“This is the United States of America. No matter what some agency says, we will always be a triple A country.” -Barack Obama
But based on the news – NET 25 the United States of America drops from triple A (AAA) to double A plus (AA+).
WHAT HAPPENED?
For the whole week, US Economic Crisis has been the talk of the town. Being the “center of the world”, everyone’s attention is all in US.
- The U.S. economy is currently experiencing its worst crisis since the Great Depression. The crisis started in the home mortgage market, especially the market for so-called “subprime” mortgages and is now spreading beyond subprime to prime mortgages, commercial real estate, corporate junk bonds, and other forms of debt. Subprime mortgage is when the people are having a hard time repaying for their debt.Because of this, it causes the US banks to
lose a 1/3 of their total bank capital.
- The US also suffers from high unemployment rate and high inflation. The workers are having a hard time, because some company tends to squeeze their existing work force to produce more, making the workers work overtime with low wages. Up to now, the government is implementing a lot of ways to solve the problem, but still the crisis remains. The crisis has led to a sharp reduction in bank lending, which in turn is causing a
severe recession in the U.S. economy.
How will you react on this?
Maybe youngsters would probably say "I don't know and I dont' care" and adults would say "OMG! Why did this happen? or "How can this be happen to USA?". The difference is most of the kids of our age wouldn't even try asking or be curious about the current state of US. We should at least involve ourselves into this problem. We should learn the importance of this matter even at our young age. Among adults, shall we say they worry too much because they have their loved ones working in US.
What are the effects of the said dropped down economy to
our country?
We all know that Philippines and USA has a good relationship. So, we should expect a great effect of this to our country. It is reported that the United States can no longer pay its debts.
- The effect of this to our country is that we can no longer lend funds for our government. We will have weaker remittances, lower exports, and more problematic investments. As of now, the USD is decreasing vs. the PHP. The financial market is trembling down and Asian markets are starting to fall. It is also a big impact to all Overseas Filipino Workers (OFW) in the USA who are delaying the money they are sending due to
lower rate of foreign exchange. Finally, the greatest effect that this could bring to our country is high rate of unemployment and the lack of productive domestic investment opportunities. As we all know, most of the countries depend on the economy of USA.
What may be the cause of the dropping down of the US Economy?
- It’s the increasing balance of debts of US.
- Also the so much use of credit cards. They always use credit cards on their everyday expense, they are not use to use bill or on cash.
- Increase of the stock market and the arguments of the Democrats and the Republicans.
- It is also mentioned about currency wars.
- Always and easily lending a loan to anyone not merely anyone, but to needy ones, like to those who are just only starting putting up a business and then suddenly they’ll just find themselves not successful, that’s why their obligation on those entities will be the one who will take risk. Because in the USA if you have a credit to them or you have a loan on payment that mean so much to them, it means that they trust you so much and unfortunately the American does.
US government must solve this problem. They should stand as one and rebuild the economy of US. They must keep in mind that the failure of US economy may also lead to the failure of the economy of other countries. (again) As we all know, most of the countries depend on the economy of USA.
