Two causes of the economic slump
What is the cause of our current economic situation? Why are so many people out of work? Why do well-established banks require federal bailouts? Why do so many people need debt relief? Part of the situation is the natural ebb and flow of the economy. But part of it isn’t. I’m not an economist, but I have my opinions. It started at the top and has oozed down to the little guys who need debt relief programs.
From my point of view, it seems that one of the beginning causes was our love affair with large houses. Builders love to build them, and homeowners love to buy them. Modern homes have been growing and growing and growing. And as prices went up, people have continued to buy. 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. Consider the homes built in the 1950s after the Second World War. Builders built block after block of three bedroom ranch houses. These homes had one 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 bring up their little Baby Boomers were cozy and happy. At this point, 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 origin of the downturn is the media. Journalists don’t want to lead the news with, ”The economy is booming; we’re all happy.” If this is the way things are, they don’t discuss it. So the listeners, watchers, and readers get it into their mind that things are bad. Then the situation begins to snowball. The news reporters say that consumer confidence is down. The listeners then become afraid to buy. Sales slump. More snowballing. With sales down, employees are downsized. More snowballing. At the first hint of problems, every news outlet is broadcasting it. The media want to brag about how accurate their predictions are, but they are creating self-fulfilling prophecies.
So now here we are. Unemployment is climbing and debt is rising. What can you do? If you are feeling hopeless about 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 choose 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. Live your life as you always have, adding in a dollop 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.
