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I will pay for the following essay The State of the economy and how it is efecting the people. The essay is to be 10 pages with three to five sources, with in-text citations and a reference page.Downl
I will pay for the following essay The State of the economy and how it is efecting the people. The essay is to be 10 pages with three to five sources, with in-text citations and a reference page.Download file to see previous pages...
Downplaying the ideological conflicts is detrimental to the welfare of the people as well as the concept of ‘free enterprise’, because the need for a strong regulatory frame work is essential for a welfare state. This paper seeks to analyze the factors leading to the present state of economy, its impact on the people, conditions necessary for the revival of the economy and outlines the reform processes which have direct and positive effects on the people. These reforms should act as a strong catalytic force for the stimulation packages by the governments to be more effective in the long run, and are necessary for a sustainable development. Causes and factors leading to the present state of economy Savings &. consumption While money saved is only meant for consumption ultimately, it is also the foundation for investment. Over the period of time, the people neglected the aspect of savings in life and its effects on economy have been largely ignored in the modern societies. Toba (148) states “Both the classics, and also J. M. Keynes, considered the individual saving as a primordial source of investments. The sacrificing of the present consumption was considered as the basis of the first stage of the investment process, respectively the savings stage. Nowadays, the main productive investments are constituted based on the credits which have been gotten from the banks”. Savings comes to the rescue of the people at the time of recession, and this culture in a society ensures uninterrupted consumption even at the time of recession, albeit at a lower level. In a study by Verma, R. &. Wilson, E. J. (2005, p. 16-17) it was found that the per worker household and private corporate savings affecting GDP support the Solow growth model, whereby domestic private sector savings promote long run economic growth. The recession impacts the society severely when the people can’t fall back on savings which leads to sudden disruptions in the consumption. The cumulative effect of decrease in consumption or demand affects the business which leads to production cuts, consequently increased unemployment. The vicious cycle continues to the detriment of the welfare of the people and the state. Subprime crisis and Debt culture Borrowing is a part of the US culture which is deep rooted into the society in the case of individuals or business enterprises which is an important cause for the collapse of the economy. When it has become a rat race to entice the people to borrow, the banks and the financial institutions have developed a tendency to ignore the basic tenets of banking, principally to be more competitive in the business, increase the market share and profitability without realizing that the entire industry has been moving towards catastrophe, and the crisis is not restricted to the US. According to Bayne, N. (2008, p. 7) the collapse in September .2007 .of Northern Rock in the UK was a bad shock for the Bank of England and blames FSA’s weak supervision and lack of effective deposit protection scheme for the disaster. Actually, the situation has become like catching the tail of a tiger, without any possibility of backtracking in their policies. The collapse of the entire edifice could be caused by any flimsy trigger as the equilibrium in the economy has been very precarious.