Why is the economy so bad?
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.
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!
Partially yes, because all the stocks are down a lot of banks are being bailed out and Americas car companies are going in the toilet. But half of what people say when they talk about the economy is the future, and we do not no what will happen in the future, so I do not think the economy is in that bad of a situation.
The gas is dropping because the economy is so bad. People are losing money because of the bad economy so many don't want to spend a lot of money on gas. The gas companies were losing buisness because people weren't using cars. Therefore the gas companies lowered their prices to bring back customers.