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How can America survive from current financial and economic crisis?
Lehman Brothers Headquarters, New York
Subprime Crisis Diagram
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
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?
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)
America is in financial and economic crisis. How can it survive? What are the ways of survival for America and Americans........