Why are America and Americans in Financial Problem? Part I

President Bush on economic crisis

George W. Bush - Press conference about economic crisis 2008-09-30
George W. Bush - Press conference about economic crisis 2008-09-30 | Source

Financial problem America: Reasons behind


America is the richest country in the world. Americans are the richest. Are they satisfied? Are they actually happy? Ask any common American and the reply will probably be negative.

Why?

Americans are in economic crisis.They are in financial problem. Sub-prime crisis hits America severely. The USA is on the brink of recession.Though the recession is not yet started technically but America is actually experiencing the deadly face of recession.

Banks and financial institutes of America are cracking down. Sub-prime crisis has exposed financial problems and weaknesses of financial institutes. It is advisable to be prepared for financial shocks in American stock markets. I will not be surprised if some large financial institutes collapse, may it be Morgan Stanley, Merrill Lynch or Lehman brothers.

Merrill Lynch, Lehman brothers and Morgan Stanley

Merrill Lynch building
Merrill Lynch building | Source
Lehman Brothers Rockefeller centre, Times Square. Photo by David Shankbone
Lehman Brothers Rockefeller centre, Times Square. Photo by David Shankbone | Source
Morgan Stanley Building, Canary Wharf, London
Morgan Stanley Building, Canary Wharf, London | Source

Apparent and actual reasons for economic crisis


There are apparent reasons of economic crisis and financial problem of America. People are discussing those apparent and temporary reasons and trying to control those aspects. Nevertheless, there are much deeper reasons than those apparent ones. They are overlooking actual reasons and causes behind the economic crisis and financial problem. Sometimes they cannot even understand. How can they know those internal aspects of permanent nature?

This is a million dollar question. The answer needs introspection. Every American need to Introspect whether they are politicians, policy makers, economists, social workers, sociologists, investors,job-seekers, hired or fired.

Is it because of terrorist attack 9/11 or Iraq war? Yes, these are some of the reasons, only some.

ARRA Unemployment Rate Graph
ARRA Unemployment Rate Graph | Source

The secret history of 9/11 - full documentary

Effect of terrorist attack 9/11


The attack on the Twin towers of the World Trade Center was not merely an attack on the buildings. It was an attack on the ego of the Americans. It was also an attack on the American economy, an attack on a ruthless but continually progressing economy.

It had broken a myth, a myth that America is safe, a myth that no outsider can attack America and a myth that America is non-conquerable. It has shaken the faith of the common Americans. The fear factor is now haunting them. Where there is a fear there is a lack of confidence. The US citizens have started losing confidence in their Government, politicians, and bureaucrats. This is one of the causes of economic crisis and financial problem in America.

The attack has cost a lot to the Americans. Besides direct monetary losses, the American economy has witnessed huge indirect losses. It has enhanced security costs by many folds. It has slowed down movements of both people and goods. As a result, the economy has slowed down.

America is conceived as anti-Mohammedans after this attack. Whether America is anti-Muslim or not is a debatable question. However, It is conceived so. Osama- Bin-Laden and other fundamentalists urge to their community to boycott American goods that mean Americans are losing sizable part of its customer base. This is another cause of the economic crisis and financial problem in the US.

America has spent a lot in the Iraq war. Billions of dollars are drained for the purpose. These are tax-payers' money, spent in Iraq war. Iraq war is not yet reaching to a logical conclusion. It needs dollars till date, many many dollars of the common American taxpayers.

President Bush is losing his popularity that hit the lowest level since last fifty years. What is the reason? People say, it is Iraq war.

Debate on Iraq war

China and other factors


Asian economy has been in its boom led by China since ninety's. America had supported China by all means. America has placed China in the status of the most favored nation. China has got the biggest consumer market in the world. They have started manufacturing all types of consumer goods. They produced cheaply. They produced and exported the cheapest. China has dumped its products in America.

The American market is flooded with cheap Chinese consumer products. American consumer durable manufacturers lost their competitive edge against China. In turn, they started outsourcing their manufacturing jobs to China and other countries providing cheap labor. These cause job losses in America.

The growth rate in the US has started slowing down. Stock markets have already faced bad days. Investors are going out of the US in quest of a safe heaven. Many of them have started moving to Asian countries likes of China, India, Korea, Vietnam, Philippines, and Malaysia. All these cause the economic crisis and financial problem in America.

( This hub has been written in May 2008, so please read in that context.)

Warren Buffet - How to turn $40 into $ 5 Million

Was giving status of most favored nation to China a blonder for America?

See results without voting

Warren Buffet pulls out investment from America


I like to point out a very crucial and interesting point about Warren Buffet. He is the richest person in the world at present. He has pushed Bill Gates of Microsoft to the third position in the list of richest persons in the world. Despite his American nationality, Warren Buffet is not investing much in America. He pulled out the investment of approximately $ 20 billion from the American stock markets alone in the year 2006. A major portion of his portfolio is enriched with foreign stocks. Recently he visited Germany to find an opportunity to invest there.

The above mentioned are some of the reasons of slowing down American economy causing financial problems to common Americans. Will someone bailout American economy? Please view other reasons of economic crisis and financial problem of America in Part-2 of this article.

( This hub has been written in May 2008, so please read in that context.)

Updates:

1. Please visit this link for the current situation on 7th June 2008.

2. President Obama has taken over the office of the President from George Bush. He has already spent more than hundred days in the White house. There is not much improvement in the economy as on 11 May 2009.

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Comments 19 comments

zia aman 5 years ago

thanx kothari for writing so bravely.

butwatever u said is correct


Sunny 5 years ago

Jyoti,

You are right. American financial system is at the brink of failure. S & P has downgraded American credit today. America is really in problem. You have predicted it well before.


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Amit,

Thanks for your comment. You are right with the spirit of the hub why Americans are in financial problem. They have invited economic crisis their own.

Thanks,

Jyoti Kothari


Amit Sahney 7 years ago

Americans are in financial problem because of their own deeds.

They have invited this economic crisis for themselves. They have to live with this financial problem because they have thought of their own only and pressurized the world to fulfill their own interest. Every thing has an end and America is moving towards its end.

Thanks Jyoti for a bravely written hub.

Amit


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Rjowais,

Thanks for your comment.

Jyoti Kothari


rjowais profile image

rjowais 7 years ago from New York

You are right my friend!

For more info visit!

http://financial--problems.blogspot.com


DK 7 years ago

Anjali has rightly said that Banks in America gone bankrupt. Yes, you have suggested that long back. The banks failed because of greed.

No bank failed in India because of its strong banking system.

Thanks.


Anjali Kapadia 7 years ago

Hi Jyoti,

banks have gone either bankrupt or in serious problem. You have suggested that long before.

Thanks for an informative and mind boggling article.

Anjali


JYOTI KOTHARI profile image

JYOTI KOTHARI 7 years ago from Jaipur Author

Hi Earnesthub,

Any one with open mind can see and predict. What one seeds he or she reaps the same.

Hitting the nail on the head is remained only way to awake people.

Jyoti Kothari


earnestshub profile image

earnestshub 8 years ago from Melbourne Australia

This comment is a bit late, sorry about that, but much of what you predicted has happened now.

You have an open mind and have hit the nail on the head.


mohit Mishra 8 years ago

It is indeed true that the biggest bloonder by the Americans are to provide status of MFN to China.

Mohit


Jagan Doshi 8 years ago

Jyoti,

Truly speaking only few people thaught in a way you described. I am agree with you that Iraq war is the biggest bloonder. george bush was the vilain.

jagan


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Dorsi,

Part 2 is already published. I am preparing 3rd.

Jyoti


Dorsi profile image

Dorsi 8 years ago from The San Francisco Bay Area

Good start to explain what's happening. I'll be looking forward to reading more.


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Dear Pgrundi,

There are much more shocking things. In the first part I have only covered very apparent reasons. Go through the second part and u will go little dipper. I have to write the 3rd or even 4th part to take to the deepest causes. You have to wait a little for that.

Jyoti Kothari


pgrundy 8 years ago

Interesting hub Jyoti--No one talks about it much here, because it would be seen as treason, but actually I think the 9/11 attack on America was successful. We are hurting economically now, and we are all afraid and have given up many of our rights out of that fear. That is what the attack was meant to accomplish, and it did accomplish it. I'm not saying it was justified or ok for Bin Laden to do that, I'm just saying I think it did hurt us and hurt us bad.

I hope I don't end up in Gitmo for saying that.


JYOTI KOTHARI profile image

JYOTI KOTHARI 8 years ago from Jaipur Author

Thanks dutch.

I think the world is flat formula is not up-to-date. A new edition of the same is required. I have not read 3 billion.... but from the title it seems to be about China, India and.. Brazil? Russia? Vietnam?.....

Jyoti


dutch84 profile image

dutch84 8 years ago

there is a book on the new business climate. "3 billion new capitalists" talks about the changes happening in the global economy which may be behind the current recession phenomena. Also, "The World is Flat". These books explore what is going on in the world to cause this "recession".


john schmit 8 years ago

This hub is pointing to a new factor, America backed China but it worked opposite. China is behind the American slow down.

john

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