Recession is the Double-edge Sword of an EconomyA recession is the one sure sign that the economy is in a restructuring phase. It will ultimately uncover which businesses have a clear chance of success or are at the brink of collapse and failure. The resent economic downturn was the worst since the great depression and the stock market crash of 1929; at that particular time many businesses became insolvent and failed while the employment roles soared to great highs causing financial chaos and even death. This latest financial catastrophe was mainly due to bad business ethics on the part of the barons of Wall Street having little or no oversight of their financial dealings (bad management). Ultimately, the federal government (US Congress) had to rescue the failing economy with a 700 billion bailout at the taxpayer’s expense. Above it all, I still feel that the taxpayers are getting the royal shaft and the next generation of taxpayers will bear the brunt of the 700 billion bailout of wall street. In the short run and after saving Wall Street (big business), Main Street (US taxpayers) are being abandoned, saddled with looming unemployment and rising foreclosures. Even with the economy in shambles, I remain optimistic that we will climb out of the deep trench we are in. Our capitalism system is still very strong and will emerge even stronger than ever when we begin to see people paying there mortgages because they are not unemployed. You must understand that capitalism is an economic system in which land, capital goods, and other resources, are owned, operated and traded by private individuals or corporations for the purpose of profit. But this system has its own flaws; (case and point) the latest economic recession and financial system melt down. These downturns are contraction phases of the business cycle. The business cycle or economic cycle refers to the fluctuations of economic activity and about its long-term growth trend. The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), and periods of relative stagnation or decline (contraction or recession). These fluctuations are often measured using the real gross domestic product (GDP). Despite being named cycles, these fluctuations in economic growth and decline do not follow a purely mechanical or predictable periodic pattern. The U.S. based National Bureau of Economic Research (NBER) defines a recession more broadly as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." A sustained one may become a depression. You will see increases in claims for unemployment insurance benefits, mortgage foreclosures will skyrocket and reduced access to business funding or credit. We are in for some terrible times. In the past weeks we have experienced an episode of such a downturn in our economy, due to liquidity problems in our financial markets. We have also recently experienced large bank failures and rescues by our federal government. In this latest financial crisis our president swiftly sent a proposal to the U.S. congress to take the pressure off the overly burdened economy and financial markets; urging them to pass his 700 billion dollar rescue measure to avoid an economic collapse (depression). During this slowly developing downturn, financial institution failures are the precursors of other maladies that we are expecting in the coming days and months to come. If you are interested, there are things you can do to recession proof your life. If you are use to using credit cards to make your purchases, start using debit cards or cash. Start a budget. (Sample budget)(Ref. article) Start a savings account. If you have multiple savings accounts never keep those accounts over the FDIC limits. That way your deposits will be totally secured against any bank failure. If you have consumer debt, keep your accounts current, never be late making payments. When available seek a lower interest rate and/or adjust the terms. Seek information about entrepreneurship. The bottom line is that until we take care of the fundamental problem of fixing the foreclosure problem, we are headed to the worst one in U.S. history. Recession update: Good news, it appears that the recession is coming to a close. For you and me on main street, it is still not over until we begin to see the unemployment numbers begin to come down, but the overall economy has risen more than 3% in the last quarter putting the economy in positive growth territory. It was negative when the recession began a year ago. Much of the growth is being attributed to the stimulus package, exports to 3rd world countries and the "cash for clunkers" program. Further, the president is proposing a summit to be held in the near future to tackle the unemployment chalenge. ************************************** Page References Business Guide (Free Course) Sample Mission Statement and Vision **************************************
|
