What are the greater implications of all the stock market concerns?
January 14, 2009 · Filed Under Economics
judithsr asked:
I know very little about economics, the way the stock market works, the greater impact it has on the economy as a whole, etc.
I know very little about economics, the way the stock market works, the greater impact it has on the economy as a whole, etc.
I know enough to know that all the things happening now are not good. This may be a silly question, but why are the dropping numbers so problematic? What happens when the stock market drops as low as it has been? How will this impact the economy, and individuals?
This sounds like an essay question, and I’m not trying to cheat on homework anything. I’m really just curious, because I don’t know and I would like to.
Thanks!
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3 Responses to “What are the greater implications of all the stock market concerns?”
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People save for retirement through 401K’s and IRA’s. That money is invested in the stock market, and now it’s all gone. They can’t retire and have to work longer. They stay in jobs that could have been filled by young people. So now when you go look for a job it won’t be there. It also won’t be there because businesses can’t get loans to pay their payrolls and other costs. They will begin to lay people off soon; many, many people. Without a job people can’t pay rent and mortgages, buy clothes, buy food. Those who still have jobs will tighten their belts and not buy as freely. If people don’t buy things, the manufacturers will go out of business. More layoffs, more people out of work. They’re calling it a recession now, but in 6 months it could be a depression. Read about how it was in the late 1920’s. Not pretty…
Kansieo.com
The best thing that can happen is us learning a lesson and changing our habbits. The next best thing that can happen is us not leraning a lesson, but repeating our mistakes and starting to prosper again. The next best thing is not learning a lesson, but the downturn of the economy keeping us in check and stabilizing slowly. The next thing that is not good that can happen is chaos and standard of living going down signifficantly for a long period of time. The next worse thing is complete chaos, starvation and mass deaths. The worst thing that can happen is not learning any lessons at all.
Bottom line is, our economy until recently was only on paper. Then it became only in complicated software. Non existent money was made from people’s money. Then one day when some people really needed money, the people that were making money for them realized they actually had no real money to give back because they were spinning stuff they did not even understand. Then banks lending money given to them by those people making money out of nothing realized they did not have money also, yet they had been given loans with the nonexistent money to many people. Then insurance companies realized they have been insuring non existent money too. Then the rich said sorry. Then the middle class and the poor said, its OK, I’ll forgive you for forcing yourself upon me. Then the rich said: “if I am forgiven, then prove it by giving me 700 billion” Then the poor and the middle class said “I don’t think so”. Then congress gave the rich 700 billion. Now the rich are saying “give me more”
What I just described at a fourth grader level sounds insane, but the irony is that it is word for word an exact depiction of what has been happening. Like I said, the worst thing that can happen is us not learning a lesson. Greed is a mother F-er.
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The stock market is more of a reflection of what investors think will happen to the economy and business profits than a cause, but the loss of wealth will further depress consumer spending. The real problem is with the banks, lending and credit markets and the problem of the fall in the price of people’s homes..