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The economy is bad because Americans produce few things that are consumed either by Americans or the rest of the world. We import much more than we export. The reasons for this and the problems it causes are discussed in a series of articles. Please see the related links below.
The basis of the problem revolves around the banks. When you receive a loan from the bank for a house, many times you are not paying the money back to the bank. Banks can sell the loan to a third party for a little less than what they would be getting if they kept the loan and received the interest. This works in favor of both the bank and the third party because the bank gets instant money, and the third party uses this as an investment. The problem with this is the bank still decides who to give loans to, but has much less incentive to ensure the loan will be paid back. (they are just going to sell the loan to someone else anyway, so why do they care if it can be paid back or not?) The problems this has caused are ridiculous. Now that the banks have caused this problem for themselves, they are now not giving loans. The feds gave them money to stimulate loaning, but now they just sit on the money because the economy is so bad.
BANKS ARE NOT LENDING!!!!
When banks don't lend business can't stay in business and new businesses can't be made. Which means no jobs or lost jobs. People can refinance homes with money back to spend and buy things and pay off debts.
With a slow economy businesses have to use most of their profit from sales to pay bills. A $10K loan to a business can buy product, after a couple months the product is sold for $15-25K. Now there is money to pay back the loan with the interest. The profits are used to rebuy the stock and sold again with no debt. Employees keep their jobs, the business where the products are bought makes good money to keep their employees and the economy is good. But only payday loans are lending at a 250% interest rate. Because banks are not lending businesses are desperate to stay in business. So a lot take it. How can that be paid back. They don't even make that much back on sales.
But now Banks don't lend, they want to say "not credit worthy". I know lots of people out there who can't get loans on good and great credit. The banks priority right now is to pay the government back to get them out of their business. They are going to continue to not lend after they pay the government back. Back to GREED above.
If the banks took the time to approve more loans you would see the economy improve immediatly! That is why they got the help in the first place because the government knew this was important to the growth of the economy. Until they start lending the economy will not get better.
Wiki User
∙ 12y ago
Wiki User
∙ 15y agoi think that the economy was in such a terrible state because they were @ war. they needed money for supplies and amunition. they also had to pay soldiers and generals. the reason that i think that is because in earlier times, this is why the new englanders dissagreed with the warhawks about going to war....
Wiki User
∙ 12y agoOur economy is so bad because the United States owe China ALOT of money!!! :]]
Wiki User
∙ 14y agoTo many loans were given out by the government and people became in debt because of credit cards. But many people believe different reasons. This is one of the most popular.
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When was the last time the economy was as bad as it is now?
The last time the economy was this bad was when the world was in the Great Depression, right after World War II
How was the economy of America during World War 2?
I dont really know. so get some awnsers down! Really bad
What kind of economy did New Hampshire have from the late 1600's- early 1700's?
a bad economy
What were the consequences of the Gold Rush?
people desperatley wanted money, economy bad so it crazed many people to get their hands on the good stuff
What was Poland's economy like post World War II?
2nd most competitive economy in the world, one of the fastest growing gnp per year, Poland is 24th biggest economy in the world. We have 204 countries on our planet, Poland is 24th next to Netherlands.
What was the economy of Shang Dynasty?
It was bad so bad you even said it was bad
Why is food so expensive now?
bad economy
How bad is your economy?
the economy is a very bad system
Can we stop the bad economy quickly?
I don't think so. I think the economy will get worse before it gets better.
What is the most popular question ever?
Probably Why Is The Economy So Bad
Why is there so much theft?
because the economy is so bad that people will do anything for money or valuables.
Can you write a sentence using the word of economy?
The economy is so bad these days, who knows if we will go into another Great Depression.
Was the economy really bad?
The economy wasn't just bad then, but it still is. I'm not sure why, but it really is. People are saving money which are making businesses close and people losing their jobs which is really bad. I think what makes the economy bad is that we are serving in two wars! So, the soldiers' weapons are being paid for!
Why are there so many Ohioans in Florida?
Because Ohio has terrible weather and a bad economy. Florida has wonderful weather and a vibrant economy.
Is Hawaii suffering from the real estate slump?
Every state in America is suffering from a real estate slump right now because the economy is so bad. It's really hard to buy a house when the economy is so bad.
Is the economy in the United States bad or is the media making it sound bad?
The economy is realy bad but theres not much we can do about it.
Why is the economy so bad now?
One of the reasons the economy is bad is because the government is trying to controll every little thing. Another reason is because of the president putting a bunch of taxas.
