A Look At The Effects And Response To The Recession

Comparing the depression of 1929-39 and the recession of today will give you a very clear picture of the impacts of a significant economic catastrophe on the world. Many individuals are not aware of the fact that the depression, just as the recession have affected every industrialized nation in the world. The global impact of the recession has impacted the economies of nations and peoples throughout the world.

Minor recessions occur regularly in a normal and healthy economy. These are not abrupt and do not last a long time, they are simply corrections that occur when a market changes. The corrections usually affect the stock market, sales, or demand for products in an industry, changes are made and the market returns to its normal flow. When an event lasts for two quarters or six months, it is referred to as a ”recession.” The term depression and recession are best defined using a popular job among economists. A recession is when your neighbor loses their job, a depression is when you lose your job. The determination of an event as a major recession or depression is very subjective and there is no clear dividing line that designates one or the other.

Low living standards and low employment are the primary indicators of a major recession/depression. In the last depression, people were losing their homes, land, jobs and were forced to find any means to survive. Today people are losing their homes, land, jobs, and are forced to find any means to survive. For the majority of people, this is a depression. The current official unemployment rate in California is 12%. This does not include people who are no longer looking for a job, are working part-time because they cannot find work, or are working at minimum wage jobs completely out of their field because they can’t find a job. When all groups are added together, the unemployment rate in California is 20%. At the height of the 1929-39 depression the unemployment rate in California was 28%. This is not an anomaly for California, all states that have been affected by an increasing and rampant unemployment rate since the recession began.

A market, or recession corrects itself when the normal forces of supply and demand occur. As demand is reduced, businesses lower wages which allows them to hire more people and product more supplies for less money. This increases demand and the market corrects. In the last depression, as with this recession, the government has prevented the natural flow of supply and demand by forcing businesses to maintain wages at a static level, increasing fees and regulations, and raising taxes. The result has been, as it was in 1929, that businesses have had to close and people have been laid off. The cost of products have remained high, but the demand is gone because the people who buy the products are unemployed and cannot buy the products.

One of the arguments that come up when people compare the last depression with the current recession/depression is the fact that money is different now than it was in 1929. However, when one compares the money, the similarities become very apparent. In 1929, the average yearly income was $6,000/year, in 2009 the average income was $30,000/year. In 1929 the average fully loaded car was $695 out the door, in 2009 the cost for a car was $23,000. The average home in 1929 was $3,500, before the crash in 2007, the average cost was over $400,000. Wages for the average American between the last depression and the recession increased five time, however, the cost of living increased significantly higher. This imbalance when calculated results in the realization that people today have less spending power than they did in 1929.

The recession has changed many lives and caused many people to take a hard look at their priorities and try to recover using ingenuity and creativity. The results of the recession on average people has been very apparent. Most people who were just getting by before the recession found that they were left floundering with house payments beyond their means, higher taxes, and job loss. The results of the economic melt-down have been felt globally, however as with any tragedy, the personal trauma that it has left in its wake have often left the deepest scars.

There have been multiple recessions in history and there will continue to be recessions, however depressions are long lasting and cause an impact on both the government and people who must survive and adapt to the circumstances in which they find themselves. While many politicians will deny that this is a depression, there will undoubtedly be historians in the future who study the Great Depression of 1929 and the Great Depression of 2007 as sister events that played a dramatic role in the changes that affected the people of the nation and world.

Recessions are often cyclical, when an economy’s growth is based on a balloon strategy of inflationary decisions made by governments intent on collecting money, the outcome will be a sudden and abrupt bursting of the balloon. This played out with the housing market, car companies, banks and other financial institutions. As with other depressions and recessions, the economy will rebound at a slower rate than most people would like.

As families have re-prioritized they have had to cut back which has resulted in a further decline in the retail, car and housing industry. Many individuals who found themselves in a sudden economic decline bought a home they could afford before their high interest loan went into foreclosure. Other people bought a smaller vehicles prior to the repossession of their higher priced vehicle. These desperate measures allowed many people to maintain some type of lifestyle as their standard of living declined.

The Internet has played an important part in helping some people to maintain a standard of living. Many people have found that they can work for individuals in other countries and make a living through their home computer. These individuals do not have health insurance or other benefits, but are providing for their families. The Internet has created a small village where people can work without the issues that had previously been addressed when work was land-based.

As the only industrialized nation in the world with national healthcare, the United States has people dieing and ill that cannot receive necessary medical care. The individuals ardently opposed to national healthcare have some type of insurance or subsidy that pays their health bills. The exorbitant costs of healthcare do not affect these individuals. One must wonder if they would feel differently if they were unable to attain healthcare for a dying child, or were forced to buy their prescriptions one pill at a time because they could not afford a supply of medication. The cost of healthcare for most newly indigent, homeless individuals is a result of the cost of healthcare that they could not afford.

When the signs of recovery have become apparent the face of the nation will have changed dramatically and indelibly. People who historically were loyal to companies and jobs will no longer seek validation in the material items they may have once owned or the job they once had. Throughout the depression, people have had to learn to get their validation through personal relationships and internal successes. This change has also resulted in the ability of people to seek different regions to live where they are able to live and thrive.

To get out of the last depression the government ended many of the regulations and restrictions that had stopped free enterprise. They also imposed rationing, started a six million defense worker program, drafted six million soldiers, and ran massive deficits to put more money into the hands of the citizens. This has not happened in the current recession as banks have been bailed out, federal money has been stopped at the state level, and money for jobs have been diverted to state programs that do not increase jobs, but further support the government agencies and departments that regulate business.

There was a mass movement during the last depression. Many people came to California seeking opportunities and benefits that this beautiful state had to offer. The opposite is, and will occur as the recession continues. There is a mass exodus of citizens leaving California who are seeking fewer governmental regulations and restrictions. Lower taxes and an affordable standard of living is being sought by individuals who have lost their homes and businesses in California while state government has made no effort to alleviate the problems that have resulted from the recession.

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