How Economy affects me?

“(…) It is not wealth one asks for, but just enough to preserve one's dignity, to work unhampered, to be generous, frank, and independent.”.

- SOMERSET MAUGHAM, “Of Human Bondage” 1.

It does not matter if it is called recession over depression, or deceleration

instead of breakdown, semantic does not directly affect people’s lives, economic

crisis does. Inverting the H. G. Wells quote2, what started as a joke has become

the actual recession, and we are not particularly laughing about it. What started as

a “don’t worry it’s OK” policy from the banks to the people interested in subprime

mortgage, almost turned into an echo of what happened in 1929. According to Jan

Kregel:

“Financial markets in the United States have recently been rocked by a crisis in real estate lending that has threatened the solvency of some of its largest global financial institutions. Losses to bank capital are already in the range of $150 billion and a large number of specialized mortgage banking institutions have declared bankruptcy or been sold. Households in increasing numbers are defaulting on their mortgage contracts and foreclosures have been rising at alarming rates, rising 75 percent in 2007”3.

The decade of the 2000s witnessed the rise in prices of raw materials after

lowering in the period 1980-2000. But in 2008, the increase in prices of raw-

particularly materials in oil prices and increased food-both began to cause real

1 SOMERSET MAUGHAM, William “Of Human Bondage”, Planet PDF, p.499 2 “The crisis of today is the joke of tomorrow”.3 http://www.levyinstitute.org/pubs/wp_530.pdf

economic damage, threatening to social problems in countries that are developing,

stagflation and stagnant globalization4.

However, this has not made full circle with what happened in the 30’s. Although

it might seem as a cyclical movement, the government’s response has been

different. In the article “Ravages of the Great Recession” for the Huntington Post,

George Danziger shows us how hard has been the impact but still, when it comes

to react, the government somehow, learn the lesson from almost 80 years ago:

“Overall, the Great Recession's costs have been massive. They would have been much larger had the federal government's fiscal and monetary policies not calmed the financial panic and kept the U.S. and the world economies from tumbling over the precipice. We avoided another Great Depression because the fiscal stimulus and other policies worked”5.

But if things are being better carried than before, how is it that after five years

the recession was, in theory, “over”6, people in America don’t have the feeling of

overcoming it?. “There will always be an inevitable gulf between hope and reality. It

is how we traverse these deserts of Let-down that show us what we are made of”7

as David Rakoff said, but the government must acknowledge that is not entirely the

people’s fault on putting their confidence on the financial sector.

Undoubtedly, these economic dynamics are embracing and damaging most of

American activities and life conditions. Thanks to the US economy situation people

are being affected in terms of education, health, home, employment etc.

4 http://research.cibcwm.com/economic5 http://www.huffingtonpost.com/sheldon-danziger/ravages-of-the-great-rece_b_4234032.html6 DAVIS, BOB, "What’s a Global Recession?". The Walstreet Journal. 22 April 2009. Retrieved 17 September 20137 RAKOFF, DAVID, “Half Empty”, Doubleday, 2010 p. 27.

Unfortunately, these dynamics do not guarantee the tranquility and human well-

being. Even though the USA economy is considered to be one of the most

important economy worldwide, it is far away from improving, in a considerably way,

the health condition of its population. Dr. Stephen Bezruchka, in his article “The

effect of economic recession on population health”, points that the current

economic is affecting the health condition of the Americans. He makes a stunning

comparison between the USA population health condition with other poor countries

such as Cuba and Greece:

“The United States, with the highest GNP per capita in the world, has a lower life expectancy than nearly all the other rich countries and a few poor ones, despite spending half of the world’s health care bill. The United States also has the greatest levels of poverty of any rich country, with correspondingly poor health outcomes and huge health disparities. Its population’s health is on a pair with that of Cuba, a poor nation that has faced economic embargoes for the past 50 years. The population of the United States is also less healthy than the population of Greece, whose economic status lies in between”8.

But how bleak is our future?, in economy not only there is room for monetary

speculation but also in theory. Authors have always something to say, ones more

reliable than others, and most of the times to make predictions an after they went

wrong, make up another theory that explains why their scheme failed.

For Nobel Prize winner Paul Krugman and Robin Wells the inertia of various

economic and political authorities portends a continuing crisis with high

unemployment and low growth. If short-term solutions are not undertaken by the

government by issuing more debt and spending more, they will not prevent a deep

8 http://www.cmaj.ca/content/181/5/281.short

recession, and then add, when the crisis is more intense budget deficits are not

only good, they are necessary9.

It is indeed an authorized voice to take stand and offers a solution for the

problem, but in the high spheres of our society, it is seen as an ideological debate

(Keynesean vs. neoliberal or interventionists vs. non interventionists). If we go to

our daily life, the average unemployed person could not care less of what Keynes,

Hayek, or Friedman had to say about anything, but how is the recovery plan

working, and if it is effectively making life better. I am not saying in any way that

people should not be informed on how to take a responsible attitude with their

finances, but instead, that when it comes to deal with such problems, the

discussions and measures taken should have more pragmatic value. At the end of

the day not each and every one has to have a stockbroker alter ego.

So this is when it gets personal, in the sense of how our very own existence is

speared with calamities like these. Huffington Post columnist Anne Brennoff

portrays vividly her situation on “5 Years After I Lost My Job: What's Changed?”:

“As I sit here five years later, I still see the devastation that rocked my peers during the Great Recession. I see friends in their 50s and 60s still hustling for gigs, others who have lost their homes, watched their marriages cave to the stress of unemployment, and who die a little more with each rejection they get when they venture into the job market. I know many who have just stopped looking for work. They laugh at the government's "falling" unemployment numbers knowing that the reason the numbers are dropping is because these people who have retreated from the job market aren't being counted anymore. They've gone underground, disappeared from our radar, getting by by stringing together piecemeal work and draining what remains of their savings as they live with in-laws, adult kids”.10

9 KRUGMAN, PAUL, WELLS, ROBIN “The slump goes on: why?” http://www.nybooks.com/articles/archives/2010/sep/30/slump-goes-why/10 http://www.huffingtonpost.com/ann-brenoff/being-laid-off_b_4949989.html

This depiction could be anyone’s story, considering that in most of the cases,

not could have been, but was worse. My family and I left our country from an

employment crisis, to find a better way of living in the United States. As we settle

down, we found our way and this became our new home, me and my sister chose

our careers and my parents decided to buy a house, that still is not completely

paid.

Until suddenly there was a period when no one could retain their current job or

find any new, even my father thought in coming back to Colombia. But there was

no turning back, and luckily it was a brief period compared with other desperate

cases.

What is called a slow recovery it is getting slower for working people than

investors or bank managers. I work as a cook in a rehabilitation center, but if I

wanted to choose some other job, more related with what I study, I couldn’t, it gets

harder every day for undergraduate students. Even though my parents working

hours are the same, they are paid less, and there is a level of stability in their

contracts due to their long time in the company, not such for new employees.

It is true that health sector has always offers for new graduates in work matters,

but still how will the conditions be? And how hard will it be for me get a job with a

decent payment and good labor conditions?. In her Life’d article “How bad

economy affects you”, Kaitlin Timmer11 points out the bad things you find in a crisis

such as: You’re more likely to lose your job. (…)Your savings account does not

earn much, and your investments go down. (…)It is harder to get credit. On the

11 TIMMER, KAITLIN, “How bad economy affects you”, Life’d, 2014

other hand, she also points the good things, naming among them that “Houses are

cheaper and interest rates are low”. Ironically, what started this whole crisis in the

first place.

Works Cited Page

SOMERSET MAUGHAM, William “Of Human Bondage”, Planet PDF, p.499

2 KREGEL, JAN, “Changes in the U.S. Financial System and the Subprime Crisis”, The Levy Economics Institute of Bard College, April, 2008.

3 RUBIN, JEFF, “The New Inflation”, CIBC World Markets, May 27, 2008

4DANZIGER, SHELDON “ The Ravages Of The Great Recession”, The Huffington Post, April, 2007.

5 DAVIS, BOB, "What’s a Global Recession?". The Walstreet Journal. 22 April 2009. Retrieved 17 September 2013

6 RAKOFF, DAVID, “Half Empty”, Doubleday, 2010 p. 27.

7 BEZRUCHKA, STEPHEN “The effect of economic recession on population health”, CMAJ, September, 2009.

8 KRUGMAN, PAUL, WELLS, ROBIN “The slump goes on: why?”, New York Books, September, 2010

9 BRENOFF, ANN, “5 Years After I Lost My Job: What's Changed?”:, Huffington Post, The Blog, March 13, 2014, 7:15am EDT.

10 TIMMER, KAITLIN, “How bad economy affects you”, Life’d. 2014.