Two reasons for the economic slump
May 9, 2009
What is the cause of our current economic situation? Why are so many people unemployed? Why do respected banks require federal bailouts? Why do large numbers of people need debt relief? Part of the situation is the normal ebb and flow of the economy. But not all of it. I’m not an economist, but I have my opinions. It started at the top and has oozed down to the little people who need debt relief programs.
In my opinion, one of the early causes was our love affair with large houses. Developers love to build them, and families love to buy them. Modern homes have been growing and growing and growing. And as prices rose, people have continued to purchase. Then home values dropped, homeowners couldn’t pay and couldn’t sell. Foreclosures followed. Thus followed the problems that mortgage industry has suffered.
What we need are housing developers who are willing to build more practical homes. Look at the homes built in the 1950s after World War II. Developers put up block after block of three bedroom ranch houses. These homes had a single bathroom. The dining room was an alcove next to the living room. There was no great room and no walk-in closets. But these families raising their little Baby Boomers were comfy and happy. Now, in the twenty-first century, these houses are fifty years old. If developers would build similar homes now (with maybe an extra bathroom), people looking for a simpler way of life would surely buy.
The second cause of the downturn is the media. Journalists don’t want to lead the news with, “Life is good; the nation is prospering.” If this is the situation, they don’t discuss it. So the listeners, watchers, and readers become convinced that things are bad. Then the situation begins to snowball. The news reporters say that consumer confidence is down. The listeners then become nervous about spending money. Sales slump. More snowballing. With decreased sales, employees are downsized. More snowballing. At the first hint of problems, every news outlet is trumpeting it. The media want to brag about how true their predictions are, but they are creating self-fulfilling prophecies.
So now here we are. Unemployment is high and debt is rising. What can you do? If you are becoming overwhelmed by your debt and are beginning to fall behind, your first step may be to contact a debt relief service. Look into more than one organization so that you can select the one with the best reputation and that will cost you the least amount of money. If the situation reaches an intolerable level at which you can never dig your way out, you may need to consider bankruptcy. Bankruptcy is a drastic step that hurts your credit for many years, but, after careful consideration, you may decide that this is the best step to take.
What can we ordinary people do to raise ourselves out of this slump? First, substitute hope for fear. Carry on your life as you always have, adding in a spoonful of prudence. Then figure out how you can be entrepreneurial. In the end, it is the entrepreneurs who will pull us out of this slump.
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