Why America and Americans are in Financial Problem? Part I

America is the richest country in the world. Americans are the richest. Are they satisfied? Are they actually happy?

Ask any common American. Reply probably be negative.

Why?

Americans are in economic crisis.They are in financial problem. Sub-prime crisis hits America severely. The USA is in the brink of recession. Technically recession is not yet started. However, America is actually experiencing the deadly face of recession.

Banks and financial institutes of America are cracking down. Sub-prime crisis has exposed financial problems and weakness of financial institutes .

It is advisable to be prepared for financial shocks in American stock markets. I will not be surprised if some large financial institutes collapse. May it be Morgan Stanley, Merrill Lynch or Lehman brothers?

Why?

There are apparent reasons of economic crisis and financial problem of America. People are discussing those apparent and temporary reasons and trying to control those aspects. Nevertheless, there is much more than that. They are overlooking actual reasons and causes behind the economic crisis and financial problem. Sometimes they cannot even understand. How can they know those internal aspects of permanent nature?

This is a million dollar question.

Answer needs introspection. Introspection by politicians, policy makers, economists, social workers, sociologists, investors, job-seekers, hired or fired, by each and every American!!!

Is it because of terrorist attack? 9/11?

Iraq war?

Yes, these are some of the reasons, only some of the.

Attack on the Twin towers of the World Trade Center was not merely an attack on the buildings. It was an attack on the ego of the Americans. It was also an attack on the American economy, an attack on a ruthless but continually progressing economy.

It had broken a myth. A myth that America is safe. A myth that no outsider can attack America. A myth that America is non-conquerable. It has shaken faith of the common Americans. The fear factor is now haunting Americans. This is one of the causes of economic crisis and financial problem of America.

Where there is a fear there is a lack of confidence. The US citizens has started loosing confidence on their Government, politicians and bureaucrats.

The attack has cost a lot to the Americans. Besides direct monetary losses, American economy has witnessed huge indirect losses. It has enhanced security cost by many folds. It has slowed down movements of both people and goods. As a result, the economy has slowed down.

America is conceived as anti-Mohammedans after this attack. Whether America is anti Muslim or not is a debatable question. However, It is conceived so. Osama- Bin-Laden and other fundamentalists urge to their community to boycott American goods that means Americans are loosing large part of its customer base.

This is another cause of economic crisis and financial problem of America.

America has also spent a lot in the Iraq war. Billions of dollars are drained for the purpose. These are tax-payers' money, spent in Iraq war. Iraq war is not yet reach to a conclusion. It needs dollars till date, many many dollars, of the common American tax payers.

President Bush is loosing his popularity. It hitted the lowest level since last fifty years. What is the reason? People say, it is Iraq war.

Asian economy have been in its boom led by China since ninety's. America had supported China by all means. America has placed China in the status of most favored nation. China has got the biggest consumer market in the world. They have started manufacturing all types of consumer goods. They produced cheap. They produced and exported the cheapest. China has dumped its products in America.

American market is flooded with cheap Chinese consumer products. American consumer durable manufacturers lost their competitive edge against China. In turn, they started outsourcing their manufacturing jobs to China and other countries providing cheap labor. These cause job-losses in America.All these cause economic crisis and financial problem in America.

Growth rate in US has started slowing down. Stock markets have already faced bad days. Investors are going out of America in quest of a safe heaven. Many of them have started moving to Asian countries like China, India, Korea, Vietnam, Philippines and Malaysia.

I like to point out a very crucial and interesting point about Warren Buffet. He is the richest person in the world now. He has pushed Bill Gates of Microsoft to third position. despite his American nationality warren Buffet is not investing much in America. He pulled out investment of approximately $ 20 billion from the American stock markets in the year 2006 alone. Major portion of his portfolio is enriched with foreign stocks. Recently he visited Germany to find an opportunity to invest there.

The above mentioned are some of the reasons of slowing down American economy causing financial problems to common Americans. Will some one bailout American economy?

( This hub is written in May 2008, so please read in that context.)

Please view other reasons of economic crisis and financial problem of America in Part-2 of this article.

1. PL visit this link for current situation on 7th June 2008.

2. President Obama has taken over the office of the President from President Bush. He has already spent more than hundred days in the White house. There is not much improvement in the economy. 11 May 2009.

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