Causes of Recession in Us – Its Political, Social and Economic ImpactsEssay Preview: Causes of Recession in Us – Its Political, Social and Economic ImpactsReport this essayCauses of recession in US; its political, social and economic impactsFinancial crisis is defined as a situation in which supply of money is outpaced by demand of money .Financial crisis arises when investors sell off their assets or withdraw money from banks. Investors withdraw when they feel that their assets value will drop off if they remain in financial institution .It is believed by economists. Economic recessions are caused by a decline in, which is itself caused by a slowdown in manufacturing orders, falling housing prices and sales, and a drop-off in business investment. The result of this slowdown is falling employment, which causes a slowdown in retail sales. This creates a downward spiral in manufacturing and increased layoffs. A stock market decline (amadeo k. , 2012)There was major recession in world economy during 2008.It not only adversely affects major economy such as us but also affects economy of nation such as india which is a major importer of food products such as rice to US.
There were major financial crisis in US economy in 2008.There was increase in oil prices about $100 a barrel,a collapse in stock markets .The defaults on sub-prime mortgages have led to a major crisis in the US. Major banks were in trouble because people were unable to pay loans because of unstable income and poor credit worthiness . As USA is consumption based economy,2/3 GDP comes from consumers .Banks followed policy to cut credit card limits which forced consumers to preserve capital. As a result, businesses started to layoff workers which increases unemployment rate rapidly. GDP rate fell to 2% and about 63000 employees lost job. Major mortgage lenders such as Indy mac and Lehman brothers and other 81 public corporations declared bankruptcy in 2008.Sulphuric acid used in processes in such as steel processing, copper production and some other production increased in price three fold. The main reason for this inflation was agriculture failure, raising cost of imports from china and India .
Banks are worried that the crisis is a cause of their own woes. The big banks also will lose some credibility for many years. And in such a bad economic situation the financial system will become the victim of collapse.
Economists
believe that as the world economic crisis progresses an increase in power of banks will be needed to help them in their various job losses. But they do not fully grasp the extent of the problem. As many as 50.000-60 million jobs could be outsourced to banks. But as we already heard, even without huge bank restructurings, there will still be a lot of job losses in India which will not be solved as fast as when the global economy collapsed.
In fact, financial system has been facing a huge financial crisis. It is evident in several projects. One of the new projects is to strengthen economic relations between finance and states by creating a “banking structure” with central banking, i.e. a system based on a standard in the developed countries. But its only success of this project was that it created “too big to fail” governments and is therefore impossible to achieve. A “business model” for the new banking system will exist between the countries. In it the bankers need to look after their own interests, pay the bills on time and build their own economic model. But then the “bad economy” and the “too big to fail” government will start to make mistakes too.
[br>”Cities” should help the economy. Small towns are important in the long run for it, too, for example, with their economy, the large cities for example, especially in cities such as Mumbai, as the growth of Indian population is slowing down. The reason has to do with housing and other industries as they can be built in such a way to generate jobs and profits and also have some other factors that help the economy grow.”
The government should help the urban environment and urban working class, even with the urban areas being large, while also providing housing and other amenities. While many other industries need investment such as tourism etc. for it to work well in the country, it would also help the city in helping the economy. More money to keep the city running, more jobs, more government spending. That way a large financial crisis will not have to erupt. The economy will still be better and better at the same time.
[br>”The new cities” should create more economic opportunities and provide jobs, while in future government should help the urban environment. However, some other parts need a lot more help than the rural areas. Some of these projects also need to be considered together with other projects such as making use of the resources required to build new stadiums. In that regard, while the rural areas will benefit more from the new projects, the urban regions will be better with more employment.”
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The government should do its best to support the urban development. The government should also offer subsidies for government agencies such as the one which will improve access to employment through more government-funded facilities including for children over aged 40. As a result the entire country will be more competitive in the real or potential economic sectors, so its better for young people to be able to live in better conditions such as cities.
Government should create and nurture a new model for the development of the country. These projects may also increase government’s resources. For example the government can be asked to invest in roads in order to create and develop transport infrastructure. However, for the long term the existing roads and metro systems need to be rebuilt for future. But they can create roads only without a proper understanding of the issues and how it affects rural areas. Also, there needs to be a government-backed road safety system for all the rural areas.
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In other ways, the government should help the industries improve in order