How can America survive from current financial and economic crisis?

Lehman Brothers Headquarters, New York

Lehman Brothers headquarters in New York City on Bankruptcy day, September 15, 2008
Lehman Brothers headquarters in New York City on Bankruptcy day, September 15, 2008 | Source

Subprime Crisis Diagram

The many sources supporting this diagram are those used for the 2007 Subprime mortgage financial crisis and the linked articles below. Hopefully, this helps you visualize the elements. There is no substitute for reading the article first. This diagra
The many sources supporting this diagram are those used for the 2007 Subprime mortgage financial crisis and the linked articles below. Hopefully, this helps you visualize the elements. There is no substitute for reading the article first. This diagra | Source

Financial crisis of America


The United States of America is facing tremendous economic and financial crisis. Financial institutions are breaking down. Extremely reputed, large and old Financial Institute like Lehman brothers has gone bankrupt. Washington mutual fund followed it with as big as $359 billion!!! Merrill Lynch is sold out. The Federal Government bought more than 79% stake in AIG in order to save it from bankruptcy.

Manufacturing, automobile, FMCG, retail all of the business sectors are doing badly. Reality sector is doomed. In fact, that has played the biggest role in bringing a recession. The economic slowdown has started after bubble burst of the housing sector. It has put the banking business into trouble.

Americans are in financial problem. Many of the American people are not able to pay their mortgage or loan. Many of US citizens lost their jobs or they are at the brink of losing it. NASDAQ, Dow Jones, Standards and Poors all are falling sharply.

The Federal Government announced a bailout package of $700 billion. In spite, the economy is not reviving. Moreover, it is falling sharply putting US citizens into economic crisis and financial problem.

The recession seems to be obvious.

GPS: Economists on the Fixing America's Financial Crisis

Cash and credit crunch


The Federal Government cannot afford more debts. Interest payments have Lion's share in Government's total expenditures. Social securities may not exist anymore within few years. There will be no money left for the same. It will soon be extremely difficult for the Government to repay both internal and external debts. The dollar is losing its credit as global reserve currency.

Is America at the threshold of total economic breakdown? It looks like so if Americans do not change their habits.

Americans have taken it for granted for many years that economy will flourish forever. They have no hesitation in getting credit and spend it, as they like. But it cannot last forever. Now income is decreasing. The economy has started shrinking. Cash and credit crunch hit the economy badly. Mortgage, remortgage, loan consolidation, federal students loan consolidation are the primary issues nowadays. Federal students loan consolidation, best students loan consolidation are in the top paid keywords.

American People are looking at the Government and political parties. They US citizens are thinking that the next President will solve the problem magically and bring the country out of the present economic crisis. They are also thinking that the new President will bring them out of financial problems.

But there are no miracles in economics. There are no free lunches. It never happens. People have to fight for their own survival. Many other countries like China, India, Brazil, Russia are fighting tooth and nail to come out of this economic crisis and financial problems. People of America has to understand that they have to compete with them for their bread. It is in the best interest of Americans to remember that the Americans will no longer be the world leaders.

Indian Institute of Technolgy

What can be the possible solution?


It is in the interest of the government and the people at large to change its policy of taking loans and paying interest forever. It will be better not to go for war at various places in the globe unnecessarily. It is the best idea to leave international policing forever.

It will help the people of America if the Government invests its resources in developing entrepreneurship and productivity to revive the economy. Government and private parties should motivate and manage people to be productive. Low-cost production of quality goods is the key word of global competition. Quality services in moderate cost can also enhance global competitiveness.

In addition, Government of America and the Federal Bank may think of selling huge gold reserve to pay out the debt or to invest in the productive area. Utilizing huge oil reserves may also be a good idea.

The USA has much more per capita agricultural land than most of the other countries. Agriculture has a huge potential of employment generation. This sector is ignored since a long time because of dependence on manufacturing and service industries. Low-cost labor gives third world countries a competitive advantage over the USA in manufacturing and service. sectors. America is failed badly to compete with them. The time has come for Americans to shift focus again on agriculture.

Workshop in IIT Delhi

Indian Institute of Technology, IITs are the most renowned institutes worldwide. Scene of a workshop in IIT, Delhi.
Indian Institute of Technology, IITs are the most renowned institutes worldwide. Scene of a workshop in IIT, Delhi. | Source

What are in the interest of American people?


1. Change their habits. Give up spending habits. Try to earn more and spend less. Switch to consume less.

Lowering consumption will also help fight global warming, a must for sustainable development.

2. Not to borrow any more. Try to pay mortgages. Discard credit cards or at least limit credits.

3. Reduce the number of credit cards. Have a zero loan policy.

4. Try to save money.

5. Invest money judiciously. Learn to invest in shares and mutual funds.

6. Consume less. Save more.

7. Live life green.

8. Be vegetarian. It saves a lot in many ways.

It takes 10 KG of vegetarian food to produce 1 KG of animal food. Thus it increases cost significantly. Vegetarian food is healthy food. Vegetarians are also less prone to diseases like Heart attack, Cancer, Diabetes, Mesothelioma etc. (Mesothelioma is a key concern nowadays. Mesothelioma lawsuits are in growing number and Mesothelioma lawyers are reaping benefit). Vegetarianism also keeps you slim and fit. Hence, reduces health care expenditures substantially.

9. Educate children in low-cost countries like India where the standard of education is high. Also, avail health care facilities from there when and where possible.

10. Invest in Asian countries for greater returns. Indian stock market is more than triple since 2004 instead of recent downfall.

11. Search job out of America, even if it has a lower salary. The cost of living is also significantly less. Job in India is safer than that of USA.

Will America and its people change their thoughts and habits to survive this cash and credit crisis and to get rid of present economic crisis and financial problem?

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(This hub is published on 29 September 2008).

US Financial Collapse is Occurring NOW

Do Americans need to change their havits to overcome financial crisis?

  • Yes
  • No
  • Can not say
See results without voting

Update: Credit crunch / Debt crisis in America


The Economic crisis and financial problem are increasing in America. The US economy is in serious long term problem. Bail out plans is failed. Rating agencies downgraded American credit rating. The US has a debt of more than $14 Billion. This amount is equivalent or more than GDP of many countries. It is very difficult to survive with a load of that much debt. Moreover, President Obama asked the Senate to prove more debt. The Senate permitted the same imposing several conditions on the federal government.

America came out from a serious problem which might cause economic disaster after this approval. However, this is a temporary relief. The American economy is still in a serious problem. Actually, it is in danger. The government, politicians, corporates, economists and people at large has to think on the problem. Any temporary measure can be proved dangerous and disastrous for the overall American economy.

The American crisis hit the economy in the European Union, another strong economy. China, the fastest growing economy is also facing the heat of American down trend. The whole world has come under and facing affects of American credit crunch.

It is time to rethink the policies and make positive changes. Short term popular measures will further worsen the economy. Should Americans be ready to eat bitter pills?

(Update on January 22, 2011)

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America is in financial and economic crisis. How can it survive? What are the ways of survival for America and Americans........

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Comments 41 comments

tropical1 profile image

tropical1 4 years ago from Jupiter, Florida USA

It will be hard for America to crawl out of this debt. We have to reign in spending, cut back on entitlements and get people back to work.


Maestro 5 years ago

Hi,

America has not learn any lesson and their economy will crash soon.

Thanks for an eye opening hub.


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Praveen,

I think Americans have started learning slowly. They are now changing their financial habits little bit. New era of Co-operation between America and India is started from today as Prime Minister Manmohan Singh is visiting White House to meet President Obama.

Thanks for comment.

Jyoti Kothari

http://business-finance-and-management.blogspot.co...


Praveen 7 years ago

Hi Jyoti,

It seems that America and its citizens did not learn a lesson. They are going in the same mood. This will only enhance their financial problem.

Praveen


DK 7 years ago

I do not know whether America can survive or not. This is a doubtful question. Following your advices may help them from falling freely.

Good hub. I rated it up!


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Anjali,

It is better for People to see inside of a phenomenon. Thanks for you to post this article in your blog.

Jyoti Kothari


Anjali Kapadia 7 years ago

Jyoti,

This is an article that opens eyes of the Americans and others. I have posted this in my blog and getting good traffic.

Anjali


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Dear Kamal Surana,

You have writely commented about the Americans. Thanks for commenting and supporting my ideas.

It is in the best interest of the Americans not poke nose in everyone's matter in the world. I agree with you.

Jyoti Kothari


Kamal Surana 7 years ago

Americans are in crisis. They have wrongly backed dictators like Saddam and General Musharraf in the past.

Iraq war and giving China status of MFN were blonders, they committed.

Americans have to change their habits of poking nose everywhere in the world. This habit costs them lot and people all over the world hate this idea.

Thanks for an extremele informative article. There are new ideas and I support those.

Kamal Surana


Anjali Kapadia 7 years ago

Jyoti,

Very informative hub. I have blogged this.

Anjali

http://business-india-business.blogspot.com/


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Sunil,

Vegetarianism is a good way of living. It is not difficult to be so. One has to change his or her mind set for the purpose.

Jyoti Kothari


Sunil Gujar 7 years ago

Hi Jyoti,

I also believe in vegetarianism. These are healthy, economic and environment friendly. If Americans start, even partially, eating vegetarian food, they will get rid of obesity, diabetese and cancer. It will save enourmous amount in their medical bills.

This will be cost effective and save lot of money in economic crisis.

Sunil


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Link financial,

Thanks for supporting the idea in comments section. Yes, if one can not be vegetarian he or she can do it partly. Partial action will bring partial result. And even that is good.

you have given very good suggestion.

Jyoti Kothari


Link Financial 7 years ago

Interesting fact about the amount of vegetarian food required to produce meat. While becoming vegetarian isn't likely for most people, you can cut down substantially on your meat intake ..have a 2 or 3 "veggie" meals each week - it will save you money, make you healthier and help conserve resources.

I think there's a definite slowdown in "consumerism" that's here to stay..people will have no option but to live within their means and re-discover the simple, low cost, pleasures in life.


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi James,

I feel that you are angry at America. However, America is now in distress and we have sympathy for them.

America has given a lot to the world, Computer, internet, bio-teck and so on.....

Every thing has pros and cons. america has been falling from its throne due to its own mistake and wrong policies as I have described in some other hubs on the topic.

It is a general criteria that when in good times people behave in a different way than in bad times.

Thanks,

Jyoti Kothari


Sumit Dassani 7 years ago

You are right Jyoti. America has fallen of its own bad habits.

Sumit


James Babb 7 years ago

Hi Jyoti,

I am totally agree with you. America is the most selfish country. It has always exploited other countries in its own interested. Now all has turned into it.

How can America dare to even speak of Nationalism? How can it be conservative after advocating liberalization for so many years?

Babb


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Kiwi 91,

Thanks for your judicious comment.

America was great supporter of free economy. The Us have advocated for globalization and free world trade for half a century. Many of the underdeveloped and developing country opposed that but the US had forced them to join the club.

Now the time has changed. The US is feeling heat of bad economy, financial problem and economic crisis. And now thinking of a 180 degree turn.

Is it good? Can it be justified in moral ground? Can the US revert their policy of free economy, capitalism and go back to nationalism?

Jyoti Kothari


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Freelance world,

I an thankful to you for commenting with relevant points. it has enhanced value of the hub.

I am of strong opinion that American Government and people at large have to change their habits to overcome the crisis. The crisis is not due to any disaster or natural calamities. It is because of wrong policies of previous administrations and bad habits of consuming more and producing less.

America can not come out again as leader in economy if they will pursue with same tactics.

I have published many other hubs describing causes of financial and economic problems and crisis.

I request you to refer those, I have written well before the crisis started. Most of them came true.

I amspecially interested to know, with which poits are you disagree, so that I can review those.

Jyoti Kothari

 


kiwi91 profile image

kiwi91 7 years ago from USA

I think this bad economy is just what a lot of people needed to change their habits, as unfortunate as all of the circumstances have been. But, people have changed their habits and are living differently now for the most part. As for investing internationally, I think we should support the US economy as much as possible. We need a stronger sense of nationalism. What ever happened to being concerned if something was made in china?


freelanceworld profile image

freelanceworld 7 years ago from Canada

After these bailouts and some recent rise in DOW jones Industrial average and other US indices (and in fact obvious rise in other world indices too), some people have started talking about next Bull Run.

They think, its over ,,,but do u think such huge bailouts can do it?

Never ever in history of world finance, Govt.'s have been able to control markets. Financial markets work as per All time tested Elliot wave theory and certain basic rules & they will move a per that only.

I feel pity when people are losing jobs, its not just US..its all over... many people from other countries are also goin back home losing jobs in foreign countries like US, UK etc.. All are in same Plane.

BUT thinking these bailouts will do the trick. NO.

I am a Market Analyst myself and have predicted the 10th Feb fall in DJI index.. (yeah ....within my friend circle only...ok...oh yes... not many others).... And i think the real pain is yet to come. Mercy is yet to be granted.

Hope the world manages it in nice way, as in these uncertain times when antisocials are galore, when militants are causing havoc, compounding of these all my lead to catastrophe.

I may sounding very pessemsitic, but that's what the world scenario is.. and every bull run has to end with a bear bottom marked by such conditions.

The difference this time is, the crisis are much deep and Big world economies like US are taking them for granted/as-usual,,,pumping money like rotten fruits... This Will just hasten the more pain. nothing else.

Hope we manage this.

Though i dont agree much with your hub , its nice you tried to bring forth the view. Some info is real truth

Regards


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Sue,

I agree with you. It is indeed true that millions of US citizens are in financial crisis and it is difficult for them to come out off this disaster. However, they can survive if they change their habits. Many of the polls in different hubpages suggest that.

Jyoti Kothari


Sue 7 years ago

Hi,

It is very difficult for America to come out of the recession and progress like before. We see millions of people suffering financially.

Sue


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Dagny,

It is up to one what would he like to eat. However, vegetarianism has positive impact on health, emotion, environment, and crucially on economy.

Jyoti Kothari


dagny roth profile image

dagny roth 7 years ago from Neverland

I agree with most of this. I believe Americans need to learn to be more self sufficient. That goes for the government as well. Not sure about becoming a vegetarian though...I sure do enjoy my piece of meat here and there! LOL.


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Mrinal,

Americans have to change their habits as poll suggests in various hubs of me about Financial crisis.

Jyoti Kothari


Mrinal Ghosh 7 years ago

Hi,

I agree with you. Americans are no longer the world leaders in economy. They are world leaders in recession. If they do not change they will collapse.

Mrinal


Miss Suggestive 7 years ago

Ha! Months later and look at these posts. Yeah, China's hurting. India's hurting bad too with the American companies laying off outside help first. Kothari; it is not the US economy that Lord Floyd is speaking. It is the American spirit. It is unbelievably powerful and is the invisible thriving force of all the glory. It is not the capitalism, but the spirit for which it thrives that makes the united States what it is. I've yet to meet a foreigner who can see that.


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Yes, the bubble is burst at last.

Jyoti Kothari


Emergency Preparedness  7 years ago

The world has actually overestimated US. The bubble is burst. But not by acsedent, it was engenired, blueprint from 1930 s.

Very, Very, sad. America has had a great Constitution.


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Dear Loyd Ford,

I am agreed with your views but one. The world has actually overestimated US. The bubble is burst.

Thanks for comments,

Jyoti Kothari

http://vardhamangems.webs.com


Loyd Ford 7 years ago

Change is needed in the United States. No matter if Americans want to change, The financial crisis in the United States is impacting all across the globe. Today all Americans should be developing their own plan to save more and reduce waste.

Many people around the world have underestimated Americans for generations. This financial crisis is a meltdown, but we're not out.

Not by a long shot.

Good luck to everyone reading this. India. United States. The world.


henrytom profile image

henrytom 7 years ago

Thanks for the advice. The US still has great future ahead and I strongly believe that if the advice is followed, at least the financial crisis would be minimal


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Moonlake,

I wish, the Americans can.

May heaven bless them.


moonlake profile image

moonlake 8 years ago from America

Americans are strong and they can make it through anything and they will. So we have to start over so what. Americans will also always stick together no matter what and no matter who they think should be president. If families have to move in together they will but we will all survive. They may panic for awhile but they will pull themselves together and figure out ways to make it.


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Dear Shruti,

You are right but Americans are still sleeping. They are not at all interested in global issues but confined to their own space. Top 20 searched words in internet by the Americans do not include any issue outside America.

jyoti kothari


shruti 8 years ago

Good hub.

America should start thinking in a different way. Emerging Asia has really challenged their supremacy.


Jagan Doshi, 8 years ago

dear JYoti,

I liked your suggessions. It is also aplicable to indian young generation. many hyderabadi youth also follow American lifestyle. I will suggest him to follow your advice. they be bankrut if they do like now.


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Americans are wealthy enough but they will not if they move in the way they are. Nothing will be happened to INdians and Chinese if Americans consume less. China and India have a population more than one third of the planet.

They will not depend on America in near future.

You may read the hubs about financial problem of America. There are links to those in this hub.


ngureco profile image

ngureco 8 years ago

When the Federal Government announced a bailout package of $700 billions the financial markets understand that to mean the economy is in a real financial mess.

Stock market has to correct itself regardless of bailout packages or not.

The American people are economically better than anybody else in this planet. If that economy was to come down, then every other country will suffer.

When you suggest that they consume less, do you know what that means to billions of people in China, India, etc., etc?


SweetiePie profile image

SweetiePie 8 years ago from Southern California, USA

Interesting hub, but your suggestions are not applicable for most Americans.  Some people may want to work in India, but I would not pose that as a suggestion for others.  Also, eating vegetarian foods is a more healthful way of living, but no one person should tell others what and how to eat.  One of the biggest things Americans need to do to weather the financial crisis it to invest more in American companies and to stop sending jobs over seas.  Also, I try not to buy bargain products as much anymore because many of these commodities are made in China.  Buy American, invest in America more, and people should not live beyond their means.  

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