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In the article The Economy Needs More Big Government Now it is in the opinion of the author that the US Government step up and be more aggressive in their stance in stabilizing the economy and beefing up our health system. I agree with the article in the sense that before when the economy was stronger, the country basically ran itself. Now that the country has been crippled, I feel that the government should step up and act like a parent coming to rescue her injured child. The government has the means to revitalize the economy and to be the strong force that pushes along the recovery effort. By slashing interest rates and encouraging investors and restoring consumer confidence the economy can turn around. However, this is a bandit that can only be applied by the US government.
If ever before, now is the time that the economy does in fact need more big government. In Economic Trends the first article discussed the weakening value of the US dollar across the globe. The downtrend on the value of the dollar will in turn weaken the overall global economy by dragging down consumption and investment overseas and potentially damage financial systems in other countries which rely on the US dollar as safe currency. Big exporters such as Japan and Germany will potentially find it hard to sell to American businesses and consumers since the falling dollar inevitably means higher prices for imports. Also, with the economy being so strong in the 1990 s, many foreign companies issued debt in dollars. If the dollar falls, those bonds would all become much less valuable to the investors holding them and in turn much more of a problem for the global financial system.
A second article featured in Economic Trends concerned increased domestic natural gas production. The argument is that the US needs to rely less on overseas suppliers of natural gas and rely more heavily on domestic produced gas. Reports show that tax credits in the 1990 s increased natural gas production and it is in the opinion of many that tax credit needs to be issued again today in 2001. It is necessary to do such considering the position that the country is in economically and in regards to our crippled relationship with foreign nations which function as our primary sources of natural gas. Because of the uncertainty of the future, our country needs to be as self-sufficient as possible.
By relying more heavily on our own resources for natural gas, we would be taking the first steps to true independence. The third article regards increased rate of unemployment in the 12 -nation euro-zone. Rising unemployment means decreased spending, decreased spending means decreased demand, decreased demand will lead to decreased supply, and all of these factors play in the part of a weakened economy. By US standards, the unemployment rate in the euro-zone was already high, however, now that it is again on the rise, it is predicted that unemployment will keep rising over the next year. This does not look good for the overall economy of the euro-zone. In Business Outlook, discusses the issues of our current economy.
The issue of cut interest rates was raised during the recession of 1990 - 91 and even in the worse recession of 1981 - 82. Now, in 2001, the government is trying to do the same thing, however, it is predicted that interest rate cuts will not revive the economy. It is predicted that overcapacity is a supply problem and not conducive to the demand stimulus like lower borrowing costs. Basically, the US economy is facing the same fate as the Japanese-style crisis. Lowering borrowing costs is not the answer because no one wants to borrow our money. This is due to the decreasing value of the US dollar.
The situation has become that the US is trying to nearly give away money that no one wants to borrow. October 22 nd Issue Economic Viewpoint. Page 26. This article, Dont Be Surprised if the Recovery Effort is Rapid, is comparing the September 11 th attacks to the Kobe earthquake in Japan in 1995. It was predicted that particular recovery would take a decade or more when in reality it only took a little over a year. The Kobe earthquake was responsible for weakening the Japanese economy through the loss of over 100, 000 buildings and 6, 000 lives lost, which is about the same number as who died on September 11 th.
Economically speaking, the loss resulting from the September 11 th attack is relatively smaller than the US economy. The only thing that is hindering the US economy is the possibility of future terrorist attacks. The stock market recovered within a week and the only thing left that is still on the recovery track is the travel industry and even in that respect, help is on the way.
Free research essays on topics related to: interest rates, september 11, natural gas, big government, dollar
Research essay sample on Natural Gas Interest Rates