Economic Crisis Leads To Recession?

Franky

Global economic breakdown that we are all witnessing together is of course not the end of the world. It isn’t a piece of cake, but the world is struggling not to fall into serious recession.

We have experienced great recessions in 1973 until 1974 and then again in 1980 to 1982. The government should know by now how to handle this, don’t you think?! A big portion of economy is still functioning as it should. Eventually the free-market economy will get back to its feet. This isn’t the first time, neither the last time!

What is a economic depressions anyway? In couple of simple words, depression means a lot of government policy errors. These errors include the lack of control over mortgage lending, misjudgment about leverage and other major government slips. The recovery will take ages, but it has to come out of the fog eventually.

Let’s consider an example – an illustrated model of recession in the past.

Recession is a decline in real gross domestic product for two consecutive quarters. 1973 was the year of a severe recession in USA. It was the worst case since the World War II. The unemployment level was over the hill and rising. There was a severe decrease in investment purchases. After all, the investment purchases are the important pieces of the puzzle.

However, credit freeze crisis is an enormous issue that has to be addressed immediately before things gets worse. If credit freeze will not be stopped soon, things can get into a serious problem. Let’s hope that the government can find a solution, and fast.

On the positive side, no matter what, the real economy lies in the minds of the living. I am talking about the technological boom and investing opportunities. The economy tsunami will end. Forex trading spreads will get tighter! Forex brokers will stop charging crazy swap rates! We will come out of this mess - a bit injured, a bit more vulnerable, but still full of hopes for a better future!