The recession & economy Essay

Published: 2020-04-22 15:25:56
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Category: Economics

Type of paper: Essay

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In order to understand the recession that the economy is going through, it is important for us to take note of the meaning of debts in the corporate world. We can look at the stock market as a big debt market where people buying stocks are in effect loaning money to companies for them to use. Of course, the rate of return of these loans is different from the typical kind as the stock buyer can gain or lose significantly based on the companys future capacity to pay. Therefore it is intuitive to say that if buyers fear that they would not gain from buying stocks, they would have no reason to do so.

As Cook reports, this is precisely the situation where the United States Economy is in at the moment. Government and corporate spending has reached an alarming rate investors no longer believe that their debts can be repaid (Cook). Furthermore, Cook explains that the boom of the market in China and the perpetual pull of Middle Eastern oil magnates have added to the U. S. economic strain. When put together, these are what make the components of the current economic recession. To solve such a vast problem, it is important to go to the source: money.

Giving tax cuts would not solve the problem simply because even if interests are down, the public doesnt have faith in the economy enough to invest. In fact, the Federal Reserve has just recently tried this and it proved to be a very temporary solution. Government spending is just way too high and we are not getting any returns from places where we are spending money the most, Iraq. Unfortunately from an investors point of view, backing out of Iraq seems to be a losing bargain. According to Gordon (27), we have simply invested too much into it to get nothing in return.

My solution would be to step up operations in extinguishing all rebel forces. As soon as this is done, we can start forging economic alliances that could tie the Iraqi oil reserves to our economy. Oil-rich middle and southern Iraq could greatly increase our economic position and jolt the market back to life. I believe that this is the best way to solve the problem.

Works Cited

Gordon, Thomas. The Economics of the Iraq Post-War Occupation. Rudyard Books, N. Y: 2006 Cook, Robert. Its Official: The Crash of the U. S. Economy has begun. Global Research Jun 14, 2007, Jan 25 2008

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