a person's health and stability.
With the United Nations listing health care as natural born right and the escalating cost of health care America has reached a debatable crisis. Even if you do have insurance it's a finical strain on most families.
The willingness of companies to swiftly lay off workers to cope with changing business environments.
There are many responses that a company can have to troubling economic times. They can first weather the storm and survive. They can back up and get driven out of business, or they can grow. The economy has been in recession for many months. It is the job of our company to identify things that can help businesses to make it through these times and hopefully prosper.