This.

People purchasing houses they could not afford. The American Dream was telling them to spend more than they had, same with credit card use.

When people spend money it does make the economy grow and expand, but the USA has been growing for years now and people got comfortable spending ungodly amounts of money on a credit card. Keeping up with the Jones' became a way of life, and now its biting these folks in the butt.

People are scared, and are therefore not buying new cars, houses, boats, etc. This forces businesses to use the cash they have on hand to pay their employees and the electric bill and not expanding their business. This causes growth to come to a grinding halt. People are pulling money out of the stock market, and it just becomes one big domino effect. Trillions of dollars on paper, have disappeared.

People who are of retirement age can't even retire, because their nest egg has been hit so hard. My dad has lost 25% of his retirement fund.

Hope that helps, its a tough question because there is SO much involved with the economy.

Short answer with no politics: Let the markets correct themselves. It will be bumpy for a while, but it'll even out. A lot of politics can be inserted in the long answer.

Honestly, I don't understand macroeconomics at all. It's always seemed to me like an inherently unstable system. If everyone spends more, the economy is better, which gives everyone more money to spend even more. If everyone spends less, the economy is worse, which impels people to spend less. I think the whole concept of the economy is a scam perpetrated on the American public by the University of Chicago.

It wasn't greed, it was stupidity. This entire economy is built around trying to make more money for yourself.

Stupidity in the lending industry led to a paper loss which sent people into a panic.

The media has made things infintely worse by telling people that everything sucks. Think about it: Everyone said we had to pass that stupid bailout or the banks would collapse. 700 billion in debt is rammed down our throat, none of it is doled out (Paulson's sitting on it) and yet the banks are still here.

How could that be?

Answer: the stupid stimulous wasn't needed...ever. The banks weren't crashing, the debt service wasn't going to make us sell off Alaska. Things were pretty good outside of a few bad banks and a handful of really cruddy regions where land prices were way too high and an adjustment was necessary. But once that sucker went through, the folks that control most of the country's money realized we'd just made a large mistake and pulled out of the market.

The economy wasn't actually as bad as it was made out to be. When the media tells everyone that the place is going down in flames, it's a self-fulfilling prophecy. Nobody hires, nobody spends, the multipliers don't work and we stall out.

[begin politics] Had the media not been so hell-bent on painting everything as dire and horrid to get Obama in office, we'd be out of this thing by now. The big 3 meltdown (again arguable) and every other true major drop has been a reaction to a non-existent panic. The only actual problem was the real estate market when sub-prime fell. What nobody mentions is that most of the losses were centered among land speculators/developers. A bunch of idiot land speculators taking a bath on real estate does not fuel an economic crisis, jackass manipulators in the media do. [/end politics]

Bottom line: The media and a stupid federal government (both sides of the aisle) screwed us on this one. They created a recession from an isolated market correction.

Post-depression laws were wiped out less than a decade ago, deregulating the banks... that was one thing that led to banks/lenders handing over lots of money to people so they could buy houses they couldn't afford. As more people got approved, demand went up, which means housing prices went up, which means lenders handed over even more money, now to people who really couldn't afford it. After a few years, people suddenly realized this wasn't a good idea ( :doh!: ), but it was too late... people can't pay their mortgages and banks start going under because of the awful investment.

Banks stopped lending money to stop the bleeding. Consumers now can't get loans for big purchases like houses and cars, which are obviously a huge part of the economy. Large corporations use loans to operate, and now can't get them, so they start laying off people. So now you have people who couldn't pay for their house to begin with are now unemployed, too. Corporations also react to their stock price (even if they shouldn't), which is going down because of the fear of a recession due to everything above, which means even more layoffs and budget cuts.

Look dude, Bush is pissed that you didn't support the war so he is giving you the business Beave.

Bush is just dumb, if only he would have pulled the green lever instead of the red one, then everything would be okie dokie right now.

I wonder how this is all going to affect student loans. I have one year left of school and I'll be applying for financial aid in the next month.

I had my 5th highest gross sale on Saturday, and almost everyone asked me how I was doing in this bad economy.

Go figure? :shrug:

Maybe it is all that funny money they are pumping into the system right now?

Don't do it. Donate plasma for tuition, and sperm for books.

Maybe in a bad economy people eat pets.

I am sorry, I didn't want it to turn into a political war where everyone said it was so and so's fault and only so and so could fix it.

Eh, the only comment was from Bunnytdr, and it was sarcastic. But you'll find it hard to discuss a tanking economy without politics involved.

I'm not being a smart ass, just saying sorry for not clarifying what I meant.


We have been discussing this topic a lot and it amazes me how everyone has some way to fix the economy, not two people had the same idea. It was, new government, spend money, don't spend money. I never really followed politics or anything like that so I had no idea what was going on and didn't really believe this "recession" we were going through until the past few months where I have looked for a job and can absolutely not find one. Seems here a lot of people have different opinions as well on how to fix this problem. I am just curious, that's all.

The large national debt is killing us
China loaned us most of it so we have to import
dogfood with anitfreeze in it and children's toys with lead paint

I have told my sons many, many times that if they want to learn a foreign language, Mandarin Chinese would be a good idea. It is always better to be able to communicate with your masters.