Wednesday, March 12, 2008

21st Economic Crisis

Our economy is like Wall Street; what goes up, must come down. People most affected by recession are those in the middle and working class families.

Because of the unstable economy, companies are threatens to downsize their employee work forced and closing doors are their next options. Many companies are laying off their employees. The loss of a job threatens many working class and middle class families with the threat of bankruptcy, because of the increasing accumulation of consumer debt. (Whiting, Sept. 1998) Jobs were hard to find; in addition, most people by without the choice, but were forced to sell their homes; many of them moved to other states. Most of them took low paying jobs to support their family. The unfortunate ones took from seven months to a year before they could find a decent job; however, "we have every reasons to maintain confidence in the US economy" according to Treasury Secretary Paul O'Neill. Others who are fortunate could sit and wait or started their own business, and the rest either take out a home equity loan or refinance to lower their mortgage payment.

In many cases, the measured responses to cost changes appear to correspond with outsourcing theories that are based on searched and customization cost. Swenson, D. (2004) Economic Indicator, Congressional Budget Office. U.S companies that outsourced the most jobs in 2003 also offered well above average pay increase up to 46% to their CEOs who outsource jobs according to new study released Tuesday from Forbes, Ackman, D. (2004). Many of them moved their businesses out of the U.S.A to other countries nearby or in the pacific where people are willing to take low paying jobs. The Dot-Com popularity is almost extinct. The recession hit California very hard with this. "On the basis of the most recent statistic, US economy cannot be classified as being in a recession. There are, however, worrying signs" Feldtein, M. K. (2001) Looking for the signs of Recession. The Boston Globe

Asia is so dependent on US trade that some economic experts predicting that could be pushed into recession Andy Xie, Morgan Stanley, economist told CNN. McMillan A.F. (CNN) Major market players in Asia like Japan, Korea and China are hit hard due to the slowing of U.S economy. European countries especially Germany, "as the sick man of Europe, is falling even further behind" said Joerg Kraemer the chief economist at Invesco Asset Mngt in Frankfurt. Landler, M. (NYT). Latin America regional economic growth remains "above expectations" said Jose Luis Machinea ECLACC executive secretary told news conference. (AP).

"There are some encouraging signs. It is not over until it is over, and it is not over yet. Recessions, like people, are shaped by characteristics inherited from earlier generations and previous economic cycles," said Stuart Hoffman, PNC economist Techyvent/Pittsburg (2002) Economist sees encouraging Signs. The US economy has achieved the critical mass of a self-sustaining cyclical recovery according to Stephen Roach from Morgan Stanley.

In the last three years, the housing market has stayed strong, retail sales are improving, order for goods are higher. Most manufacturings are bouncing off its incredibly low level due to low demand of U.S products for export.

Starts up businesses were almost the life savior for the people who loss their jobs and can afford to buy, a franchise businesses are the most popular, it seems very promising for the people who are desperate to find a job. All kinds of business scheme sprung up like mushrooms. Pyramid scheme (scum) quickie investment, insurance you name it and its out there waiting for unemployed to grab the bait and buried them to debt. Another business start to spread around by the word of mouth, husband and wife team up together to work few hours a night and others was lured by the Marketing techniques "Be your Own Boss" of cleaning franchise business with the start up investment as low as $ 500.00 or 0 down but there's a catch, the first three months of your paycheck will pay off the down payment of the franchise fees which is about 3 to 4 times of your monthly income. Few people who are smart enough to learn the systems started their own cleaning business, but for those who depend to the franchisor, they become the victims.

The pre and post 9/11 economies overall; are in much in recession level, according to the economic gurus. "The worst may be over, but the recovery is like to be anemic" said Conway co-author of the Puget Sound Economic Forecaster, Nyhan P. (2004) Seattle Post-Intelligencer. The people who work hard survive in these kinds of situations and they plan ahead in time of troubles and do not stop looking to support their family needs. Working class people are the one who most affected by the recessions, and the people who do not surrender because jobs are not available are called the "Survival of the Fittest."



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