What Really Caused the Recession?
@whimsystoryteller (1743)
United States
March 31, 2008 9:53pm CST
I've been warning people about the current recession for the past three or four years and everyone ignored me but now it's really happening and I'm wondering if anyone will pay attention now.
There are several key things that have created this economic crisis and until the American people are ready to face these issues and change their ways of doing things, what we see now is just the beginning.
The key reasons we are in a recession are as follows:
1. Illegal immigration- not just the jobs we've lost to people here illegally but even more so are the anchor babies that these illegal immigrants have had and are now draining our economy with all of the welfare and WIC that they collect. It's costing our nation billions of dollars every year. And, the fastest way to stop that cost is to cut them off. If we quit rewarding them for having children in our country, they'll stop and go back to their country because they can't make enough here to live in this economy.
2. People living off credit and beyond their means - I see kids all the time with fancy cell phones, iPods and the latest fad in clothes and their parents have the latest in TV sets, etc. It's absolutely ridiculous that a whole generation of people are deep in debt because they are trying so hard to keep up with everyone else. People are having heart attacks from the stress and now people are losing their homes because they are over their heads in debt.
Whatever happened to saving up for things? I don't buy things unless I have the money for them. This credit thing has turned our nation's people into a group of thieves because every time you buy something with that credit card knowing you can't pay for it next month, you're stealing because all you pay is the interest and that's not paying for the item.
3. Credit cards and loan companies run amuk - There needs to be some regulation as to their interest rates/contracts and people with bad credit shouldn't get loans without a co-signer.
If the people of this country don't stop living on credit, the financial situations we see right now are going to get much worse. And, these businesses that offer you items that you don't have to pay for until the next year need stop that as well because no one knows what will happen within a year. Someone told me they have insurance if the person can't pay but then the insurance rates go up. It's just like the idiots at the grocery store who leave perishable items out on the checkout counter or on some shelf in the store. Don't you realize that every time something spoils because of that, they pass on the expense to the consumers in the store?
4. Government spending - there are entirely too many government programs that are way out of hand. The welfare program needs to be re-designed and limited in time. The EDD needs to be re-designed as well because it's really unfair that we put in money to Unemployment that we've already paid taxes on in our paycheck but then they turn around and charge us taxes on it when we utilize it. Also, the payment level structure with Unemployment needs to be changed because being out of work is hard enough without being penalized for trying to pay the rent.
Something is really wrong when our government pays to support illegal immigrants and their kids but penalizes citizens who are trying to take care of themselves.
Anyway, let me hear your thoughts on the matter...
3 responses
@ryantakyan (148)
• Philippines
2 Apr 08
From what I have remembered from my Economics class, a recessions is the decline of a country's GDP for 3 consecutive quarters. Personal Consumption and Government Spending is part of the GDP (following GDP = C + I + G + (EX-IM)) so if there is big consumption and government spending then there would be a possibility that GDP would be bigger.
Seriously, we cannot blame recession to anyone since it's very hard to predict if there's going to be one in the next years. But recessions can be avoided if there is proper management of a country's economic instances.
@whimsystoryteller (1743)
• United States
2 Apr 08
I'm not sure where you're living but everything around us is screaming recession. And, yes we can blame a lot of people for it. The reason we are facing the high costs and people are losing their homes is because no one wants to take responsibility for their actions in this country and change their way of living.
I don't care what an economics class says. The reality is that gasoline is almost $4 a gallon, food prices have jumped almost 50% on many items in just the last few months and our country is in debt up to and above its eyeballs because no one wants to save anymore, they just want to buy what they can get their grubby little hands on. That coupled with the fact that our nation is overextended trying to support people who are here illegally and come here to have babies so they can get on our welfare system. It's stupid! And irresponsible!
As far as recession being avoided by proper management of our country's economic system, you are living in a dream world. The reason we are in this mess is because no one is properly managing things or the things I mentioned above wouldn't be going on.
You're probably one of those people living on credit so are you living on credit or are you managing your resources properly?
@ryantakyan (148)
• Philippines
3 Apr 08
No, I don't live off credit because I do not spend for myself. I am still dependent on my parents and they earn more than enough for us not to take any credits and loans.
But I think blaming it to these things is a bit premature. The government identifies problem areas that caused the recession but there has never been a single reason or cause to a recession. I mean, almost every country in the world experiences recession and there is no doubt that as long as there is no proper management of economic instances these economic downfalls will always occur.
@ladym33 (10979)
• United States
2 Apr 08
We pay our credit card off every month, and live in a home below our means, which I believe is what people should do instead of taking out loans for homes you really can't afford. I don't know why any one ever thought that would be a good idea. If you live in a house and don't have at least a couple hundred dollars extra to put in savings every month, you are living in a house you can't afford. Even if you manage to scrape by every month, if you are having to scrape you in a house you can't afford, if you don't have any money to put away for your kids college or to get them braces you are living in a house you can not afford. The loan companies should be ashamed for creating those unrealistic homes, but I agree with you the people who took out these loans should have known better, but unforunately schools don't teach financial responsibility. It is certainly sad.
@coffeebreak (17798)
• United States
4 Apr 08
Add to that that wages never increase to accomodate the cost of living and you got the common sense realities of this country's current problem. I've been watching it build for years too. And now, since so many millions and millions deliberately bought homes they knew they could not pay for and are now paying hte price and blaming the lenders etc, and we are up the creek without a paddle! I just saw a clip on Yahoo News where a couple by their own admission/words, bought a home - their income was $30,000 a year, they bought a home for $330,300! The lender said one thing, but the loan papers said another and they said they couldn't make that payment, but signed the loan anyway!!! Now it is the governments fault?
@whimsystoryteller (1743)
• United States
4 Apr 08
No one should ever sign a document knowing they can't live up to it. Once you sign those papers, you are legally bound to them. People are fools who sign a contract knowing they aren't going to be able to keep their end of the bargain and they deserve getting booted out of the house. I won't even call it their home because it isn't theirs. When someone knowingly agrees to something they don't plan to do, I don't feel one bit sorry for them.
In addition to the housing market, though, I just got an email saying that 30,000 people lost their jobs in March. The job market is already tight so I don't know where they are going to find jobs.
It's just a scary state for the economy at the moment.
@coffeebreak (17798)
• United States
4 Apr 08
Borrowers signing the loan papers and not knowing what they were doing, and knowing they couldn't make the payment when the adjustible term was up and not asking questions, but just taking it a gospel what a loan agent says, are why the current foreclosure problem exists. If they sigend a 3 Yr ATM, they should have asked "what will the payment be in three years" and if they couldn't meet that payment now, they shouldn ot have signe. Salaries don't go up regularly to accomodate a ARM - those are for someonet hat knows they won't be in that house more than 3 years. Or lkes to gamble and hope they can refi in three years. But that is what the Loan officers will say, "dont' worry - you just refi in 3 years and you'll be fine". This whole thing is at least 80%, if not more, the fault of the people/borrowers themselves. They didn't know what they were doing and didn't bother to ask questions or to figure out how it would effect them. Sorry, I dont have any sympathy for someone that doesn't take control of their own money and just sign what they don't have a clue as to what they are comitting themselves to.
@Destiny007 (5805)
• United States
1 Apr 08
Although we are still teetering on the brink we are't quite there yet....
You forgot to mention two other reasons... the out of control fuel costs and the out of control food prices.
The food prices are due to converting our crops into biofuels instead of food thus causing a shortage and raising prices.... and because of the rising fuel costs which is making crop production more expensive.
The fuel is rising due to our dependence on foreign oil, and over taxation as a way to force people to use less fuel as a way to stop man made global warming... which by the way is a hoax.
Climate Change and Global Warming / Cooling is caused by the Sun and water vapor... not CO2.
CO2 is plant food,and is not a pollutant.
As too the Housing Balloon and the credit crisis... after the Great Depression banks were regulated and not allowed to invest with deposited money... however there grew out of those regulations a new breed of Investment Banks that were not regulated, and these are the ones that we are reading about now... these investment banks were doing things that they should not have been and it finally caught up with them.
I believe that they should be regulated as well, with lost of oversight.
The financial sector is about the ONLY place I approve of strict government regulation. Industry and business need to be able to work unfettered so that the free market can work correctly.
@whimsystoryteller (1743)
• United States
1 Apr 08
You're right that I forgot to add the fuel costs as a factor. I got interrupted by some rude neighbors in the middle of my post and lost my train of thought. I agree that the global warming thing is a hoax.
However, regarding the fuel price increase, part of that is due to the fact that the people who are selling us the oil know how spoiled the American people are and know they can get away with this.
Even though there does need to be more regulation on the financial sector, the people of this country greatly contributed by giving up the old-fashioned value of living within their means and saving up for things they want instead of being spoiled little brats wanting things now. People have taught their children that the only way to live is on credit and that they don't really have to pay for it if things get a little tight. Unfortunately, we have a nation of thieves who don't even know they are thieves.
