The Decision That Drove the Economy Forward - 1500 Words

Sachit Grover The Decision That Drove the Economy Forward The downward spiral of the United States economy began in 2007. Initially, banks made careless loans to individuals. Following these careless loans, many couldn’t afford to stay in their homes. The credit crisis was occurring simultaneously with the housing market collapse. The credit crisis occurred when large financial institutions were on the verge of collapsing due to the risky loans issued to United States residents. In order to stabilize the economy, the United States government developed a two-pronged strategy. They would â€Å"bailout distressed financial institutions and industries and pump government money into the economy† (â€Å"The Great Recession of 2008-09†). Despite the†¦show more content†¦A decrease in demand for large-sized vehicles caused a decrease in the manufacturing of vehicles. At the time, GM and Chrysler were accustomed to manufacturing vehicles that had low mileage per gallon. The decrease in demand for these gas-guzzlers cau sed a decrease in vehicle manufacturing. As a result, the GDP of the United States decreased as well (Amadeo). This also reduced the number of manufacturing jobs that were available at GM and Chrysler. Fewer manufacturing jobs available increased the unemployment rate; therefore, the overall GDP was decreased. With such a large negative impact on the GDP, the government needed to bail out GM and Chrysler. Along with the United States economy, the global economy was at risk if the bailout hadn’t been implemented. As the United States economy took a downfall, other countries were becoming more competitive. This was a golden opportunity for other countries to get past the United States in terms of their economic state. At the time of the bailout, a global credit crisis was taking place. The credit crisis is known to be the worst crisis since the Great Depression in the 1930’s. Many businesses could not trade with one another, because of the liquidity crisis caused by the global credit crisis. The liquidity crisis was caused by the banks distrust in consumers being able to pay back loans after the great recession. Trade had come to a halt for GM and Chrysler. Since the global economyShow MoreRelatedConsensus and Conformity Essays991 Words   |  4 Pagesto seek tranquility and harmony. The fifties were the decade of change led by president Eisenhower. During this time the n ation was in an up rise in many ways. The economy was booming as the Gross National Product more than doubled from the past decade. Thus there was a rise in consumer spending which had a domino effect on the economy. Though it was unexpected, many issues arrived such as the fear of communism and the suspicion of communists hiding in the government. 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