Is excessive loans the downfall of the u.s. economy?

Question

Is excessive loans the downfall of the u.s. economy?

Answer 1

Of course not. The media will be.

Answer 2

No.  People who are losing their homes are renting.  This did not change the economy a great deal.

The media and the dems spreading doom and gloom is causing the economy to sink.

The fastest way for the economy to rebound at this point is if investors consider stocks and houses to be "ON SALE" and start buying.  The housing and stock market would soar within weeks.

InReality...EXCELLENT ANALYSIS

My Virtu...And where in your imagination did you come up with that 75 years?  Other countries do not show this.  The US has only had one in 232 years, and we have some pretty good safeguards in place to prevent another depression.  You might want to take an economics course or two before you spout off that liberal doom and gloom c**p.

Answer 3

Yes, it is a downfall, but only one of the downfalls of the US economy. This is something for the uneducated and foolish people answering your question.

A Depression usually comes along about ever 75 years, so we are over due.

Recession cycles are thought to be a normal part of living in a world of inexact balances between supply and demand. What turns a usually mild and short recession or "ordinary" business cycle into a great depression is a subject of debate and concern. Scholars have not agreed on the exact causes and their relative importance. The search for causes is closely connected to the question of how to avoid a future depression, and so the political and policy viewpoints of scholars are mixed into the analysis of historic events eight decades ago. The even larger question is whether it was largely a failure on the part of free markets or largely a failure on the part of governments to not exacerbate widespread bank failures and the resulting panics and reduction in the money supply. Those who believe in a large role for governments in the economy believe it was mostly a failure of the free markets and those who believe in free markets believe it was mostly a failure of government that compounded the problem.

Debt is seen as one of the causes of the Great Depression. (What follows relates to the USA).

Macroeconomists including Ben Bernanke, the current chairman of the U.S. Federal Reserve Bank, have revived the debt-deflation view of the Great Depression originated by Arthur Cecil Pigou and Irving Fisher: in the 1920s, American consumers and businesses relied on cheap credit, the former to purchase consumer goods such as automobiles and furniture, and the latter for capital investment to increase production. This fueled strong short-term growth but created consumer and commercial debt. People and businesses who were deeply in debt when price deflation occurred or demand for their product decreased often risked default. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged.

Massive layoffs occurred, resulting in unemployment rates of over 25%. (US) Banks which had financed this debt began to fail as debtors defaulted on debt and depositors became worried about their deposits and began massive withdrawals. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets.

The debt became heavier, because prices and incomes fell by 20–50% but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 US banks failed. (In all, 9,000 banks failed during the 1930s). By 1933, depositors had lost $140 billion in deposits.

Bank failures snowballed as desperate bankers called in loans which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending.[8] Banks built up their capital reserves and made fewer loans, which intensified deflationary pressures. A vicious cycle developed and the downward spiral accelerated. This kind of self-aggravating process may have turned a 1930 recession into a 1933 great depression.

This is exactly what is happening today, so WAKE UP AMERICA, WAKE UP!!! Huge credit crisis, cheap and easy credit, billions in defaulted home mortgages, 2 huge financial institutions crashing (IndyMac, Bear&Stearns), major layoffs, Fannie Mae and Freddie Mac needing federal bailout, raising oil, gold, food, etc. Prepare yourself now for the coming times and never be to foolish to think it can never happen. It has happened time and time again throughout history. WAKE UP AMERICA, WAKE UP WORLD!!!

Answer 4

The downfall of the economy is the federal government trying to protect  those that were swindled by the banks and other institutions. Instead of using taxpayer funds to reward people that knew from the start they could not afford the house they bought congress should make the lenders responsible.  It has been a double win for companies that gave loans they knew could never be paid.  They get penalties from the clients and also taxpayer money  when a default happens.

Answer 5

Lack of accountability is. People spend more than they earn and then expect the responsible people to help them. Its a downward spiral.

Answer 6

what downfall? The mall was crowded today.

Answer 7

No, the biggest problem is our leadership.  Our leaders are blinded by their wealth and education and can't see what is really going on.  If I made their kind of money, I wouldn't worry about gas prices or mortgage defaults either.

Answer 8

First off, the economy is not exactly booming at the moment but is far from being bad.  At any point in time there will always be parts of the economy & stock market that are doing great, some that are doing ok, some that are not doing much and others that are not doing well.  Even in the greatest economic times there are losers and even in the worst economic times there are winners.

That being said, the problems we do have with our economy are almost all related to the government.

The government taxes too much, consumes too much, spends too much, regulates too much and it has been growing at rates much surpassing the private sector.

We need to return our government to Constitutional rule (especially at the federal level), dramatically reduce taxation and implement a simple national consumption tax, cut government spending & reduce the size of government, remove much of the regulation in place (especially regulation concerning energy production - we need more nuclear & coal plants, more gas exploration, more oil exploration, more refineries, etc.) and stop the expansion of government at the expense of our freedoms.

Government should simple keep us safe & free, provide some vital infrastructure and then get out of the way.

We need to expand our freedoms.  Only free individuals and free trade are the answers to our problems.  The government is not the answer and in most cases the problem.

God Bless America