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- Republican attempts to invalidate state-ordered congressional districting schemes in North Carolina and Pennsylvania were rejected by the Supreme Court. For this year’s elections, justices are permitting maps chosen by each state’s Supreme Court to be used. Those maps are more Democratic-friendly than those drawn by state legislatures.
- The Israeli military says it has demolished the homes of two Palestinians accused of killing a Jewish seminary student and wounded others in a fatal shooting attack in the occupied West Bank last year.
- For betting on games, Atlanta Falcons wide receiver Calvin Ridley has been suspended for at least the upcoming NFL season. He placed bets last season after declaring his departure from the team to focus on his mental health, according to an NFL inquiry.
The US economy is still recovering from the COVID-19-induced slump. Although a healthy job market is helping it catch up, analysts are also predicting an oncoming recession. Experts warn that it might happen this year, according to Economic Reporter Paul Davidson.
It’s unlikely that a recession will occur. Really, economists are looking out a year or a little over a year, and late 2022 is probably within that area. The odds aren’t in your favor, but aren’t these all differences in odds? I instance, a few of economists told me that the chances of ad recession were 15%, and now one says it’s 30%, and another says it’s 25%. However, any time the odds improve, it’s worth noting. It’s possible that there will be, especially if sanctions against Russia’s oil exports are imposed and oil and gas prices skyrocket. Energy prices, after all, are a major consideration. When consumers have to pay that much out of pocket for gas and have to fill up every couple of weeks, they cut back on other purchases. As a result, inflation rises, prompting the Federal Reserve to boost interest rates even higher, posing new problems.
Joe LaVorgna, an economist, observed that, since 1970, whenever oil prices increased by 90% in a year, we were either in or about to enter a recession. So it’s back to what I was saying earlier, that it’s just a burden on the consumer. 70% of the economy is made up of consumer expenditure. So, if consumers spend more of their income on petrol and less on other items, you’re affecting 70% of the economy. That is one way, or channel, by which a recession might occur. The Fed, on the other hand, must react to inflation. And if the Fed has to raise interest rates too quickly, it can lead to inflation, as the home you buy, your credit card payments, and your auto loan all become more costly, which isn’t good for the stock market. As a result, Fed rate hikes by themselves can trigger a recession.
Arguments over whether Russia is committed war crimes in its ongoing invasion of Ukraine were heard before The Hague yesterday. Officials petitioned the International Court of Justice to halt the invasion. Russia declined to attend the session, while Anton Korynevych, the Ukrainian representative, urged action.
The fact that Russia’s chairs are empty is a powerful statement. They aren’t present in this courtroom. They are fighting an aggressive war against my country on a battlefield. Let us settle our conflict like civilized nations, is my appeal to Russia. Place your arms on the table and present your proof.
Russia’s tactics, according to Jonathan Gimblett, a member of Ukraine’s legal team, are reminiscent of medieval siege warfare. A truce in portions of Ukraine, including the city of Kyiv, is expected to begin this morning, according to Russia. However, Russia and Ukraine are debating which evacuation routes civilians will be allowed to utilize. A prior Russian plan indicated that routes should be taken through Russia or Belarus, a Russian ally. Instead, Ukraine has offered routes to the country’s western areas, where shelling is minimal compared to Eastern Ukraine. Cities in that region, such as Mariupol’s port, are running out of food and medicine. Around half of the city’s residents want to evacuate, but are waiting for safer evacuation routes. Cell phone networks are also down, in addition to supply problems.
Heavy Russian shelling continues to batter residential complexes in Kharkiv, Ukraine’s second largest city. Russian soldiers have mostly been unable to infiltrate Kyiv’s capital, while much of Russia’s attention has remained on smaller, easier-to-capture cities. Hundreds of checkpoints have been established to protect Kyiv by military and volunteers. Some are two stories high and made of thick concrete and sandbags, while others are more chaotic, with stacks of books holding down tires.
Despite the lack of evacuation routes, Ukrainians continue to flee the country in droves. A total of 1.7 million people are thought to have left, with the vast majority (more than a million) settling in Poland. Some hotels are putting people up in Romania, where approximately 100,000 Ukrainian refugees have landed. Nellya Nahorna, an 85-year-old grandmother at a hotel in Suceava, Romania, described the scenario like way. She had previously evacuated after fleeing the Nazi German invasion of Ukraine in 1941.
“This conflict is unique in that we had adversaries, the fascists. The Russians, on the other hand, were brothers here.”
The national average price of petrol has surpassed $4 per gallon, as we’ve been discussing on 5 Things. It’s the first time this has happened in almost a decade, with gas prices skyrocketing in the aftermath of Russia’s invasion of Ukraine. Is there, however, any hope in sight? Jordan Mendoza, a reporter, provides additional context.
The national average is currently $4.06, which is a significant increase from a week ago. It was $3.61 last week, according to AAA, and it’s now $4.06. In addition, the national average cost a typical gallon of gas is $4.11, which was set in 2008. And it appears to indicate that the record will be broken very soon, most likely this week. It could happen as soon as Tuesday, but it’ll most likely happen this week.
California has long been considered as the most costly state for gas; right now, the average cost of a gallon of gas in California is $5.34. The costs in California and Southern California are insane, but it’s the same story everywhere around the state. And we noticed that the states around us were going through the same thing. They aren’t as pricey as California, but Nevada, Oregon, Washington, Hawaii, and Alaska are all experiencing the same problems.
I understand that a lot of it has to do with what’s going on in Ukraine right now, as well as Russia’s impact on oil prices, but it’s going to continue. People can report what prices are at the pump using the mobile app GasBuddy, which allows them to check how much gas is like where they are. They’re predicting that this will take a long time to resolve. They predict that the average cost of gas in the United States will be $4.25 in May. That’s 14 cents more than the previous high. As a result, it’ll most likely continue to rise for some time. Because gas prices normally rise in the summer, they’re speculating. Not only that, but a lot of COVID limits are being lifted as well. As a result, people desire to… They are able to go out more frequently. As a result of all of these factors, gas prices are likely to rise for the foreseeable future. According to GasBuddy, the average price of a gallon of gas will be over $4 until November. As a result, 2017 will be one of the most expensive gas years in US history.
Today, Apple will have an online event to announce some new items. One of them is an improved version of the iPhone SE, Apple’s more affordable smartphone. Brett Molina, the tech editor, has more.
A new generation of Apple’s budget-friendly smartphone, the iPhone SE, is one of the big reports we’ve seen as far as what Apple is likely to announce at this event. According to Bloomberg, Apple is expected to unveil not only a new SE, but also an improved iPad Air. During this event, we may also see a new Mac model. So, obviously, there’s a lot of interesting stuff that can come here. The last time we heard from Apple was in the fall, when the iPhone 13 was released. And, of course, that was a huge hit. Apple reported iPhone sales of 71.6 billion on their most recent quarterly call, which comes as no surprise, but the iPhone makes a lot of money for Apple.
However, for a few of reasons, the iPhone SE on a budget will be something to keep an eye on. First and foremost, we are seeing a greater number of cheap phones on the market, as I recently discussed, where you don’t have to pay a lot of money to have a smartphone that is really nice, extremely useful, and really functional. Of course, the iPhone SE is currently available; they have a replica of this. It’s also a good phone. I believe it costs between $450 and $500. You get a lot of the benefits of being part of the Apple ecosystem. Obviously, there are certain flaws in the hardware itself. On the back, there is simply one camera. It still works rapidly, but not as swiftly as before. As I previously stated, the camera isn’t as excellent as newer versions, and the battery life isn’t likely to be as good either. But, then again, it’s a good way to come into the Apple ecosystem, and it’s a good phone.
What will happen with the display is one of the things I’ll be looking at. Are we going to stick with the reduced display size, or will they upgrade it to match the rest of their models? One of the iPhone SE’s distinguishing features has been its reduced screen size. Are they going to keep it up? How much of a difference will we see in the cameras? What kind of camera will we get this time, and what kind of processing will we use? Those are the two things that pique my curiosity.
Of course, all of these stories indicate that this will be a 5G phone. It’s also intriguing since it’s a pretty simple method to get into 5G. Of course, there will be other phones around this price point, but getting an iPhone with 5G at what is projected to be an affordable price might be a very excellent alternative for a lot of people.
Is a recession expected in 2021?
Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means.
Is the UK facing a recession in 2022?
Households in the United Kingdom are under increasing strain. The cost of living dilemma looms huge, and low interest rates imply our money’s worth is rapidly depreciating.
Many people are still feeling the effects of the 2020 Covid recession, although the British economy has shown a remarkable “V-shaped” rebound so far. Experts believe that in 2022, the country will outperform every other G7 country for the second year in a row.
However, because of the ongoing Covid uncertainty, long-term growth is not guaranteed. In 2021, the UK economy increased by 7.5 percent overall, with a 0.2 percent decrease in December.
A weaker economy usually means lower incomes and more layoffs, thus a recession may be disastrous to people’s everyday finances. Telegraph Money explains what a recession is and how to safeguard your finances from its consequences.
Is a recession expected in 2023?
Rising oil prices and other consequences of Russia’s invasion of Ukraine, according to Goldman Sachs, will cut US GDP this year, and the probability of a recession in 2023 has increased to 20% to 30%.
What is the state of the economy in 2021?
Indeed, the year is starting with little signs of progress, as the late-year spread of omicron, along with the fading tailwind of fiscal stimulus, has experts across Wall Street lowering their GDP projections.
When you add in a Federal Reserve that has shifted from its most accommodative policy in history to hawkish inflation-fighters, the picture changes dramatically. The Atlanta Fed’s GDPNow indicator currently shows a 0.1 percent increase in first-quarter GDP.
“The economy is slowing and downshifting,” said Joseph LaVorgna, Natixis’ chief economist for the Americas and former chief economist for President Donald Trump’s National Economic Council. “It isn’t a recession now, but it will be if the Fed becomes overly aggressive.”
GDP climbed by 6.9% in the fourth quarter of 2021, capping a year in which the total value of all goods and services produced in the United States increased by 5.7 percent on an annualized basis. That followed a 3.4 percent drop in 2020, the steepest but shortest recession in US history, caused by a pandemic.
What should I put away in case of economic collapse?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
How can we get ready for the next downturn?
It is impossible to predict the exact reason of the next recession. We do, however, understand how it affects people on a personal level. Jobs become insecure or disappear. Businesses do not succeed. The financial markets suffer a setback, lowering portfolio values. Some people even lose their houses as a result of this.
Keeping this in mind, the following nine measures can be used to prepare for the next recession:
Shore Up Your Emergency Fund
Financial emergencies can occur at any time, although they are more common during recessions. Apart from having funds set aside for emergencies, having cash in the bank to cover you if you lose your work can be freeing.
While you don’t want to go overboard with your savings, you should consider increasing your emergency fund from three months’ worth of living expenses to six months or more. Having that kind of cash on hand can help you feel less worried about losing your work.
You can earn many times more than your local bank by transferring your savings to one of the top online savings accounts.
Nothing beats having money in the bank when a crisis strikes. It’s now or never to stock up on it.
Pay Off or (at least) Pay Down Your Debts
An impending recession might not be the best time to start a long-term undertaking, such as paying off your home early. However, it is a good moment to pay down or eliminate other debts.
Credit cards are at the top of the list. Paying down your debts is a great way to increase your cash flow because interest rates normally vary between 15% and 25%. Transferring your high-interest credit cards to a 0% balance transfer card is another effective strategy. This can eliminate interest payments for a period of 12 to 24 months, allowing you to put more money toward your debt. As a result, you’ll be able to pay off your credit cards more quickly.
Auto loans or other sorts of installment borrowing would be next in line. Even though the interest rates are modest, the high set monthly payments may be something you can’t afford if you lose your job. Simply removing a payment from your to-do list can be a huge stress reliever.
Even if you are unable to pay off your mortgage, you may be able to reduce your monthly payments by refinancing into a lower-interest loan. If interest rates rise before or during the recession, this will be an extremely wise strategy.
There is no simple solution to repaying student loans. It may be worth paying off only to be rid of the payment if it’s a tiny sum (or to avoid the possibility of default). However, a huge sum is comparable to a mortgage. To pay it off, you’ll need to make a long-term commitment. Rather than tackling a huge loan balance on short notice, you could be better off keeping the funds liquid for emergencies. Calculate the numbers and make the best decision you can.
There are ways to pay off student debts faster, but you’ll need to be willing to put in the time and effort. Examine many tactics to see which one will work best for you.
Refinancing is another option if paying off your student loans seems impossible. You may be able to acquire a lower interest rate and a smaller monthly payment by using one of the finest student loan refinance sources. That will not eliminate your student loan payment, but it will make it much more reasonable.
Start Cutting Living Expenses
This is the place where you may let your inner penny pincher loose. If you have any expenses that aren’t absolutely required, this is a great moment to cut them back or remove them entirely.
One of the most effective strategies to reduce living expenses is to pay off or reduce debt. A debt is no longer an expense after it is paid off.
Apart from debt, you should analyze all of your spending. Get rid of any Hulu or Netflix subscriptions that you don’t utilize. Have you considered severing your cable connection? It’s possible that now is the right time. Another target is if you have a gym membership but never go to the gym. Just make sure you have other ways to stay in shape.
Insurance. Now is a great moment to re-evaluate your insurance coverage completely. Insurance has become a substantial expense for most families, and premiums may often be decreased by reviewing policies on a regular basis. Committed to locating the greatest insurance in each area, including life, health, disability, business, and even pet insurance.
Food is another expense that could be targeted for cost-cutting. Begin with restaurant fare. Reduce your eating out to once a week if you normally dine out twice a week. Take advantage of coupons and deals to eat at lower-cost eateries.
Look into wholesale clubs when it comes to grocery shopping. You’ll have to join, but you’ll most likely recoup your membership fees on your first shopping trip. ALDI is a good option if you live near one. Although it is unusual for a grocery store, you can significantly reduce your grocery price by shopping there.
Finally, if you haven’t done so already, get serious about creating a budget. You can organize your finances with the help of free budgeting applications. When you have all of your income and expenses in one place, it’s easier to stick to a budget.
Delay Major Spending Plans
Consider deferring your purchase of a new home or car for a few of years if you’ve been thinking about doing so.
Making a substantial purchase and taking on a larger monthly commitment just before the slump hits is one of the conditions that gets individuals into financial problems during a recession.
This is especially true when it comes to purchasing a new home. House prices have reached all-time highs, surpassing those seen prior to the last housing crisis. That should be a warning sign.
It isn’t merely the purchase price of the home. When you move from a less expensive property to a more expensive one, your other expenses are likely to rise as well. Higher electricity costs and property maintenance, as well as the fees that come with moving into a new house, can all add up.
Rearrange Your Stock Portfolio
This does not imply that you should sell all of your stock assets. However, this might be a good moment to start shifting your portfolio to safer investments.
Stocks with a high dividend yield. There will be a shift in investor attention if the stock market falls along with the economy. When growth is uncertain, income becomes more crucial. High dividend companies may be preferable to growth ones.
Consider putting some money into dividend aristocrats, a type of stock that pays out dividends on a regular basis. These are significant, well-known corporations’ equities that have increased their dividends for at least the past 25 years.
If you’re planning to make adjustments to your portfolio allocations, now might be a good time to switch brokers. In the brokerage business, a number of things have changed recently, including the advent of zero commission trades. Look into the best online brokers for you and make the necessary changes while the markets are still acting normally.
a trust that invests in real estate (REITs). They’re similar to mutual funds, but they invest in commercial real estate. A REIT might own retail assets, office buildings, or big apartment complexes, for example. It’s a means to spread a modest sum of money across a variety of assets and even geographical regions.
REITs pay monthly dividends, provide capital growth, and may even provide tax benefits. And their historical performance has been on par with or greater than that of stocks. Between 1978 and 2016, equity REITs outpaced equities by a margin of 12.87 percent to 11.64 percent.
REITs are a terrific method to break up an all-stock portfolio and diversify your equity allocation. Even if equities fall, they may continue to generate positive returns.
Reduce the amount of company stock you own. You may want to reduce your exposure to corporate stock if you have a lot of it in your employer-sponsored retirement plan. Your employer’s financial issues will have an influence not just on your work, but also on the value of their shares. In a recession, having too much stock in the firm you work for might be a double-edged sword.
Start Building Cash Reserves
This does not imply that you should sell your investments to raise funds. Keep your new investment contributions in cash and cash equivalents rather than stocks and bonds.
- When the bear market ends, you’ll have cash on hand to purchase stocks and mutual funds at much reduced prices.
There’s one more thing to consider: cash is the only completely safe investment when the financial markets go haywire. You’ll be developing a truly safe area of your financial portfolio by increasing your cash reserves.
Make Yourself More Valuable on the Job
Staff reductions are common during recessions. During the previous recession, the unemployment rate peaked at roughly 10%. However, the good news is that 90% of employees did not lose their employment.
When the next recession arrives, you’ll want to be a part of that group. Make a promise to yourself that you will.
The greatest approach to do so is to improve your professional skills. Now is the time to get any credentials, professional training, or skill sets that will increase your employer’s value. During recessions, people do lose their jobs. The most valuable employees, on the other hand, keep theirs. You’ll have a far higher chance of making it among the survivors if you improve your work skills.
However, strengthening your abilities and qualifications has a supplementary benefit. If you do lose your job, you’ll be better prepared for the subsequent job search.
It’s best to put these tactics in place now, when you have control over the situation, rather than waiting until your employment becomes a problem.
Add an Additional Income Stream (or Two)
- It may be able to offer the additional funds required to implement the other solutions on this list.
- If you lose your job, the second income may serve as the foundation for your next principal source of income.
Creating a side hustle is one of the finest strategies to build additional revenue streams or at the very least a second income. In essence, this entails becoming self-employed. However, doing it as a side business makes the process much easier and less hazardous.
Consider any abilities you possess, especially if you employ them in your present or former jobs. However, you should also think about the abilities you employ in your daily life. Any one of those skills, or a combination of them, has the potential to be commercialized and turned into a lucrative side hustle.
It will take some time to get a side hustle off the ground and into a position where it can generate consistent income flow. That is why you should get started on this project right away.
Keep a Positive Mindset!
It’s impossible to dispute that worrying about your job while your stock portfolio plummets is unsettling. When confronted with a crisis, though, it is vital not to panic. The most effective approach to do this is to be deliberate in adopting and maintaining a positive mindset.
Don’t think of a downturn as the end of your career or your investing experience. Instead, think of it as a transitional period.
There’s a lot to be optimistic about in what may otherwise be a bleak situation:
- The downturn can help you get incentive to learn new job skills that can help you advance in your profession.
- You might now have the motivation to put that budget in place that you’ve been putting off over the protracted expansion.
In a recession, do housing prices drop?
This is due to the fact that a recession causes job losses and lower salaries, making people less able to purchase a property.
However, the recession did not begin in the normal manner, owing to the fact that it began as a result of a public health crisis rather than a financial one.
It indicates the financial system has not froze like it did during the 2008 financial crisis, when property prices plummeted.
What triggered the UK recession in 2008?
In September 2008, Lehman Brothers, one of the world’s largest financial organizations, went bankrupt in a matter of weeks; the value of Britain’s largest corporations was wiped out in a single day; and cash ATMs were rumored to be running out.
When did it begin?
Lehman Brothers declared bankruptcy on September 15, 2008. This is widely regarded as the official start of the economic crisis. There would be no bailout, according to then-President George W. Bush. “Lehman Brothers, one of the world’s oldest, wealthiest, and most powerful investment banks, was not too big to fail,” the Telegraph reports.
What caused the 2008 financial crash?
The financial crisis of 2008 has deep roots, but it wasn’t until September 2008 that the full extent of its consequences became clear to the rest of the globe.
According to Scott Newton, emeritus professor of modern British and international history at the University of Cardiff, the immediate trigger was a combination of speculative activity in financial markets, with a particular focus on property transactions particularly in the United States and Western Europe and the availability of cheap credit.
“A massive amount of money was borrowed to fund what appeared to be a one-way bet on rising property values.” However, the boom was short-lived since, starting around 2005, the gap between income and debt began to expand. This was brought about by growing energy prices on worldwide markets, which resulted in a rise in global inflation.
“Borrowers were squeezed as a result of this trend, with many struggling to repay their mortgages. Property prices have now begun to decrease, causing the value of many banking institutions’ holdings to plummet. The banking sectors of the United States and the United Kingdom were on the verge of collapsing and had to be rescued by government action.”
“Excessive financial liberalisation, backed by a drop in regulation, from the late twentieth century was underpinned by trust in the efficiency of markets,” says Martin Daunton, emeritus professor of economic history at the University of Cambridge.
Where did the crisis start?
“The crash first hit the United States’ banking and financial system, with spillovers throughout Europe,” Daunton adds. “Another crisis emerged here, this time involving sovereign debt, as a result of the eurozone’s defective design, which allowed nations like Greece to borrow on similar conditions to Germany in the expectation that the eurozone would bail out the debtors.
“When the crisis struck, the European Central Bank declined to reschedule or mutualize debt, instead offering a bailout package – on the condition that the afflicted countries implement austerity policies.”
Was the 2008 financial crisis predicted?
Ann Pettifor, a UK-based author and economist, projected an Anglo-American debt-deflationary disaster in 2003 as editor of The Real World Economic Outlook. Following that, The Coming First World Debt Crisis (2006), which became a best-seller following the global financial crisis, was published.
“The crash caught economists and observers off guard since most of them were brought up to regard the free market order as the only workable economic model available,” Newton adds. The demise of the Soviet Union and China’s conversion to capitalism, as well as financial advancements, reinforced this conviction.”
Was the 2008 financial crisis unusual in being so sudden and so unexpected?
“There was a smug notion that crises were a thing of the past, and that there was a ‘great moderation’ – the idea that macroeconomic volatility had diminished over the previous 20 or so years,” says Daunton.
“Inflation and output fluctuation had decreased to half of what it had been in the 1980s, reducing economic uncertainty for individuals and businesses and stabilizing employment.
“In 2004, Ben Bernanke, a Federal Reserve governor who served as chairman from 2006 to 2014, believed that a variety of structural improvements had improved economies’ ability to absorb shocks, and that macroeconomic policy particularly monetary policy had improved inflation control significantly.
“Bernanke did not take into account the financial sector’s instability when congratulating himself on the Fed’s successful management of monetary policy (and nor were most of his fellow economists). Those who believe that an economy is intrinsically prone to shocks, on the other hand, could see the dangers.”
Newton also mentions the 2008 financial crisis “The property crash of the late 1980s and the currency crises of the late 1990s were both more abrupt than the two prior catastrophes of the post-1979 era. This is largely due to the central role that major capitalist governments’ banks play. These institutions lend significant sums of money to one another, as well as to governments, enterprises, and individuals.
“Given the advent of 24-hour and computerized trading, as well as continuous financial sector deregulation, a big financial crisis in capitalist centers as large as the United States and the United Kingdom was bound to spread quickly throughout global markets and banking systems. It was also unavoidable that monetary flows would suddenly stop flowing.”
How closely did the events of 2008 mirror previous economic crises, such as the Wall Street Crash of 1929?
According to Newton, there are some parallels with 1929 “The most prominent of these are reckless speculation, credit dependence, and grossly unequal income distribution.
“The Wall Street Crash, on the other hand, spread more slowly over the world than its predecessor in 200708. Currency and banking crises erupted in Europe, Australia, and Latin America, but not until the 1930s or even later. Bank failures occurred in the United States in 193031, but the big banking crisis did not come until late 1932 and early 1933.”
Dr. Linda Yueh, an Oxford University and London Business School economist, adds, “Every crisis is unique, but this one resembled the Great Crash of 1929 in several ways. Both stocks in 1929 and housing in 2008 show the perils of having too much debt in asset markets.”
Daunton draws a distinction between the two crises, saying: “Overconfidence followed by collapse is a common pattern in crises, but the ones in 1929 and 2008 were marked by different fault lines and tensions. The state was significantly smaller in the 1930s (constraining its power to intervene) and international financial flows were comparatively little.
“There were also monetary policy discrepancies. Britain and America acquired monetary policy sovereignty by quitting the gold standard in 1931 and 1933. The Germans and the French, on the other hand, stuck to gold, which slowed their comeback.
“The post-First World War settlement impeded international co-operation in 1929: Britain resented its debt to the United States, while Germany despised having to pay war reparations. Meanwhile, primary producers have been impacted hard by the drop in food and raw material prices, as well as Europe’s move toward self-sufficiency.”
How did politicians and policymakers try to ‘solve’ the 2008 financial crisis?
According to Newton, policymakers initially responded well. “Governments did not employ public spending cuts to reduce debt, following the theories of John Maynard Keynes. Instead, there were small national reflations, which were intended to keep economic activity and employment going while also replenishing bank and corporate balance sheets.
“These packages were complemented by a significant increase in the IMF’s resources to help countries with severe deficits and offset pressures on them to cut back, which may lead to a trade downturn. These actions, taken together, averted a significant worldwide output and employment decline.
“Outside of the United States, these tactics had been largely abandoned in favor of ‘austerity,’ which entails drastic cuts in government spending. Austerity slowed national and international growth, particularly in the United Kingdom and the eurozone. It did not, however, cause a downturn, thanks in large part to China’s huge investment, which consumed 45 percent more cement between 2011 and 2013 than the United States had used in the whole twentieth century.”
Daunton goes on to say: “Quantitative easing was successful in preventing the crisis from being as severe as it was during the Great Depression. The World Trade Organization’s international institutions also played a role in averting a trade war. However, historians may point to frustrations that occurred as a result of the decision to bail out the banking sector, as well as the impact of austerity on the quality of life of residents.”
What were the consequences of the 2008 financial crisis?
In the short term, a massive bailout governments injecting billions into failing banks prevented the financial system from collapsing completely. The crash’s long-term consequences were enormous: lower wages, austerity, and severe political instability. We’re still dealing with the fallout ten years later.
Why did the United Kingdom experience a recession in 2008?
The financial crisis of the late 2000s, rising global commodity prices, the subprime mortgage crisis entering the British banking sector, and a massive credit crunch The recession lasted five quarters and was the harshest in the United Kingdom since World War II. By the end of 2008, manufacturing production had fallen by 7%.
How do you get through a downturn?
But, according to Tara Sinclair, an economics professor at George Washington University and a senior fellow at Indeed’s Hiring Lab, one of the finest investments you can make to recession-proof your life is obtaining an education. Those with a bachelor’s degree or higher have a substantially lower unemployment rate than those with a high school diploma or less during recessions.
“Education is always being emphasized by economists,” Sinclair argues. “Even if you can’t build up a financial cushion, focusing on ensuring that you have some training and abilities that are broadly applicable is quite important.”