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What are the reasons of the exponential fall in the world economy?? ?

Its really scary to be reading and listening to the crashing of american financial markets and the consequent impact of it on the dependent economies, is there any one who could help me with the true possible reasons with supporting facts and figures if possible!! Only serious answers please!!

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  • 1 decade ago
    Favorite Answer

    Stock trading is a risky business, it is a gamble. I was told years ago never invest if you can not afford to loose the money.

    As to why it is all happening.

    1. Gas prices kept skyrocketing.

    2. Lenders let out too much unsecured loans. Giving out loans with balloon payments coming in after x amount of years.

    3. When the gas prices rocketed, people felt the impact in many ways. Increased food costs. Taking more money to get to work. Some people could not afford to drive to work, as it was costing them more and more money to fill the tank.

    4 With less money coming in and no extra money to be spent, vacation spots did not get the visitors they were needing and are hurting now.

    5 No extra money means no extras like new furniture, new clothes. All of a sudden people have found thrift shops and started shopping there. Realizing wearing hand me downs is not so bad.

    6 When all the balloon payments came due people were losing their homes left and right.

    7 The lending institutions did not want the property back, they needed the money owed on the loan.

    8 when the banking institutes failed, people realized we were in major trouble that a lot of us saw coming a long time ago.

    9 The stock market started dropping and so far has not really stabilized yet.

    10 Now the auto Industries are hollering doom and gloom too. That will affect many people and many areas increasing unemployment big time.

    11 with the stock market losing so much money it is affecting retirement plans. Major companies who counted on stock to be able to bail them out because the stock had value which they could sell is now way below what it was worth before. they can not make the money needed by selling the sto9ck at a loss.

    It is a major domino affect going on. We are in for a long haul to rebuild all that is affecting erevything. Medical care cost are unreal. Medications are too expensive. It cost me $1500.00 to walk into the emergency room to have my thumb sewed back on after cutting off the tip my accident. My medications with insurance cost me an average of $5700.00 a year, that on top of paying the insurance company $179,00 every two weeks for insurance coverage. That does not cover house payment, insurance, property taxes, utilities, Nor does it cover any food costs to feed my family. We buy generic foods, Do not splurge on things we can not afford. yet we struggle to make it pay day to pay day. Now put millions of people in that position, jack the price of gas from $1.50 a gallon to nearly $4.00 a gallon or more. Increase the cost on every item you buy, due to the increased shipping cost to get it to your location.

    If we were all millionaires we would be ok, but my family only brings in about $50k a year. A lot of people do not even make that much. We are considered middle class.

    It cost us $4000.00 dollars for a bare bones funeral when my mother in law died last year. That is not including the cost of the funeral plot we had to buy. We could not even afford to plac e the obit, because it is now no longer considered part of the new. You are charged per word for an obit now and they run in the hundreds.

    Lots of jobs have been shipped out of the US to other countrys because they can do the work cheaper.

  • 1 decade ago

    Just before afew years the world finance institutions were giving out loans and monies to corporate & individuals against no secuirty. It has been very hard for them to recover these monies.

    Secondly companies true financial position was never mentioned claerly by the directors hence we now have soectacular business collapse affecting all.

    The bail out schemes by most countries might work to save us from cash shortage and unemployment.

  • 1 decade ago

    Have a read of robert peston's business blog at bbc.co.uk business section (on the left)

  • 1 decade ago

    I think that we are truly screwed in the next years.

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