ECONOMIC DECLINE

The recession mirroring the Great

Depression
By
Erik Sterner
 Great Depression
At the end of the “Roarin’ 20’s,” America entered the worst
economic position it has ever been in. This period of
economic turmoil is known as the great depression.
 Depression strikes

 Oct 29, 1929, known as “Black Tuesday,” the stock market lost 14 billion
dollars, totaling the lost for the week at 30 billion dollars.

 Suicides throughout New York City’s financial district followed the initial
crash.

 Weak banking, along with overproduction, and a bursting credit bubble all
contributed to start of the depression.

 During this time majority of Americans lived in poverty. ¼ were not able to
find jobs.

 With males being the only source of income in most households at the time,
if the husband hadn’t had a job then all income to the house stopped.
 Current Recession

 Being at war with Iraq stuck a huge blow to the

American economy, with money being spent overseas,
less money was flowing throughout the states.

 At the height of the recession prices for gas and oil

sky-rocketed, jobs were hard to come by, and banks
went bankrupt.

 This is one of the worse economic situations we’ve

been in since the great depression.
 Industrial Reason for Decline
 The United States’ material demand shadows
the rest of the world’s demand.
 The U.S. military has one of the biggest U.S.
budget.
 Outsourcing for oil puts a toll on the United
State’s funds.
 Oil
 The U.S. ever growing has had a high demand
for oil ever since the industrial revolution.
 In 2007 the U.S. consumed 20,680,000bbl/day.
 One bbl is equal to 42 gallons.
 The Iraq War
 March 20, 2003 President Bush declared the
invasion of Iraq.
 As well as being seen as a commercial war on
terrorism, the another motive was to protect
the United State’s oil interests in the Middle
East.
 Military Spending
 The U.S. accounts for 46.5% of the world’s
military spending since 2009.
 The U.S. spends $684 billion a year on it’s
military.
 Real Estate Market
 The real estate problem played a huge part in
the decline as seen with the rapid growing of
the market coming to a sudden halt.
 Mortgage
 Housing bubbles are rapid increases in value of real property in a
certain area until unsustainable levels are reached relative to
incomes.
 This leaves homeowners with a negative equity, a mortgage debt
higher than the value of the property. So many homeowners
couldn’t pay for the houses they lived in
 Housing Loans
 The markets rapid growing was due to U.S.
citizens loaning vast amounts of money from
Banks.
 These people didn’t have the incomes to pay
the banks back. So banks were losing money
along with other people’s money as well.
 Banks
 With the booming real estate market who wouldn’t
seize the opportunity to make money?
 This attitude resulted in many banks cutting many jobs
and in some cases the banks closing
 On October 3rd 2008, banks across America received a
$700 bailout to save what was left of the economy.
Unemployment
 Since the recession of
2008/09 has hit, many find
their wealth vanishing and
many worry for their jobs.
 In the U.S. alone,
unemployment has risen
8.5%
 During November 2008,
employers shed 553,000 jobs,
the biggest downsize in 34
years.
 Amount unemployed
 14.8 million people in the United States are
unemployed.
Layoffs
 Layoff is temporary
unemployment of an employee
or group of employees.

 When a business doesn’t have

much money temporary
layoffs are often the solution.

 Just in August of 2010, 403

mass layoff events too place,
over 150,000 workers were laid
off.
 Stock Market

 The stock market is a key indicator of how the

economy is presently.

 As the economy improves, businesses make

money, so their market value increases.

 Declining business profits caused by anything,

causes a weakening economy which results in
failing businesses, therefore falling market values.
 Conclusion

Today, the economy is still pretty bad,

we are still paying for the war in Iraq and
are having bugeting problems. With
many so-called solutions to the economic
crisis, there hasn’t been a perfectly fitful
plan to save our economy. If lucky in the
near future we will see an improvement
in the economy.
 Sources
 http://www.nationmaster.com/graph/ene_oil_con-energy-oil-consumption
 http://en.wikipedia.org/wiki/Recession
 http://en.wikipedia.org/wiki/United_States_housing_market_correction
 http://useconomy.about.com/od/criticalssues/a/govt_bailout.htm
 http://www.globalissues.org/article/75/world-military-spendingby Anup Shah Created: Monday, July 20,
1998 Last Updated: Wednesday, July 07, 2010
 http://www.cdi.org/issues/usmi/
 http://www.bls.gov/news.release/pdf/empsit.pdf
 http://applicant.com/from-4-129-the-state-of-unemployment-across-us/
 http://www.bls.gov/mls/
 http://en.wikipedia.org/wiki/Layoff
 http://facts.randomhistory.com/2009/04/12_great-depression.html
 http://mises.org/daily/4654