United States Economic Crisis (part 2)

  United States Economic Crisis

      The crisis in the United States began with the fall of the housing sector due to the increase 

in high-risk housing loans (subprime mortgages) in August 2007 caused bad credit and falling 

prices global stocks in recent months. The crisis in the United States spread to Europe,

 knocked down global stock prices and weakened the US dollar United to a record high of 

US $ 1.4967 against the Euro, at the time of the year 1999 US $ 1,16675. Banks that have 

networking in investment bonds housing with a reputable property business has also been 

affected,thus making banking performance experience a great shock, and compounded when 

the global stock market did not have the power to overcome the impact of the mortgage. 

This hit the stock market at a slumping level, the harder it gets trust in capital market 

players, both in the market in America and in the region world economy. The issuers are hit

and cannot afford to change drastically, the collapse in stock prices almost knocked out a

portfolio of several world-famous corporations.

     The credit crisis in the United States has resulted in credit becoming more expensive

and difficult obtained, many banks are reluctant to provide loans to customers.

Bankers prefer to look for safety with a tight credit pattern, and this action is logical

as a preventive step to minimize the risk of the effect of a mortgage increasingly widespread.

     According to Merrill Lynch and Goldman Sachs, the United States has entered danger of recession.
This is conveyed on the basis of: (1) finances that remain fragile, (2) many markets remain weak, 
(3) obscurity of large banks affected by the crisis credit, (4) high oil prices, and (5) weak 
consumer purchasing power. The Fed (The Federal Reserve) has been careful in every policy decision
with the principle of saving the economy.


     The accumulation of large funds in the housing sector has given birth to stagnation 
resulting in a slowdown in US economic growth in 2007 estimated to grow 2.3%, even though in 2006 
it grew 3.3%. This situation too followed by deteriorating social conditions with unemployment rates 
at 4.9%, while in 2006 3%. Inflation in 2006 amounted to 2.1% and in 2007 increased to 4.3%


    This Supreme mortgage has also disrupted the exchange since mid-2007 changes are heating up, 
and one by one large companies are falling such as: Bear Stern, Morgan Stanley, Citigroup, and even 
General Motors the pride of the United States fell. Subprime mortgage causes a crisis in interbank 
money market, claimed casualties in Europe and Japan. Banks and Securities companies have deleted 
asset books, credit losses as of April 1, 2008 reached US $ 232 billion. Many companies make 
subprime mortgages as collateral or underlying asset for debt securities.


    To tackle the Fed crisis in mid-August 2007 together with other central banks pouring 
liquidity into the shared money market for three European Central Banks, and Japan more than 
US $ 400 billion and lowered 50 bsp interest rate, to overcome the panic of global investors.
It seems the momentum is not right, because the housing crisis has penetrated into the sector real.


    Efforts are being made to stimulate the economic movement to rise back, the Fed cut 
interest rates since September 18, 2007 end of December 2007. The Fed funds rate was lowered 
from 5.25% to 4.25%, fell again to 3.5% (January 22, 2008) and 3% at the end of January 2008,
even heading to 2.5%, but the Japanese BOJ and Eurozone ECB are still holding back the rate 
interest amid high inflation due to rising energy prices. At first falling interest rates have 
succeeded in pushing the pace of global exchanges (including the CSPI) but in the last decline 
of December 11, 2007, the global stock exchange was even worse off. The Government of the United 
States has announced a fiscal stimulus policy amounting to US $ 150 billion in the form of
US $ 800 tax rebates per house, even mid-February 2009 approved fiscal stimulus of 
US $ 787 billion (April Economic News) 2009). The Fed cut interest rates and the government 
gave a stimulus fiscal, aimed at increasing people's purchasing power so that consumption increases.


    According to the World Bank, continued expansion in developing countries will help 
limit the impact of the economic slowdown in the United States in the year 2008. Estimated global 
economic growth in 2008 was 3.3%, compared to 2007 of 3.6%. IMF predictions that make up projections
pessimistic about the number of economic growth in the United States in 2008 no more than 1.5% even 
though in 2007 it was still 2.2%. The Fed predicts between 1.3% and 2.0%, and predictions from the
United States Department of Commerce US GDP growth fell sharply from 4.9% in the third quarter of 
2007 to 0.6% in quarter IV / 2007.


    The worsening economic condition of the United States has opened its weak veil United 
States finances and money market turmoil that includes: production insurance, securities, 
banking systems, credit cards, individual and corporate credit. Besides these two things 
there are still other symptoms that Americans carry Unions that are currently in crisis 
include:
a. the decline in the construction, manufacturing, service and property market industries minus 24%
  (in 2007), and 4.6% (in 2009)
b. decrease in consumption level in 2007 41.3% and in 2009 36.9%
c. decline in the consumer confidence index (IKK) in 2007 90.6 in 2008 87.9
   and 2009 dropped dramatically to 26.0
d. falling stock / securities prices and weakening of the market for goods and services
e. rising inflation (4.3%) and unemployment (5%) in January 2008
f. economic growth declined towards 1% even close to minus
g. Banking capital continues to be depressed, and credit crunch (credit clogged)
h. property market fell minus 24.4% in 2008, and in 2009 4.6%
i. a surge in oil prices (beginning of 2008 of US $ 110 per barrel), and the IMF trying
   released decoupling, but recouping occurred