The united states economy has of late been on most media regarding the worst recessions that the country is undergoing through. This has been happening due to the old assumptions that its citizens have been having taking rule of our minds. “We have had to rethink old assumptions and question conventional wisdom in the face of a crisis whose dimensions few of us might have imagined.” US President Obama. Indeed when you stick to to traditions that have been past by time, they will remain morals-yes but impact little on economic technology (cycle).
The US economy has been striving on growth and keeping its status. It has always forgotten one thing! The economy has not been keeping people on jobs. “Employment is down about 6 percentage points from its peak in late 2007.” He says. Employment is a key contribution to the economic cycles of any country. Unemployment indicates a very poor recession-employment indicates a well doing nation in terms of economy. Unemployment in the US occurred because many firms were just producing products without keenly evaluating the sales they were making both in the national and the international markets. This is also an indication that they must have not studied the market trends from their competitors like the other superpowers like the Japanese and the Russians.
IT must have also had some impact on job market and the entire economic cycle. But it should not be taken directly that IT is killing jobs, it is creating-
“The extent of the improvement may be similar to the jobless recoveries following the 1990- 1991 and 2001 recessions. In the second case, it took three years after the end of the recession for the level of employment to exceed its previous business cycle peak.”
This was just after IT technology had taken deep roots and made a greater improvement in job creation and economic improvement. Glick et al. (2009).
Other factors that impacted the situation is the households that took largest proportions of debt from the banks. This must have lead to low personal saving rate that resulted to the entire economic crisis all over the US and the entire world. This will lead the whole nation into debts! According to (Reinhart 67) "The true legacy of financial crises is more government debt."
From the above factors however, some gave a positive remark on the future contribution to the business cycle in the US. Firstly, unemployment and joblessness. This is one of the most influential factors that will lead to severe business cycles in the US and even the world at large. For one, this not only affects the economy but also the legal aspect of the government as such like theft, prostitution and drug abuse to generalize. Back back at our mind, these are the obstacles that most hinder any economic prosperity and progress of any country. The weakness of consumer confidence may also fall here.
On the other hand, other factors like sticking to outdated traditions will still be there and I don't think if it will affect much the economic cycles. Ethics is diverse and every society's ethics are defined and starting to argue about them will just leave a grudge on the involved parties. This will bring in the law and will eventually lead to some ambiguity between the ethics and government land laws. On debts, this will much affect the economic cycles on the basis that the employment will either lead to award of jobs to people that will eventually make people independent and not bother banking institutions with dangerous loaning. Like it happens, it eventually leads to writing off the loans because such people will never be able to repay. Consistent trends like this lead the entire country into debts.
Economic scholars are very many all over the world. Most scholars have come out to say that the business cycles are dead. But this is not true. Business cycles are to stay and live for ever because technology growth is a continuous and ever growing field. Keeping in mind that technology and business ideas are like a one thing. Any new ideas that come will always lead to a change in the business cycle. The united states of America has to undergo through other business cycles.
First of all, the president if not the only party who controls the economy of the states-though he/she has say. Unless decisions are made together as a community at large, the impact will be very small and the business cycle will be affected at last. The effect can be negative or positive remaking the fact that the economy has been affected. Normally the economy will never stagnate at one point because the economists argue that economy depends on many factors ranging from nature-like the environment.
Taking the example of the medical bill in the US, the president is seen to have very good will for the state but surprisingly, the entire senate has personal political ambitions that they want fulfilled.
For instance, according to Reinhardt,
“Federal Reserve can specify requirements for capital, liquidity and leverage for any firm (whose combination of size, leverage, and interconnectedness could pose a threat to financial stability if it failed) If a large firm is failing, Treasury can appoint a conservator or receiver – in lieu of bankruptcy Implication is that such firms are 'TOO BIG TO FAIL' or truly, 'TOO BIG TO SUCCEED INDEPENDENTLY'.”
As the president of the united States, I can recommend the following factors to end the recession of 2007-2009. For one, I will mobilize the US Treasury to plan a scrutiny on markets to formulate strict rules that will make it possible for them to restore the or win the confidence of their customers into their markets.
Banks must have specific strategies in order to be allowed to run. For example, they must have sufficient capita to be allowed to be in the market operation. The banks must ensure liquidity and implement major deposits with aggressiveness. Under macro-strategies for the global economy there should be a mandatory location of floor for housing values and cleaning up of balance sheets at recognized and valued institutions.
From the previous records of the United States, bank borrowing can be temporarily allowed in order to allow access to funds and reduce the borrowing rates. The government should also input/inject capital to promising and ready to run, aid and protect institutions that can boost the economy in any way or give some hope to consumes. My government should be able to remove, write off bank problems in order to help them start running again. Giving banks future optimism on total profits and positive returns all the time. This will be a king of motivation to macro investors.
Allowing of the bank managers to make proper decisions that could be right even though they not necessarily are and or is stated in the laws. The government should finally have shares in order to increase trust in the investors and the management itself.