From the nightly news and the front page of your local paper to the water cooler in your office and in line at the grocery store, everyone is talking about the condition of our economy. Words like "credit crisis," "recession" and even "depression" are being whispered. Is it really that bad? What's really going on with our economy?
Concerns arose when one portion of the mortgage business - subprime loans - began losing money when homeowners who bought more home than they could afford defaulted on their loans. This led to the collapse of Bear Stearns - one of the nation's largest underwriters of mortgage bonds - stock market panic and forced the Federal Reserve to take its boldest actions since the Depression.
As explained by David Leonhardt in the New York Times, "Bubbles lead to busts. Busts lead to panics. And panics can lead to long, deep economic downturns, which is why the Fed has been taking unprecedented actions to restore confidence."
How does this compare to other nations?
As the businesses invest more and more conservatively and consumers focus on saving rather than spending, the economy of the United States is shrinking at a rate greater than any in the past seven years.
Japan, the world's second biggest economy, unveiled a 5 trillion yen ($51 billion) package to support its own economy. And Germany revealed a plan to boost its business by 25 billion euros ($32 billion).
Nations across the globe, including China, Norway, Britain and Australia are also cutting interest rates, giving tax breaks and creating programs to support such industries as car manufacturers and building renovation.
Many economists theorize that the only solution now is for the federal government to bailout people with unwanted debt. Until this downturn improves, all you can do is try to deal with financial situations as best you can and let your power as a consumer speak for you
Goran Jovanovic
YOUR World Class Realty Team
Keller Williams Elite
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