Tag Archives: Recession

Global recession, unemployment debt and finding a way out

Most of the major financial institutions in US have been led to file for bankruptcy due to the current recession and this has caused a domino effect of social issues in today’s society. The working class has been tremendously affected and it was unexpected. It was like everyone wake up in the morning and realized that the world was suffering from an economic slowdown and large number of companies from different sectors are closing up or taking drastic cost cutting measures.

Companies that are still existing during the recession period are engaged in downsizing work forces, rotating man power or outright layoffs due. This has put many people into a situation where they are getting half or less than half of their wages and those who got jobless got nothing at all. Unemployment has drastically gone up and the job markets are getting saturated with jobseekers adding far more competition to the already large amount of high school and college graduates looking forward to getting into the working class. This has caused people getting into severe debt problems.

Most of the average Americans will have several loans taken out under their name like the car loans or home loans. An individual may have 2 – 3 credit cards with a high outstanding balance on each account. These kind of debts can be easily paid back if you have a regular income and keep your credit in good standing. But the problem arises when an unemployment occurs and everything reaches to a point of stalemate and the existing debts starts hounding you. Things will get tough to manage and that’s the time when most people start looking for some professional help like a debt management or a debt negotiation program.

An unemployment check from your social security can help you in the short terms when you are in between jobs and pay off some of your existing loans. What will happen to the long term goals? There is no guarantee that the new job that you might get will pay the same like you used to earn in your previous job especially at the current financial market. Priorities will drastically change in times of need. One would prefer to feed his family over amortizing a car loan any day.

There are many non profit debt consolidation companies who can help you in coming out of this debt situation. A financial advisor will look into your present financial situation and calculate your monthly income and expenses. Once he gone through your budgeting, he will work out an affordable repayment plan with your creditors. If you are not in a situation to afford your monthly payments in the debt management program, then he will negotiate with your creditors to settle the balance for something less than half so that it can be paid off in one lump sum amount. You need to have a lot of patience, time and discipline when you are looking for such a program.

Recession and prescription drug abuse

Last time when the economy saw serious turmoil was during the Great Depression of 1929. The number of stressors is looming large, and due to this downturn in their financial situation, they are getting forced to prescription drug abuse.

Recession has caused a large number of unemployment throughout the world. While most people consume medicines as prescribed by their doctors, 20% of the total population has started taking pharmaceutical drugs for non-medical reasons. The problem of prescription drug abuse is serious and growing.

Experts believe that prescription drug abuse among most of the Americans is increasing because of job loss, health problems caused by stress, gloomy weather, bounced checks, declining job market, increasing heating bills, etc.

People who are poor are getting into drug abuse, depending on street narcotics and alcohol, narcotic painkillers, sedatives, tranquilizers and stimulants. The declining pharmaceutical industry sales figures might be a consequence of people postponing expensive medications for illnesses such as heart disease. This foregoing of treatment shows up as increases in sales of pain killers and mood elevators.

There has not been a definite reason of why the drug abuse is going higher, in general. Some people are indicating towards the easy availability of drugs. There are some who believe that doctors are now prescribing more drugs for health problems than ever before. Another reason of the drug abuse increasing higher is the online pharmacies who are selling these drugs to most of the youngsters without any kind of prescriptions from a doctor. Ultimately it is affecting the future of the youngsters as well as many responsible grown up people affected during the recession period.

Recession leading to continuous foreclosure and bailout

Due to the economic recession, foreclosure crisis and huge costs for the financial bailout, the federal deficit has shoved to a record high of the budget year’s first four months.

The treasury management announced that the deficit from October 2008 to January 2009 amounted to $569 billion and this is more than six times compared to the imbalance during the year age period. In January alone, the deficit amounted to $83.8 billion, which was worse than what the economists predicted. It was something close to $78 billion. The administration had to rush a surplus of $17.8 billion last January 2008.

Recession has taken such a gruesome effect mainly because of the decline in the finances of the government that sliced into tax revenues, foreclosures, as well as huge amount of money being used from the Congress’ $700 billion financial rescue plan passed last October. An estimated 75 percent of the increase in deficit was attributed to the spending on the bailout program.

The budget year is going to happen in a few months from now, and the deficit has already exceeded the projected amount causing a disparity of $454.8 billion which is the full-year record.

The Congressional Budget office predicts that the deficit will strike up to $1.2 trillion. This is excluding the cost of the economic stimulus plan pushed by the US president guiding the Congress to immediately approve to fight the housing foreclosure and economic recession. Some private economists are forecasting that the deficit will go up to $1.6 trillion.

The Treasury secretary unveiled a revamp of the bailout plan, delineating changes on how the administration intends to utilize the second $350 billion. These initiatives would bind the bail out funds to assets at the private sector and the Federal Reserve to amplify lending initiatives by as much as $2 trillion. The administration is also planning to utilize the $50 billion from the bailout fund to release new government initiatives to fight the recurring mortgage foreclosures. New strategies have been initiated by the Housing and Urban Development Department with the help of housing group representatives and top bank executives to restructure the new programs and combat foreclosures.

Recession – Its causes and effects


Everyone is talking about recession in the present US market. We cling to newspapers, televisions, news channels, and financial reports to find out what’s going to happen next in the recession period. Technically speaking, when a recession occurs, there is a decline in the GDP of a country for two consecutive quarters. This has a gruesome effect in real income, employment, industrial production, and wholesale-retail sales in the economy.

As per the National Bureau of Economic Research, there have been ten recessions since 1945. There are various factors that flush an economy into the weird state of recession but inflation is the main factor which contributes more towards the situation. Inflation is the condition in an economy when the prices of goods and services rise immensely over a certain period of time. The higher the rate of inflation, the smaller the percentage of goods and services can be purchased with the same amount of money. It may be because of the increased production costs, higher economy costs and national debt. When the prices of goods reach to the higher stage, people tend to cut down their spending habits and restrict themselves towards their necessities only and save as much as possible during this period. As a result, GDP declines when people cut down their expenditures in order to cut down costs. . This makes the companies to cut their costs as well and they chuck out workers which brings unemployment.

  • There are certain factors that push an economy towards recession…

1) Credit crunch, which means shortage of finance.
2) Falling house prices. This is related to shortage of mortgages and credit crunch.
3) Cost push inflation squeezing incomes and reducing disposable income
4) Collapse in confidence of finance sector causing lower confidence amongst real economy.

Recession has a serious impact on the global economy. One of the major effects of recession is inflation. Recession comes into effect with inflation while on the other hand, it is one of the after effects of recession. Commodities will reach to their highest prices and people will cut down their costs. Hence, inflation becomes the major effect left out by recession. Another strong effect of recession is lower income. As people cut down their costs, they buy less items which reduces their income and as a result, fewer profits or no profits. Mortgage rates also go up during the recession period. Lenders will increase the mortgage rates so that they can cover some of the losses experienced during the recession period. Employment opportunities are also one of the major targets when the economy is burning under recession. In order to reduce the costs, companies cut down the employment opportunities thereby creating more and more unemployment in the economic market. When an economy enters into recession, companies experience very less or marginal profits during this period. The reason is that the tendency for price wars to develop in a recession. Firms get encouraged to cut down the prices due to the low sales and falling sales leads to lower revenue.