Francis Simbolon
–
Illustration of the trade war between America and China. KONTAN/Fransiskus Simbolon/16/05/2019
–
Intisari-Online.com – United States of America (AS) threatened to default on its debt in October.
Washington is in debt more than 28 trillion dollars AS or exceed IDR 400,000 trillion.
If you really fail to pay the debt, great danger lurks”Uncle Sam’s Country”.
Even though, economy AS is recovering from Covid-19.
Financial services firm Moody’s Analytics warned that if the US defaulted on debt, the country could fall into a recession.
In fact, the company warns the US recession this time will be more dire than Great Recession.
The Great Recession was an economic recession that was triggered in the United States by the 2007-08 financial crisis and quickly spread to other countries.
Beginning in late 2007 and lasting through mid-2009, it was the longest and deepest economic downturn in many countries, including the United States, since the Great Depression (1929-1939).
The financial crisis, a severe contraction of liquidity in global financial markets, began in 2007 as a result of the bursting of the US housing bubble.
Since 2001, successive declines in key interest rates (interest rates charged by banks to “prime” or low-risk customers) have allowed banks to issue mortgage loans with lower interest rates to millions of customers who normally do not qualify for it.
From the start of the recession in December 2007 to its official end in June 2009, real gross domestic product (GDP)—that is, inflation-adjusted or deflationary GDP—declined by 4.3 percent, and unemployment increased from 5 percent to 9.5 percent, peaking at 10 percent in October 2009.
As millions lost their homes, jobs, and savings, the poverty rate in the United States increased, from 12.5 percent in 2007 to more than 15 percent in 2010.
In the opinion of some experts, a greater increase in poverty can only be prevented by a federal law, the 2009 American Recovery and Reinvestment Act (ARRA), which provides funds to create and maintain jobs and extend or expand unemployment insurance and other safety net programs, including food stamps.
Despite these measures, during 2007–10 poverty among children and young adults (those aged 18–24 years) was around 22 percent, representing an increase of 4 percent and 4.7 percent, respectively.
Much wealth was lost as US stock prices, represented by the S&P 500 index, fell 57 percent between 2007 and 2009 (by 2013 the S&P had recovered those losses, and soon surpassed their peak in 2007).
Overall, between late 2007 and early 2009, American households lost an estimated $16 trillion in net worth; a quarter of households lost at least 75 percent of their net worth, and more than half lost at least 25 percent.
Households headed by younger adults, especially by people born in the 1980s, lost the most wealth.
It is measured as a percentage of what the previous generation in the same age group has accumulated.
They also took the longest to recover, and some of them still haven’t recovered even 10 years after the end of the recession.
Featured Videos
– PROMOTED CONTENT
economic recession
