Wednesday, November 23, 2011

What's the Answer to the U.S.A.'s Financial Woes?

Economic experts Warren Gee and Nate Doug say, "Regulate."
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8 comments:

ReikoHuffman said...

I applaud that you used that video :).

Anyway, I'm not a well respected economist and I'm pretty sure my solutions aren't accurate enough to make a dramatic change, but here is what I think.

Whenever, I watch the news or walk into a store sometimes I wonder how can we still be in an economic crisis? Everywhere I see people spending money mostly on..... luxury items.....

I remember Mr. Silton saying something during the Honors Economic unit that it's not that people can't afford something, it's that they aren't willing to give up other things, mostly luxuries, for another. And I COMPLETELY believe that's true.

Thus, one way, I think that America can see some improvement is by sacrifice. So many complain about how the president or the governor, or whoever isn't doing enough to fulfill their needs however, I think they can do more than they're willing. Why is it that a person who has an ipod touch also has a minimum wage job and car that barely runs?

I think Americans need to get their priorities straight. By doing this I think we won't be completely satisfied, but improvement will be seen.

November 23, 2011 at 8:44 PM
Jennifer Nguyen said...

Going off of what Reiko said, people everywhere seem to be spending money on luxuries left or right. Maybe the reason we're in such an economic crisis is because people aren't spending as smartly as they used to. This irresponsible spending plus the fact that our new necessities are now semi-expensive is causing this major rift in our economy.

November 23, 2011 at 11:53 PM
Gabe Hargis said...

I strongly disagree with both these statements on the grounds that Americans are not spending more money on luxuries, Americans aren't spending more money on anything at all. Consumer spending has remained very low in all sectors really since the beginning of the economic crisis and therefore it isn't that consumers are spending their money irresponsibly, the problem is they are being too thrifty and conservative in their spending decisions. Consumer expectations and habits have a large influence on all parts of our economic system, from how much of a certain product businesses choose to produce or sell, to which companies are expected to do well in the stock market in the near future and so a bleak view of the economy only fuels the downturn more. Rather than tightening our belts and accepting some sort of sacrifice, such as the austerity measures that have been so popular in Europe lately, we need to have more government stimulus of the economy and stop acting in our own self interest-saving our money until the economy gets better - because if everyone does that, it never will.

November 25, 2011 at 1:36 AM
ReikoHuffman said...

That is a good point that Gabe brings up. However, just as few months ago, I can't really remember, the new ipod was released and I recall that there were extremely long lines being reported on the news about those waiting to get one. Therefore, I guess what I am saying is that, especially with Christmas coming up, shouldn't people's spending increase? Therefore people won't be holing on to their money as much? In addition, what do you think the government should do for more long-term growth?

November 25, 2011 at 1:54 PM
Jan Galabay said...

In response to the comments mentioned above, although some people buy luxury goods, they are not mostly average Americans. An average American might buy one or two luxury items a year during recession. Mostly the rich spend more on these luxury items. They can afford it. Moreover, most people associate higher priced goods to better quality although it is not totally true. They think that it has some value in it. Buying luxury items might actually be good for the economy. According to Mark Zandi, chief economist of Moody's Analytics, the top 5% of income earners accounts for about one- third of spending and the top 20% accounts for 60% of spending.
The rich people buying luxury goods is a good sign that our economy is heading to a positve direction. Although this might not look good beacuse of unemploymant, this is still helpful. Few years ago, luxury retailers were suffering because of the recession, but now they are slowly recovering from it.

In terms of stimulating the economy, I think the government and the Fed are still trying some measures. The Fed already cut interest rates to near zero and bought billions of bonds.However, like what Amy Jiang posted in the previous article "A Slow and Maybe Not So Steady Recovery," the number of jobs is increasing and the economy is improving but in a very slow pace. Like what I wrote in that article, there is no shortcut to speed up the process.

November 27, 2011 at 1:30 PM
Jan Galabay said...

This is where I got most of my information and quote about luxury items:

http://www.nytimes.com/2011/08/04/business/sales-of-luxury-goods-are-recovering-strongly.html

November 27, 2011 at 1:33 PM
Serena Tam said...

I agree with Gabe. In a CNN poll, 8 in 10 people still believed that we're in a recession. This affects the consumer confidence, which slows the economic recovery. I also recall reading in class that people are still having a hard time finding jobs and that the people who do find jobs are taking up jobs that pay less than their former jobs. These factors definitely contribute to the low consumer spending rates we are experiencing now.

Rest in peace, Nate Dogg.

November 27, 2011 at 7:10 PM
Keaton Gee said...

It find it interesting that Reiko and Jennifer believe Americans are spending more on luxury items while Gabe argues the exact opposite. However, I also think there's a certain degree of truth to both opinions; It just depends on which geographic standpoint you're evaluating. For example, here in the San Mateo/Hillsborough area, even though business isn't exactly booming, we're still noticeably better off in comparison to the majority of the country. I think it's safe to say that SM/Hillsborough residents spend more on luxury items (on average) than those living in inner-city Oakland or the likes. (Not that I'm trying to single out Oakland or anything.)
Addressing what Jennifer said, maybe it SEEMS like people are spending a lot on luxury items because we live in an area that is, like I said earlier, much better off economically than inner-city regions.
Unless you looked up statistics as Jan and Serena did, an individuals perception of how the nation spends as a whole is purely based off of personal political socialization, and is probably biased.

ps: Gabe, I'm diggin the jamz.

November 27, 2011 at 9:28 PM

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