The US. Economic Crisis

The US definitely has an economic problem. This is the worst crisis since the Great Depression. As of right now, unemployment is at an all-time high, people are spending much less than before, companies are going bankrupt, etc. I’m sure that production possibility curves for many, many companies have decreased significantly which means that amounts of products that were producible before may now be impossible. There is now such a scarcity of resources, prices have increased greatly which leads to even less consumer spending. If it hasn’t happened already, market failure is fast approaching. With the example of GM and the government owning some of the company, one can see that this is one market that has definitely failed. Hopefully, this won’t lead to government failure. Trading has stopped helping since the majority of people don’t really buy American anymore.

Here’s where it all began: real estate. Profits started to decline and attempts to restore the balance faltered. Some strategies were inflation, cutting back on health insurance/pensions, bankruptcy. None of these have worked. If anything, these made the crisis worse because less and less money was circulating through the nation. The debt reached banks and this is what impacted the rest of the economy. Businesses are dependent on the banks for financing. When the banks were not able to provide as many loans, then business investments and consumer spending decreased. The government has been frantically trying to restore order, but we have yet to see how they will prevail in the long run.