22
Jan
08

Is the US economic slowdown affecting you?

Hello. Santo in Juba, Southern Sudan, Paul in Liberia, Beverly in California and Amy in the UK are among today’s new Daily Email sign-ups.

During yesterday’s meeting, Alisa Miller from Public Radio International (one of the American radio executives visiting us) suggested asking ‘Are you worried the slump in the US economy will affect you?’. She was ahead of her time, as today that’s close to what we’re doing.Hundreds of you are emailing us as you watch the markets in Europe and Asia tumble. Now we’re waiting for New York (which was closed for Martin Luther King Day yesterday).

Call it a recession or a slump or instability or a blip or whatever you like, you’re conversations boil down to this.

What’s happening to the world economy?

Which people and countries does it affect?

and what should we do about it?

Your answers please. And whether you’re extremely worried or couldn’t care less or anywhere in between, you’re all welcome to comment.

Here’s an excellent Q&A about the slump.

THE INAUGRAL GOLD MEDAL FOR WHYS COMMITMENT

It’s true I am easily impressed by the efforts that you make for this show, but Beverly in Oakland deserves a special mention. Here’s the email she’s just sent me…

‘I’m a Kenyan-American listening from Oakland, California. And I just learned of the program this weekend and listened to the last 5 podcasts (New World Order – Nuclear Power) on the train ride from Bakersfield to Oakland for 6 hours! I was thoroughly engrossed and kept wanting to call in. Can’t wait for the next one!’

What to say Beverly? Even my Mum isn’t that keen.

If you want to follow Beverly’s lead, here’s the WHYS podcast page.

Speak to you all later.


76 Responses to “Is the US economic slowdown affecting you?”


  1. 1 muthee mwangi
    January 22, 2008 at 13:34

    Hi Ros am writing from Nairobi and am telling you i really couldnt care less on the us economy affecting us.first of all we have enough here on our hands and in any case i dont belive most african economies depend so much on the dynamics of the united states economy. i think the countries feeling the crunch are in europe and and the far east.
    thanks.

  2. January 22, 2008 at 13:42

    On Credit Crunch : The credit crunch is what happens when fortunate people get exactly what they are asking for. Until policy makers realize that the health of an economy is judged by how fast money flows through it, and not how much money is in it. Raw free market economies have a problem with a tendency for utility to pool in one area of the system. A graphical representation can be seen here. Right now we creep slowly towards the situation where 20% of Americans have all the money but nothing to spend it on. The poorest Americans will have no money and since the people with the money aren’t spending it on anything, they have no way to get money. The effect will be that which mimics the power steering in a car when the pump has gone bad.

    On Bush: I second Brett’s motion. Bush has been on happy pills since the day he started office. If he doesn’t like the outlook on a subject, he just changes his perspective.

    On the world recession: The economies of the world have moved further and further from Symbiotic models for the last hundred years. Taking more from their environment then is sustainable for the ecology and economy. When they have hauled up and sold off all of your natural resources why do local economies and their members look so surprised when the industry moves on.

  3. 3 Greg in Oregon
    January 22, 2008 at 14:05

    We have to start by holding people accountable and finding out the real depths of the chicanery that has taken place in the US. This will be difficult as a lot of the history has been erased. It is also compounded by the fact that so many people have their hands in the till, which is what happens when you “deregulate” everything.
    I was wrong and I am willing to admit it. I said 6 or 7 years ago that the country (US) would eventually look like every other company that the President worked at. I did not give him enough credit., We now see the whole world looks like “Arbusto”. Give credit where credit is due?
    GB/OB

  4. 4 Racje
    January 22, 2008 at 14:10

    I’m in the USA. So far, my life is not directly affected. I have enough food, my roof is not leaking and I am still able to pay my rent.

    I have been listening for years to all those seductive ads about how you can get a good mortgage, low payments, even with bad credit. Dancing guys or girls looking happy and carefree. I would like to own my own place but I did not trust the come-ons, and it seems I was right. I am sorry for all those people who mortgaged their future for a dream of home ownership.

    In the long run, of course it affects me when other people suffer. I am more concerned about the homeless people begging in the streets than about people who lost their down payments.

    I hope that we can learn to create a global economy that provides a good life for everyone, without destroying the planet that sustains us. Enough is enough.

  5. 5 John D. Anthony
    January 22, 2008 at 14:10

    Today is what happens when you start paying attention to the man behind the curtain.

    John in Salem

  6. 6 Bedoon Esam - Bahrain
    January 22, 2008 at 14:11

    I believe the world economy is inflated to a certain extent by the over selling of Financial Paper by the large financial institutions worldwide. Banks (such as CITI, Merill) create commercial paper if a CEO of a Fortune 500 company so much as farts. They then try to package this excretion of Gas as the greatest asset ever packaged and sell it to the new rich in various forms capital protected for the risk averse and promising fantastic leveraged returns for those who are more adventurous.

    The media also needs to have serious rethink on its fascination with every sneeze the US economy has, the US is bound to drag its feet for a while before it gains momentum again.

    Increasingly a lot of the world economy is beginning to diversify and the next 10 years will increasingly tilt towards Asia which will continue to be the growth engine and Africa if it puts its governance in order.

  7. 7 Bedoon Esam - Bahrain
    January 22, 2008 at 14:14

    Before we even begin the WHYS dialog US Fed has cut 75bps off its benchmark interest rate in an unprecedented emergency move. (First of its kind since 2001).

    All will be hunky dory in the global markets tomorrow if the US markets based on the rate cut today even perform moderately through the day.

    The Fed it seems wants to ensure there is no blood bath in the US markets today hence the swift rate cut announcement.

  8. 8 rosatkins
    January 22, 2008 at 14:15

    Delighted to hear you had people from the US Public Radio in your office yesterday. I hope you were good to them. PBS is the lifesaver in American broadcasting.

    I emigrated from UK to US three years ago to live near my son and grandchildren, and although many things about America are positive and valuable (I’m happy here), the media don’t display the talent we take for granted in the BBC and British quality journalism. Those are the things I miss most about UK. There are two hundred channels on my cable tv and I often find there is little worth watching, beyond old films. Most radio programmes broadcast endless pop and country music. A larger body of rubbish broadcasting does not exist anywhere else in the world.

    But PBS is an oasis in a cultural desert. Uninterrupted by advertising (every ten minutes on most programmes, so banal and disruptive), and compiled and presented by people one would like to meet, PBS radio at least in Virginia, is very good indeed. When we are not listening to discussions, news, and entertaining programmes, they play classical music. They rely on voluntary contributions from the public to fund their work. I often yearn for them to meet the BBC, and the BBC to meet the few people in American broadcasting that make it worth listening. Please, more cultural exchanges.

    Yes, we urgently need new world institutions, and the composition of the Security Council is so out of date as to be irrelevant today. A fairer distribution of surplus wealth would go some way to alleviating hunger and ignorance, but that is even more difficult to achieve, lacking the political will. Without a concerted effort to tackle the problem of climate change, there will be no world left worth living in, fifty or a hundred years from now.
    Eileen in Virginia

  9. 9 Ken in Cleveland
    January 22, 2008 at 14:16

    Considering the global market behaves much like a junkie – Not caring where it’s next fix comes from, just as long as it gets one – I think that is where a new ideas should be applied first. It’s time that true fair trade is practiced so the poor aren’t exploited and the rich are genuinely held accountable for their actions.

  10. 10 Eric in Holland
    January 22, 2008 at 14:16

    Hello,

    I would like to see the 200 countries or so part of the UN security council, world bank and so on, BUT who pays for it. If India, for instance, wants more action, is it ready to pay equivalently per head than the current countries leading the world band and IMF are. It will come one day, but in the meantime I would like that our countries controlling the cash that they are providing. If everybody also wants to change the contribution ratio, let’s talk about.

    Also, the one who said that India should be part of the UN SC because it is a democracy is just appalling. Remember the crisis in Burma where India losts its voice suddenly and could not complain about the events. Well in the UNSC we already have China then as a democracy.

    When comes to Africa, I would like to see Africa cleaning in front of its door by reducing actively its level of corruption. The West, so me as a taxpayer, is giving billions with little results.

    We discuss the matter, but before those countries who just want power without the consequences change. The current system is as good and bad as we can make it. By the way, would a different UNSC structure have stopped the war in Iraq to happen? I do not recall lots being done by the emerging countries then.

    Cheers to the world,

    Eric (Netherlands)

  11. 11 steve
    January 22, 2008 at 14:23

    If they keep on lowering interest rates, won’t it just continue to devalue the dollar? If the dollar is worthless, what can we buy with it, and hwo will that support the economy if the dollar is only good for kindling fires?

  12. 12 George in America
    January 22, 2008 at 14:32

    1. First call a free fall of markets what it is, a free fall.

    2. The fed already cut 3/4 a point in interest as an emergency measure, but may be racing after the market rather than going in the right direction for economic soundness.

    3. A reality based president would be indicated.

    We have serious problems based on heaping up huge debt. The USA is not operating soundly.

    Denial of “cheapwar.com (war on a credit card), irregularities in war costs, institutionally corrupt sub-prime lending, and that nations are pulling out of the dollar, is unsound policy. This is trickle down economics carried to it’s extreme.

    The candidates for president in the USA are not addressing the total fiasco created by the current administration and to get elected are still singing the “tax cuts for the rich” mantra.

    So there is zero reassurance from this administration or those seeking the White House that sound financial policy is even being considered.

    4. How it affects me-

    I am optimistic of personal advancement: from nothing you can only go up.

    5. This White House has established it’s legacy.

    Trust in and about the USA is “zip”.

    The market will correct itself, in spite of our officials protecting moves from one bubble to another.

    The fantasy gravy train derailed.

  13. 13 Dwight in Detroit
    January 22, 2008 at 14:33

    To slow the slump would require the US to completely change the way they govern wage compensation. Currently the CEO of a company may have to work .125 minutes in order to fill up his gas tank and operate his vehicle for the week; while a service agent at the same organization has to work 2.5 days just to pay for their transportation needs. Legislators will have no control over the economy until they implement a policy that controls this ratio. That will not be realized until they understand that increasing hard numbers such as minimum wage is what as known as “chasing the setting sun.” Minimum percentages are our only way out of this mess and yet still retain our democratic/ free enterprise identity.

  14. 14 Gerry by email
    January 22, 2008 at 14:43

    If people are selling, that means somebody else is buying, in the expectation of making a profit when the return bounce comes. And so the cycle goes on; no manipulation of course…

    Gerry from Tasmania, Australia;

  15. 15 ali
    January 22, 2008 at 14:59

    The answer to all this economic nonsense is, of course, an Islamic economy based on principles of honesty, no interest and living within one’s means.

    Don’t spend money you don’t have.
    Don’t borrow money for anything more than 0% interest.
    If you can’t afford it don’t buy it.
    Don’t gamble on stocks and shares.

  16. 16 steve
    January 22, 2008 at 15:15

    ali: why are so many muslim countries that don’t have oil dirt poor then? I realize poor people can be happy, but living in squalor cannot be that great. I do agree with living within one’s means, which many people in the US refuse to do.

  17. 17 Sarah - New York
    January 22, 2008 at 15:27

    According to the definition of a recession, we cannot know if we are in one until there has been 6 months of steady decline. So far, we are in month ONE. I do not see a need to worry quite yet. The US government has many weapons to combat a recession if we do find ourselves in trouble. Cutting interest rates is just step one.

    Until then, I have put off buying a new HD TV and am dreading the dollar to Euro conversion when I go to France next month.

    On a seperate note, I am glad to see my local radio station, WNYC, may be interested in WHYS. Now I am not sure how I will listen to the show, but I am glad I have a choice.

  18. 18 Katharina
    January 22, 2008 at 15:39

    I believe the only people really hurt by this will be in the USA, where coincidentally this whole slump took off. Of course, as usual, it hits the poor who were more or less tricked into refinancing their homes so that they could afford their spending habits, until they got the nasty bill… and in turn many employees from investment companies or banks get the sack due to the poor judgement of their managers – who, if they get fired, can count on a nice severence package and a golden handshake. Outside the US, I don’t think too much will happen, even the Canadian economy seems very stable as they could detach themselves a little bit from the US economy. (I lived there for a while and still follow the news.) Unless you own shares and sold them yesterday, I don’t think there’s too much too worry. This reminds me very much of the bubble burst in 2000, when market prices were corrected and some internet companies, that had no real value, went down the drain. This is not 1929, and there are too many players out there now. Just don’t invest in stocks for the moment.

  19. 19 rosatkins
    January 22, 2008 at 15:40

    FROM LUBNA IN BAGHDAD:
    Dearest Ros : Hi… How are you doing today ?! As a 21 years old ordinary Baghdadi girl, I’m afraid that I don’t care at all about what’s been happening to the world economy lately ! Since 2003, Iraqis have been suffering alot from a severe lack of all public services, massive unemployment, and also the prices of fuel and cooking gas are so high for ordinary Iraqis to afford (notice that Iraq is so rich with oil while ordinary Iraqis suffer a great deal in order to get fuel and cooking gas). After all this, why should we care at all about what’s happening to the world economy ?! With my love ! Your friend Lubna in Baghdad !

  20. 20 Ian
    January 22, 2008 at 15:50

    Ron Paul the american presidential hopeful has some interesting views on this matter. Go gooogle him

  21. 21 steve
    January 22, 2008 at 15:53

    Sarah: There are ways to save money while in europe. Are you willing to do them? I’ll be in Germany/France in 3 weeks from now. Know how to not spend too much? Don’t eat out. Buy food from grocery stores. Lord, I go there to bring food back from grocery stores that I cannot get here.

  22. 22 Mark
    January 22, 2008 at 15:56

    One way or another, people around the world will pay for the wars in Iraq and Afghanistan and the one in Iran if it comes to that. It will be doubly satisfying since they not only refused to contribute to the fighting but condemned it. It is THEY who are responsible for the way Iraq is now. The recession will be part of the punishment for all the crimes they have committed against the People of the United States. That and much more to come.

  23. January 22, 2008 at 16:04

    lol,

    George Bush Perspective: Look how well Iraq is doing. Because of the invasion and occupation they are unaffected by the global recession.

  24. 24 John D. Anthony
    January 22, 2008 at 16:32

    To calm world markets (and stabilize our own) there needs to be an immediate 2-3 year moratorium on mortgage interest rate increases and the Federal Reserve needs to hold the line on the prime rate, NOT lower it. The Fed compounded the crash of ’29 by lowering the rate too fast, and Greenspan helped create this one by keeping the rate too low for too long.
    What we need now is sanity, not rebates.

    John in Salem

  25. 25 Brett
    January 22, 2008 at 17:04

    Has the slowdown of the US and global economy had a direct effect on me? Not so far as I can tell. As noted in the earlier blog, the rise in oil/gas prices has had a far greater impact on me (through the price of goods, transport, and heating) than the global slowdown. My company of which our branch is involved directly with manufacturing and construction has oddly enough seen growth through this current period of slowdown.

    I think in the end though it will end up affecting almost all countries. The extent of the damage remains to be seen though. And what can be done about it? Global economics is a tough topic to discuss theories on… I don’t have many aside from my western-culture bashing comments and thoughts such as, the US and other western lifestyles of mass consumerism and acquisition of debt in order to have today what you can’t pay for until tomorrow…. or the next day… or the next has played a very large role in the current debaucle we find ourselves in. That and the greed of the worlds banks and lenders.
    I can pinpoint hundreds of things that went wrong and that attributed to the situation. But suggestions on what can be done to fix it now? I think I’ll sit this one out, watch and learn.

    Brett ~ Richmond, Va.

  26. 26 Brett
    January 22, 2008 at 17:26

    22 Mark
    January 22, 2008 at 3:56 pm

    “One way or another, people around the world will pay for the wars in Iraq and Afghanistan and the one in Iran if it comes to that. It will be doubly satisfying since they not only refused to contribute to the fighting but condemned it. It is THEY who are responsible for the way Iraq is now. The recession will be part of the punishment for all the crimes they have committed against the People of the United States. That and much more to come.”

    Not sure where this came from, but it was scary yet with just the right amount of underlying irony / humor. Well written!

    Every great nation has its rise, its moment in glory, then its fall. It will only be a matter of time before the US goes picking a fight with another nation or nations for whatever pointless reason it has, most likely claiming it in the name of freedom, democracy or security. An alliance will be formed and the US will have not one, but many opponents. And for the first time in centuries, the war will be brought to US soil. Maybe it will take that extreme to stop America from trying to shape the world for its benefit and at any cost. Or maybe it will just take a new president (Thank God or whoever you worship for ’09!), The US will end up paying for all of its wars, one way or another. Its a scary thought. I just hope I am not around when that time comes.

    Lets stop all of these wars, and save some money! That may help a tad with this downturn, especially viewing the figures that certain wars are costing certain nations *cough cough*

    Brett ~ Richmond, Va.

  27. 27 Sikander via email
    January 22, 2008 at 17:40

    Hi,

    The Fed has panicked by reducing interest rates.

    Also, I would like to ask whether the prudent investors, who have saved should be kicked in the teeth.

    Should the prudent savers suffer by the reduction in interest rates ?

    Why are those who have borrowed to the hilt being favoured ?

    Many who have retired and rely on their savings will be badly affected.

    Thanks

    Kind regards

    Sikander

  28. 28 John via email
    January 22, 2008 at 17:47

    Ros –

    Lest you read too much into Beverly’s enthusiasm, keep in mind that the scenery from Bakersfield to Oakland is on a par with the Atlantic Abyssal Plain.

    John in Salem

  29. 29 Devadas via email
    January 22, 2008 at 18:03

    whom does it effect .immedietly the rich ones playing the stockmarket will be shockd . in india 75 crores doesnt know what is stock market and about bulls and bears .on daily subsistence wages they are inching forward with their living on a paltry sum ranging between lowest denomination of rs;12 per day and above . mind you according to indian staistical report there are 30 crores people living on rs 600 a month .as the land is still there with cattles etc the poor are shrugging on .now with this neo policies of the government if the land shrinks and farmers are devoid of their farmland the 50 crore poor of india will have to do without 3 meals a day if this recession or slump continues as the public sector is withdrawing from the social sector and private players are having a ball.this is the case with africa and othercentral, latin american countries .

    devadas
    kerala
    india

  30. 30 Huldah via email
    January 22, 2008 at 18:10

    I notice that the world is looking to the United States for stability in order to remain bouyant. From my understanding the US is a broke country. Each day the Treasury Department has to borrow millions of dollars from Asia to run the country. That being the case it seems to me that we are in a great crisis and things can only get worst. Let me hear what you have to say about this.
    HULDAH,JAMAICA

  31. 31 Steve via email
    January 22, 2008 at 18:11

    Muthee wrote that they don’t care about the US economy.
    Hate to break it to you, but if there is a recession in the US, that means there’s reduced economic growth, less revenues, less incomes, means less taxes paid, meaning less foreign aid for Africa.

    Steve
    USA

  32. 32 Chuka via text
    January 22, 2008 at 18:16

    Our stock market is booming especially the banking sector. I just invested about N17k last week and my share price is up by N7 from N17.
    Chuka in Nigeria

  33. 33 Nikkoli via text
    January 22, 2008 at 18:23

    The ramifications of the subprime loans scandal will be felt worldwide.
    Those loans were bundled and sold as securities worldwide and as the US home forclosures continue to rise so to will instabilites in the world market.

    NIKKOLI – Portland OR

  34. 34 Chuck P
    January 22, 2008 at 18:24

    Read Alan Greenspan’s latest book. American has been in a recession for over a year. Just because the Bush administration won’t admit it does not mean that the problem does not exist. Can you really be that naive to believe it is “just” happening?

    Chuck P
    Portland, Oregon, USA

  35. 35 Jef via text
    January 22, 2008 at 18:28

    I am a construction engineer in Madison, Wisconsin. The foundation for the downturn is oil prices. Consumer insecurity arrived when oil prices rose so rapidly.
    Jef

  36. 36 Ali via text
    January 22, 2008 at 18:28

    I think the American economy is so big that it can affect the whole world.The whole world has to pay the price of the lost war in Iraq.
    Ali in Egypt

  37. 37 Abdulkadir via text
    January 22, 2008 at 18:36

    Yes,what is happening elsewhere affecting us here in somalia.
    Abdulkadir,kismayo town

  38. 38 James via email
    January 22, 2008 at 18:36

    I think Africa will be affected by any recession of the American economy. Many African countries rely on the U.S. for food aid. An economic recession will drive up prices of food. There’s this arrangement where the U.S. donates food to relief organizations in Africa. It then requires these organizations to sell the food to local industries to raise money for development projects in especially rural areas. Expensively produced U.S. food, therefore, will have effects on consumers in these poor countries. Industries will pass on cost to consumers.
    James
    Seattle
    Washington

  39. 39 John via email
    January 22, 2008 at 18:37

    Dear World Have Your Say,

    I have a very simple question for your experts. Excuse my ignorance to the way in which these types of things work.

    My question is: Is the underlying cause of the predicted recession (whether it remains in the U.S. or spreads to the rest of the world) simply because
    of the problems people in the U.S. sub-prime mortgage market had repaying their loans and the resultant “Credit crunch” from this? If so, how could something which seems so obvious to preempt have happened (or is it not so obvious)? Further, does anyone think there are more complicated global political reasons for this situation that are not being spoken about? I don’t mean this in any “conspirital” sort of way, I just wonder if there are any credible thoughts from the experts that go beyond the purely economic.

    Thanks so much for your help.
    John, American currently living in Vienna, Austria

  40. 40 Harry via email
    January 22, 2008 at 18:39

    Both Europe and the US have hollowed out economies. Very little is produced. Citizens and residents of the US are 70% of the economy.
    They are highly leveraged, and the government deficit is massive as is the trade deficit. The banks are in a disastrous state, and we don’t know what will happen with credit cards for which the banks depend on for a great part of their revenues. Lending is frozen, rather like a deer in headlights. Bond ratings firms have lost credibility and their ratings with them. Interest rates are low; real-world inflation is high here. That raises the possibility of stagflation. This could last decades. This is one of the greatest financial scams of all time. As much as $500 billion may have to be written off, and the complexity and non-transparency of billions in derivatives could set the stage for massive failure. There is no easy way out of this problem. Look at Japan to see the possible future of the US economy!

    Harry listening on KALW in San Francisco

  41. 41 Josh via email
    January 22, 2008 at 18:39

    I am production manager at window factory in Portland Oregon. Above and beyond seasonal slowdown I have had to layoff 50 percent of my workforce over the past month. How can a slowdown in housing not have a sever impact on the economy?

  42. 42 Bimpeh Christopher via text
    January 22, 2008 at 18:42

    Greetings,i think the Economist should implement economic policies to transform the recession leading to a fall in national income, to recovery leading to growth to avoid fluctuations in the world economy.
    Bimpeh Christopher in Ghana

  43. 43 K.K. via text
    January 22, 2008 at 18:43

    A cut in mineral exports due to a recession in the West will only dent the Swiss bank accounts of the ruling class in Africa.
    K.K. Accra

  44. 44 Mark via text
    January 22, 2008 at 18:44

    Foreigners in America remit money back home n many Americans send money 2 various countries. Any reduction in their bottomline affects the world.
    Mark, Uganda

  45. 45 Dennis via email
    January 22, 2008 at 18:45

    i am worry about the economy and it very scary!

    i hope that the world wakes up and see it and
    hope it can be stop before another RECESSION
    happens……..
    Dennis

  46. 46 AZ
    January 22, 2008 at 18:45

    Bank of England has failed.

    It has allowed the Banks and Building Societies to create money just like confetti.

    House prices were allowed to get out of control.

    House prices are more than ten times average salary.

    Surely house prices have got to come ‘ down to earth ‘.

  47. 47 Bob via email
    January 22, 2008 at 18:46

    I don’t think that China and India will be able to pick up the slack left from the US downturn. They are not consumers like we are. The reason they are using a lot of the resources is because they import raw materials and export finished goods. Those goods will not be purchased in the US so they won’t need the raw products.
    Bob
    Lynnwood, WA USA

  48. 48 Thomas via email
    January 22, 2008 at 18:46

    I’ve been watching the world economic turmoil with a mixture of fascination and dread these past few weeks.
    Will it affect me?
    I’m a freelancer just getting started after a move to Berlin. I am quite worried about how my very still very small group of clients — largely dependent on US sentiment — will respond if things continue to turn down. I’m lucky because my girlfriend has a well-paying job, but she’s on probation for another three months and could be laid off at short notice. So we could conceivably be in a lot of trouble in a few months.
    And by the way, the media aren’t to blame.
    cheers,
    Thomas

  49. 49 Carol via email
    January 22, 2008 at 18:47

    I think it’s about time the US stock market had a correction to more accurately reflect the value of US companies. The US has been printing money in order to buoy up it’s smoke-and-mirrors economy. We no longer manufacture the goods the world wants, and our knowledge workers are overpriced compared to other countries because of our desired standard of living. We’ve had a negative savings rate and our average credit card debt is ridiculous. The US economy has been a joke for several years, and I think a downturn like this MIGHT force the country to face reality and make some important changes. The question is, will the government have the will to make long-term change, or just more bandages.

    Carol B

  50. 50 Steve via email
    January 22, 2008 at 18:48

    Here in the US, many people have what’s known as a 401(k), where they take some of your income and invest it in mutual funds or whatever. If you are nearing retirement, money in mutual funds could be more risky, as something like what is going on now could wipe a substantial part of your retirement out. So when you’re older, you should get more conservative, and choose the conservative option, which usually means the manager of your fund will invest in municipal bonds, and other lower risk investments. Since I’m relatively young, I don’t really care if my aggressive portfolio takes a hit, because I cannot even retire for 33 more years, and if the price of the shares goes down, that means that my monthly contribution could buy more, and when the value goes back up, I will be that much better off until the next recession.

    Steve
    USA

  51. January 22, 2008 at 18:48

    I really don’t have much money so I’m not that worried. I feel bad for those stressing rich folk that have more to lose, they may die younger because of it….

  52. 52 Kalyan via email
    January 22, 2008 at 18:49

    Can anyone tell me if the US economic recession will affect India IT industry. It is my understanding that there are a lot of US based jobs that caused a boom in India, and not to forget the BPOs in India. So does it mean when US goes down, lot of people in Indian IT industry will lose their jobs.
    Thanks
    Kalyan from Chennai, India.

  53. 53 Omer via email
    January 22, 2008 at 18:49

    One of your experts was trying to define the recession . Yes, in macroeconomics, a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.

    But WHERE I BEG TO DIFFER However in the United States GDP is officially tracked by the Commerce Department’s Bureau of Economic Analysis. An alternative, less accepted definition of recession is a downward trend in the rate of actual GDP growth as promoted by the business-cycle dating committee of the National Bureau of Economic Research. That private organization defines a recession more ambiguously as “a significant decline in economic activity spread across the economy, lasting more than a few months.”

    A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits. Recessions may be associated with falling prices (deflation), or, alternatively, sharply rising prices (inflation) in a process known as stagflation. A severe or long recession is referred to as an economic depression. A devastating breakdown of an economy (essentially, a severe depression, or a hyperinflation, depending on the circumstances) is called economic collapse. Newspaper columnist Sidney J. Harris distinguished terms this way: “a recession is when you lose your job; a depression is when I lose mine.”
    Omer Ishmail
    Toronto, Canada

  54. 54 Ibraahim via email
    January 22, 2008 at 18:50

    Yes, American economic problem affects me and my country, because many people in our country depend on US Aid
    Ibraahim Sheegow, Somalia

  55. 55 Michael via text
    January 22, 2008 at 18:51

    The current recession is just one more symptom (after the Iraq war) of the incompetence of the leadership in the present US administration.
    Michael, Germany

  56. 56 Babagana via text
    January 22, 2008 at 18:52

    Dear BBC,
    Expressly or impliedly US economy will affect Nigeria and Nigerians specifically unemployed citizen like me.
    Babagana,Maiduguri,Nigeria.

  57. 57 Dee via text
    January 22, 2008 at 18:54

    I’ll be affected. And right now I m sitting in the dark for the 2nd day becoz our power utility co is failing. Not conneced for sure but just putting the news out there.
    Dee

  58. 58 Sean
    January 22, 2008 at 18:56

    I am incredibly concerned about the economic state of this country. As a recent college graduate, I am faced with the reality that there are less jobs and less money to be had. Also, the value of the dollar has fallen dramatically. Even with my degree I find that it’s hard to pay the increased energy and housing costs here. I don’t believe the stop gap measures proposed by the government lately will do anything to help out my family’s financial situation, let alone the situation of people the world over who’s very livelihood may very well be effected by the downturn in the U.S. economy.

    Sean-U.S.

  59. 59 Abdulahi via text
    January 22, 2008 at 18:57

    Somalia war-torn country where 90% people depends remitence from USA& EU. Recession may impact and can worsen ordeal in Somalia.
    Abdulahi Hasan Seefle

  60. 60 Abdulahi via text
    January 22, 2008 at 18:58

    Wud the US rate cut not encourage borrowing cheap for speculative purposes which can distort the market and make resolution of the problem difficult?
    albert/zambia

  61. 61 Jon
    January 22, 2008 at 19:22

    Abdulahi is absolutely right…rate cuts are irresponsible and unwarranted. Unfortunately, Neo-Keynesian ideologues hold sway over the US economy and believe the government’s good intentions can save the country from its own consumer-driven irresponsibility. Corporate America has encouraged credit consumption and it appears the day of reckoning is nearly upon us. The fed needs to remember that its main concern must always be the preservation of a strong currency. Tax cuts/rate cuts will mean nothing if the dollar continues to devolve.

  62. 62 Anonymous via email
    January 22, 2008 at 19:32

    International listeners who call the US BANKRUPT are spot on.

    BANKRUPT financially, structurally, politically, moraly.

    That’s from a life-long Californian!!

    The only thing holding the US together at this point is the US Dollar — we’ll see how long the glue holds!

  63. 63 Michael via email
    January 22, 2008 at 19:33

    Is the US broke?
    Sure it is. For decades corporate America has been sending every single job overseas they can to profit their shareholders. The current Bush regime has spent billions (given to choice American corporations) on the invasion and war against IRAQ.

    I am a home owner who was given a choice on either a fixed percentage mortgage or an adjustable (which would allowed me to buy more home) I chose the fixed, safer route. The reduced mortgage rate will allow me to refinance at a lower rate, thus lowering my monthly payment. It’s not just the “sub prime” loans, it’s all the adjustable loans that are in jeopardy.

    Thanks for the opportunity to comment on the subject.

    Michael, Los Angeles

  64. 64 Lauren via email
    January 22, 2008 at 19:35

    China holds most of the US debt and the american public is ignorant to what is really going on with the economy.

    anytime you go into war the result is a recession
    Lauren

  65. 65 Theresa via email
    January 22, 2008 at 19:36

    Listening, I thought the American farmer put it best. We have to buy where the production is cheapest. Once both we and the US had stability and growth, based upon innovative engineering. Now we both rely on service industries which, alone or for the most part, will always be totally dodgy. Say an island, unable to reach out to trade with others, decided that, to help it survive, all should take in each other’s washing. That is what relying on service industries is all about.
    Were we in a perfect world, not organized by politicians or bureaucrats but making money a true reality of normal life, when the exchange rate of any currency would be governed by a y-factor, the basic cost of housing, feeding, educating and medicines for a family of four in that area, we might have something of it sussed. But something else may still go wrong because things always do.
    Unfortunately.
    Best wishes, Teresa
    UK

  66. 66 Paul Brinker
    January 22, 2008 at 20:16

    Let me point out that a recession is simply a reduction in the rate of growth dosent mean much on its own, its natural for recessions to happen as poor bussness models cause the bussness to go out of bussness. The us has nothing to blame but its self given its short term thinking and love for quick profits before jumping ship.

    The US is feeling the brunt of paying a huge war bill, huge support costs for its armed forces world wide, defined benifits for retired civil servents and many many more costs that could easly be cut.

    However, if we were to pull out of iraq, remove many major military bases from the world, stand down part of our military and cut back, we would be seen as weak to the rest of the world.

    The only true way I can see the US to recover as a whole is to compleatly restart our budget, Have major cuts in almost all aspects of spending and start paying down our debt. Once debt free we need to take a page from alaska and invest any extra income in the vary stock market that runs our economy with the gole being to build a stablizing force.

    As for the jobless people in the rust belt, and the many parts of the US that are showing 10%+ unemployment, perhaps we need to bring back the federal works programs along with giving a GI bill type program to everyone who signs up for the program.

    In short amearica needs to:
    Redo its budget from scrach
    Pull out of its current wars
    Draw down its military outside the US and reduce its total service numbers
    Repay its debt, generate a income and invest that income
    Recreate federal work programs and tie them to some type of GI bill

    Paul,
    Former US Marine,
    College Student
    Vancouver WA, USA

  67. 67 Alma Cristina
    January 22, 2008 at 20:18

    World economy? US economy? EXCESS POPULATION, Excess Growth and Development, Excess Enterprises and Consumption, Ecodegradation and Climate change, etc. etc. And you ask what is wrong? Better find out WHAT ISN’T WRONG? Isn’t it time we connected the dots and saw the WHOLE picture, not just the bits and pieces? The Economy today and Climate tomorrow; bombings and genocides one day; floods and mudslides, unrest and protests the next. Symptoms of ONE DISEASE, all of them consequences of ONE CAUSE: TOO MANY PEOPLE ON THE PLANET! And EXCESS in all our affairs and ways. What to do? One person has cogent, intelligent, well research answer: Lester Brown of the Earth Policy Institute. Check his website: http://www.earth-policy.org. Non-governmental. The answer: start running the planet FOR PEOPLE, FOR SURVIVAL AND WELL BEING AND NOT FOR PROFIT AND GAIN. Start thinking of the WHOLE AND NOT THE PIECES, with nothing and no one left out. OR NOBODY WILL MAKE IT. The problem is NOT the Economy. It is US, TOO MANY OF US!

  68. January 22, 2008 at 20:36

    Hi, I’m Beverly who won the “Gold Medal” for commenting =)

    Just like to reiterate what I said in a previous post. Living in the States its quite clear we are in a recession but the government (and some presidential candidates) are not keep on explicitly saying so. I agree with some comments about the War in Iraq is now bottoming out the economy. It has been from day one, but its taken until now for citizens all over the US realize this.

    http://afropolitans.typepad.com/

  69. 69 Ryan
    January 22, 2008 at 21:22

    Why are we experianceing economic troubles? Because our homes and economies are over valued … I only hope that there arrises the chance to make the changes to our system that are so badly needed. Lets CLEAN HOUSE.

  70. 70 George
    January 22, 2008 at 21:26

    Sikander via email January 22, 2008 at 5:40 pm

    Hi,

    The Fed has panicked by reducing interest rates.

    Also, I would like to ask whether the prudent investors, who have saved should be kicked in the teeth.

    Should the prudent savers suffer by the reduction in interest rates ?

    Why are those who have borrowed to the hilt being favoured ?

    Many who have retired and rely on their savings will be badly affected.

    Thanks

    Kind regards

    Sikander

    /////////////////////////////////////////////////////////

    Sik-

    1. The US has moved from one speculative bubble to another: speculation makes mega bucks for those in the game and has been propped up again and again going deeper and deeper in debt.

    2. Wallstreet and banks are protected in all our financial policy and by the Fed, rather than pensioners or families who of course can eat cake.

    3. Lobby folk run the legislature and the mega bucks few direct those in the White House to the incredible harm of sound policy on all matters.

    4. The credit industry has reached pirate level abuses, the aim to put every citizen into credit slavery for profits.

    5. Zero honesty is spoken in public service or institutions, much less the media to continue the process above.

    6. Financial markets have something of a life of their own and the wounds to the USA are bleeding now.

    7. Foreign nations, not foreign banks or corporations but foreign nations (e.g. China, Saudi Arabia, and others) are literally buying the USA piece by piece and now dictating interest rates and foreign policy to US officials.

    8. Never in the history of the earth, have so few, stolen so much, from so many, to destroy a nation so quickly.

    Stay tuned it gets more interesting much faster now.

    Don’t worry Sik, you are of course absolutely correct in your reasoning.

    You are watching the slow motion wreck flying through the air out of control but the engineers are already deftly bailing out with golden parachutes shouting “keep your seats folks” over their shoulders with a grin.

    There will be large changes in the USA, which is game plan for some, a shock and misery for most, but a sleigh of hand will puff out a national life jacket with strings which the masses will then grab and life as we have known it in the USA will never be the same.

    What the heck, the population does not know what is happening now or why, so that will be no problem to smooth over either: like slowly boiling a frog in a pot.

    “Savins?……we don need no stinkin savins!” a la “Treasure of Sierra Madres”.

  71. 71 John B. Min
    January 22, 2008 at 22:04

    Hey,

    The U.S. economy effects everyone in the world. The hundreds of billions of dollars of charity and trillions of dollars of commerce circulate because of U.S. influence.

    People need to support each other’s nations so that we can all be prosperous. The requirement for entering the trusted circle of economic exchange is that the government of the nation in question is well structured for the people. Corruption, crime and unethical choice of action are all breaking factors to potential nations.

    Our economy will move on, just as it has in the past. An opportunity for lucrative investment is being developed through cyclic manipulation of the market. Get ready to invest.

  72. 72 Thomas Murray
    January 22, 2008 at 22:51

    It’s the high-pressure atmosphere of aggressive (nay, predatory) salemanship in the U.S. that got us in trouble. Hence “predatory lending” — the practice of not caring if the loanee could afford his (subprime) mortgage. He can slave it out later, when it’s somebody else’s business.

    Marx was right. Capitalists are their own hangmen. India and China should take heed.

    Confidential to Dwight: Bush isn’t on happy pills. He a legend in his own mind, sailing down the river of denial.

    A few weeks ago I thought the only certainty in the cosmos was that the New England Patriots are going to win the Superbowl. Now, after the shellacking they got the last two times out, all I know is that our next president will either be a black guy or a white woman.

    Cheers — Louisville, Kentucky, USA.

  73. 73 Bob Ormston
    January 23, 2008 at 02:44

    Thanks to the BBC, & a little luck – no! I’ve used the BBC’s website, news, market & economic analysis, as my primary source tor investment information, for over 10 years. With good results. I can not get this quantity, or quality, of news & information from any other source! Based upon, what I thought was, fairly conclusive evidence of a pending market & economic down-turn, & possible recession/depression, I sold the majority of my stock, last summer – right before the markets started down. Also, greatly increased my investment in gold. Both moves were against the advice of my professional advisor. Needless to say, I’m felling pretty good! Again, my thanks! Next time I come to Great Britain, the drinks are on me!

  74. 74 Joey
    January 23, 2008 at 02:44

    Thinking Allowed…
    Thanks for having Steven Evans on the programme, as I listen to the Business Daily podcast everyday. That guy is no ordinary reporter, and clearly an expert. Might add Peter Day to that list as well (Global Business programme). Coordinating the WHYS programme with the Business Daily is a positive and influential move.

    Recently, Chris Rock was interviewed on the BBC. That guy is taking his creativity worldwide.
    He said that Americans worship money. Money is our God, look at any coin or foldable piece and it will say in god we trust. Whoever set that system up may have realized that if ordinary people keep striving for that extra dollar and believe it to be our life goal, the super rich will be able to keep this process moving indefinitly (we’ll keep on looking for another dollar and not be satisfied). Is that all we want, a stable system based on a misbelief in the almighty dollar? Or can we take it to the next level, with a clearer understanding of the gap between the rich and poor. If we understand that gap, then it should be no problem to bridge…

    Joey Givan
    Denver, Colorado–USA
    303-902-2683
    joeydatta@yahoo.com

  75. 75 James in Indianapolis
    January 24, 2008 at 13:47

    The coasts and people that live the high life are the ones that are causing and feeling this. Buying houses for hundreds of thousands of dollars is ludicrous. Here in the midwest, there are lots of affordable houses. There are new construction, single family homes starting at $80,000 US dollars. If you want pre-owned, I can show you houses for under $20,000. If one CHOOSES to live beyond their means, that’s the risk you take. If you buy one of these $20-60k homes, you can AFFORD to live there, dontcha think? No one needs fancy cars and cable TV and internet access. But, they think they do. My wife and I are both 4-year college graduates, and live well under our means. But, there are tons of entry-level (High School diploma) jobs. Just go to indeed.com and search for them. Some pay fairly well, imo, too.

  76. 76 Franco
    November 24, 2008 at 16:57

    I’m in the United States(North Carolina at the moment) and so far I’ve not seen a drastic decline in the quality of life here on the east coast from New York to South Carolina over the few months. People are at the malls and shopping centers doing holiday shopping, my bank account is good, and I’ve recently purchased a car(I even*gasp* got a loan to do it!) The only problems that I see so far are businesses go belly up who have done poorly up until now. Circuit city is going bankrupt(they suck), Wachovia got bought out(they sucked too), DHL was the smallest competitor among the shipping companies and they stopped operations in the U.S.( I’ve heard that they sucked, but never used them). I’m curious as to what will happen like everyone else considering the financial ties between the U.S. and other countries. The most that I can fathom considering how little I’ve been affected is that the richies who run the big businesses(poorly) will suffer,whine, and then get uncle sam to bail them out while the media sells us at the lower financial levels a new, non existent, great depression.
    Maybe this is a depression for the rich. I know that we are all connected in a way but, if say, 100 major companies were to go belly up in the U.S. in the next five minutes then armageddon would still be a 100 years away if you understand what I mean. My personal theory until I work out a better one on this economy is that only cerrtain people will be affected by it. Those people being the people running “big business” poorly(ex.Detroit auto companies) and those in their employ. Everyone else should be fine and even after layoffs people adapt. If we would refuse to buy into this seemingly needless fear then the public may start buying without as much hesitation and our economy would surge a bit. Anything can happen though, I just feel that greed is to powerful of a feeling to allow its possessors to go unsatisfied. If the big guys want more money they will try their hardest not to let the economy drop to far and hard, otherwise they’d be in the red, right?


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