How Bad Is the Economy, Really?
Monday May 19, 2008
A reader asks:
In our eyes the economy is in a shambles and we are extremely worried about losing everything we have. I feel that another great depression is just down the road! Is this possible? And if so, what can we do now to protect ourselves?That's a great question, and one I'm sure that many people who lived through the Great Depression have on their minds. Especially since every day gives conflicting news reports on whether we are in a recession or even worse. Given the complexity of today's economy, confusing news about the nation's, and even the world's, financial health is something we should all get used to.
However, despite plunging home sales and prices, the world is still afloat in liquidity. That is why interest rates are low, and why the price of oil and food is high. This means that, unlike the Depression, there is still plenty of money available for investment.
Unfortunately, this money is not going into mortgages and other loans because banks have tightened their credit restrictions, and loans are really hard to get, even for good borrowers. Although this is temporary, it continues to strangle the real estate market.
Comments
Hello, Mrs. Amadeo
Do you think that economy, it falling dollar, and the rising fuel prices will become a national security issue? I think it should be priority one on the new President’s to do list. The misery seems to all lead back to these issue. As an oil dependant myself, I believe that Americans are not just addicted to foreign oil but oil in general and we have been that way for a while, and now we hand onto it by thread, in one basket. There seems to be no choice…Will alternative technologies be taken seriously as a commadity? Can we change over before it is to late or is it a waiting game?
Do you think that the economy, its falling dollar, and the rising fuel prices will become a national security risk? I think it should be priority one on the new President’s to do list. The misery seems to all lead back to these issues. As an oil dependant myself, I believe that Americans are not just addicted to foreign oil but oil in general and we have been that way for a while, and now we hang onto it by thread, in one basket. There seems to be no choice…Will alternative technologies be taken seriously as a commadity? Can we change over before it is to late or is it a waiting game? Do we have a choice?
Hi Brian,
I am not an expert on foreign policy and defense, so I won’t answer your question about security.
However, high oil prices will force a transition to alternative energy, conservation and smaller vehicles. It may actually be the thing to help slow global warming!
Kimberly