Introduction
The American economy affects everyone, regardless of their societal status. Therefore, when the American Economy is in recession, the whole world falls into a state of trauma, millions of jobs are lost and multi-national companies are forced to shut down. In America alone 2.8 million jobs were lost in 2008 (source: CNN money). If the tolls were so high in one of the stronger economic states what of the less resilient?
Why I chose this topic
I chose this topic as to know the other side of an, other-wise cliché, research question. Is it not true that every-one knows of the great devastation that the 2008 recession caused for countries such as the United States of America and France? But is it not true that no-one bothered to even ask about the rest of the countries that are part of the very same planet as well?
“To know what really happened, you must look at the holistic picture”
– Dalai Lama.
Causes
To understand what really happened in the Great 2008 Recession, we must go all the way back to the end of the Second World War. After the fighting had stopped, the European economic system had grinded to a halt as the war-time technology and equipment trade ceased, “The economic mechanism of Europe is jammed”, wrote David Lloyd George, Britain’s war-time president of the time. On an international level, this meant disaster as the European colonies extended through half of the globe.
However, together, the economists of the time managed to establish a new system in the Bretton Woods agreement in 1944. Every-one of the 700 or so members present there agreed to it, except one, John Maynard Keynes. He ended up to be the only one right. The over dependence on the U.S economy meant sure-shot failure.
Impacts on the Afr...
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...w.therichest.com/business/highest-oil-producing-countries-in-africa/
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- http://focusafrica.gov.in/Sector_Profile_Kenya.html
-http://www.treasury.gpg.gov.za/Document/Documents/Quaterly%20Bulletin%20_-Review%20of%20the%20Tourism%20Industry%20in%20Gauteng%20and%20SA.pdf
- http://www.huffingtonpost.com/2011/05/12/nafta-job-loss-trade-deficit-epi_n_859983.html
- http://www.kenpro.org/papers/economic-crisis-kenya-during-recession-period-2008-2009.htm
- http://www.worldbank.org/en/country/kenya
- http://www.imf.org/external/pubs/ft/survey/so/2009/CAR092509A.htm
- http://twnafrica.org/index.php?option=com_content&view=article&id=84:global-recession-bites-south-african-economy-&catid=58:investment&Itemid=86
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- Grand Pursuit: The Story of Economic Genius by Sylvia Nasar
As an illustration, Michael Grabell speaks about signs of recession in March 2009; and how the recession consumed many states across the United States in the fall of 2008. Employment rates were decreasing, Unemployment rates were off the charts and there were many house foreclosures. Furthermore, in Krugman’s Economics for AP* it goes more into depth about the signs of recessions and house foreclosures which can be seen in Module 2. Here, it talks about the many signs of recessions-- inflation, deflation and labor force, which is the total amount of people that are employed and unemployed. In addition to, which they are vigorously looking for work but are not currently employed. Moreover, a few modules ahead Krugman’s textbook also talks about what some individuals did to survive the recession. For instance, Home foreclosures caused tax revenues to plummet. Not to mention, how at the same time more people sought Medicaid and food stamps to survive the recession.
This paper aims to discuss the Short-Term and Long-Term Impacts of the Great Recession and
These conditions have the ability to cause recession. Now that an armistice has been reached in Korea, a recession is beginning to occur (Pach and Richardson, 54). I believe that the President’s chief concern should not be to make an immediate and fast acting restoration of the general economy. The problems of the federal deficit and the recession must wait until the more important problems are dealt with. The problem at hand is the rising rate of unemployment.
Throughout all of my research over the recession of July 1990-March 1991 I have concluded that it was not one of the largest recessions the United States has ever seen, but it was also not the smallest. This recession was only eight months long and did some damage, but not a lot. The Gulf War had the biggest impact on this recession along with the oil spill causing a rise of oil prices. The economy hit a low point and was not able to come out of it until the following year after the recession had already technically ended. Unemployment rates were at a low point towards the ending of the recession and because companies were hesitant about hiring new employees’ unemployment did not start getting better until the following year after the recession ended.
December of 2007 saw the beginning of the worst economic downturn in memorable history; not since the end of the Great Depression in 1939 has the world seen such a devastating and long-lasting economic breakdown. The Great Recession shook the public’s faith in the capitalist system and silenced those who claimed a modern economy was impervious to another broad collapse like the one in 1929. Discontent and mistrust from the public has built not only with large corporations and the financial sector, but also with the government, whose legislature and policies in recent decades seem to coincide with the interests of private corporate power-houses. These lenient policies contributed directly to the recession that affected individuals across the globe. Stunted wages, increased poverty, massive income inequality, and unprecedented unemployment rates are just the start to a long list of consequences that continue to grow as the effects of the Great Recession continue to be felt by individuals all over the world.
Since being founded, America became a capitalist society. Being a capitalist society obtains luxurious benefits and rather harsh consequences if gone bad. In a capitalist society people must buy products and spend money to keep the economy balanced, but once those people stop spending money, the economy goes off balance and the nation enters a recession. Once a recession drastically takes a downturn, the nation enters what is known as a depression. In 2008 America entered a recession and its consequences were severe enough for some people, such as President Barack Obama, to compare the recent crisis to the world’s darkest economic depression in history, the Great Depression. Although the Great Depression and the Great Recession of 2008 hold similarities and differences between the stock market and government spending, political issues, lifestyle changes, and wealth distribution, the Great Depression proved far more detrimental consequences than the Recession.
It can be argued that the economic hardships of the great recession began when interest rates were lowered by the Federal Reserve. This caused a bubble in the housing market. Housing prices plummeted, home prices plummeted, then thousands of borrowers could no longer afford to pay on their loans (Koba, 2011). The bubble forced banks to give out homes loans with unreasonably high risk rates. The response of the banks caused a decline in the amount of houses purchased and “a crisis involving mortgage loans and the financial securities built on them” (McConnell, 2012 p.479). The effect on the economy was catastrophic and caused a “pandemic” of foreclosures that effected tens of thousands home owners across the U.S. (Scaliger, 2013). The debt burden eventually became unsustainable and the U.S. crisis deepened as the long-term effect on bank loans would affect not only the housing market, but also the job market.
Looking back to the Carter and Reagan Administration’s, you can begin to see where the Recession originated from. Prior to the Reagan administration, the United States economy experienced a decade of rising unemployment and inflation. Political pressure favored stimulus resulting in an expansion of the money supply. Reagan wanted to increase defense spending while lowering taxes, Reagan's approach was a departure from his immediate predecessors. Reagan enacted lower marginal tax rates in combination with simplified income tax codes and continued deregulation. During Reagan's presidency the annual deficits averaged 4.2% of GDP after inheriting an annual deficit of 2.7% of GDP in 1980 under President Carter. The real
Presently, the United States is considered to be the country with the largest economy. According to the latest World Bank figures "[The United States] represents a quarter share of the global economy (24.3%)", but the country hasn't always been financially superior. From 1929 to 1939, America had been going through the Great Depression, where people all over were struggling financially. In 1929, the Stock Market crashed, having a dreadful impact on all Americans, starting the Great Depression; this was then worsened by the Dust Bowl in the Midwest making life hard, and affecting the economic prosperity for all Americans.
According to the article on “Economic Recession” from Issues and Controversies, a panel of economists determined that the U.S. was in a recession from December 2007 to June 2009, making it the longest ...
...ults of the recession. In order for this never to happen again, there is a need to learn from the mistakes in the past and to look for the warning signs. The problem is not just restricted to one country, but is a global problem and needs to be addressed as such.
When Hurricane Katrina devastated New Orleans and the Gulf Coast, it caused immediate and significant damage not only to that regions economy but to the countrys as well.
In economics, a recession occurs when there is a slowdown in the spending of goods and services in the market. A recession causes a drop in employment, GDP growth, investment, as well as societal well-being. All recessions are caused by a specific cause, but the Great Recession of 2007-2009 was caused by a crash in the housing market. This crash was triggered by a steep decline in housing prices. All of a sudden, people bought houses because there was an excessive amount of money in the economy and they thought the price of houses would only increase. (Amadeo, 2012). There was a financial frenzy as the growing desire for homes expanded. People held a lot of faith in the economy and began spending irrationally on houses that they couldn’t afford. This led to overvalued estate and unsustainable mortgage debt. (McConnell, Brue, Flynn, 2012).
The end of the World War II marked the beginning of a new era for the world economy. The Bretton Woods System refers to an agreement made at an international conference between 44 nations in 1944 at Bretton Woods, New Hampshire, United States of America (hereby U.S.) on the 22nd of July 1944. It was aimed at maintaining stability in the monetary system in the post World War II period. “In an effort to free international trade and fund postwar reconstruction the member states agreed to fix their exchange rates by tying their currencies to the U.S. dollar.” The fundamental of this system was liberalizing trade policy and promoting free trade. The U.S. dollar was linked to gold as a show of its dependability in the eyes of the rest of the world, $35 equaled 1 ounce of gold. They followed an adjustable fixed exchange rate (1% band). It set up the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which is a part of the World Bank today. Member nations monetary contributions to the setting up of these institutes determined their number of votes as well as their economic prowess
The main factor that put us in a recession in 2007 thru 2009 was the crash of the housing market and subprime loans. Are we are no longer in a recession. But where are we?