The Economy: US and the World

All in all, one can say that this recession, if it doesn’t turn into a depression, will be severe and will last at least 2 to 4 years. Now you must realise that I am talking about the effects of the recession and not technical recession. The recent technical recessions that we have seen is listed below: 

- January-July 1980: 6 months (worst quarter GDP Growth -7.8%) 
- July 1981-November 1982: 16 months (worst quarter GDP Growth -6.4%)
- July 1990-March 1991: 8 months (worst quarter GDP Growth -3.0%) 
- March 2001-November 2001: 8 months (worst quarter GDP Growth -1.4%)

Technically a recession may last one year, but the effect of that recession on families may last a decade. Some lose their homes, some their jobs, some families will break-up and so on and so forth. The human misery of technical recession lasts much longer than the recession itself. Anyway, if the price of the houses is dropped by 40% in two years, how many years of growth will it take to retake that 40%? Usually much longer than people think.

	The Economy: US and the World
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I wrote an article in September 2006 titled “Who Will Pay the US Debt”. In this article I explained who will be most affected by the coming financial crisis. This is the direct excerpt from that article:

“The truth is that at the end of the day it is the American people that have to pay. This will be in the form of higher taxes and reduced governmental services. In other words lower living standards. The poor and the working poor do not have anything to give. Their contribution will be in form of statistics. The number of people living below poverty line will increase. They will suffer because they rely on many services that will be cut or reduced. The rich will always find some loop-hole to avoid paying the major part of their share. Even if their wealth is reduced by 10%, they will see no hardship. This leaves us with the Middle class. This group will be hit the hardest. They will see their taxes and expenses increase simultaneously. A good portion will have to live on far less than they are used to. Many will work longer hours just to stay solvent. Many may also join the working poor. It all may sound rather apocalyptic but the numbers do not lie. Politicians may avoid this problem for now, but sooner or later someone has to pay the piper.”

By Dr. Abbas Bakhtiar

To be continued

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