Thesis on "Recession in America Effects on the American People"

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Brief History of the Issue and Potential Causes

Taught to contribute to their retirement funds, invest in stocks and bonds, and diversify their portfolios, many Americans were astounded and wrought with despair when the economy began to show signs of struggling during mid-September. Although concern over the U.S. economy began as early as 2007, according to some, the London Guardian cited September 12 as the beginning of the financial crises. On this day, a buyer was sought for the struggling Lehman Brothers, but just three days later, the investment bank would file for bankruptcy, and the Dow Jones would fall by 504 points. Now, in what some call the worst economic situation since the Great Depression, the markets are struggling fueled by low rates of investment and corporate collapses. Most agree that the current financial situation is historic in its enormity and destruction. According to the BBC, Washington Mutual's September bankruptcy was "the largest bank failure yet in the United States." But the devastation doesn't end there. While Washington Mutual's failure would have been historic in itself, the BBC described the late summer and early fall's economic maladies as a tumult of problems. "Each day," says the BBC, "has brought an extraordinary development that would have seemed astonishing just the day before" (BBC 2008).

But what exactly caused the present economic crisis? The answer to this question cannot easily be answered. In fact, the answer is so difficult to grasp that analysts have been grappling with it since the first signs emerged. But most can agree that the sub-prime mortgage crisis contributed to the problem. Home loans became available to even those with terrible lines of credit and virtually no income, but when home prices to become stagnant and even fall, and thousands began to sell their homes, "flood[ing] the market with supply, and demand dried up" ("The Financial Crisis" 2008).

But just because the financial crisis has made news anchors, the high rollers, and the CEOs, does this climate of economic distress affect ordinary people? From the average blue and white collar workers to large corporations to employment opportunities across the nation, the financial crises affects nearly everyone in the United States and many in the world. Some have found their investments squandered by the falling rates; others have suffered from retirement funds that no longer make close retirement a possibility. Still others worry about the safety of their banks. Furthermore, some are worried about their increasing mortgages and loosing their jobs, as the lending between banks has driven up mortgages and unemployment continues to increase (BBC 2008).

The Financial Crisis and Cultural Change

Precisely because the recession has affects for so many people, it has become a magnificent impetus for culture change. That change can be most easily observed politically. According to the Economist, the economy played a major role in Barack Obama's win on Tuesday November 4. Although most voters were not sure why the economy was in its current state, according to the Economist, they wanted change. Barack Obama and the Democratic Party, who are not currently in power, appeared to these voters as a way to boost the economy and change the culture of job and asset loss ("It's an Ill Wind" 2008). Election night certainly saw that cultural change take place, as the Republican White House was not only handed to the opposing party, but also the congress was taken by Democrats, giving the American people a united legislative and judicial branch of the Democratic Party for the first time in many years. In addition to winning the presidency, Obama's win encompassed culture change in that he managed to take many states that were traditionally conservative, such as Indiana. All of this information suggests that the American people were ready for a culture change that embraced the values of the Democratic Party. The Economist and many other sources found that the economy was at the root of that change.

While the political shift from Republicans to Democrats is certainly the most visible sign of a cultural change due to the struggling economy, it is certainly not only way in which culture is changing to accommodate the recession. Instead, family values and behaviors are beginning to shift, along with society's own values. Before the current recession, credit was the norm, and the policy of buy now pay later was most shoppers' creed. But just like credit lead to the Great Depression, credit also lead to the current financial crisis, and American families are beginning to change their attitudes about credit cards and financing. Leigh (2008) suggests that credit card companies will start feeling the pain of customers who are unable to make their minimum payments and who default on their loans. Fearful of this situation, many consumers will most likely refrain from using credit cards as much as possible. This can certainly curb the current trend and attitude toward spending in America. Where that attitude used to be one of privilege and luxury, holding that one should get what one wants, the primary attitude has now shifted to one of caution and savings. In fact, the New York Times reported that consumer spending has dropped significantly, largely scaling back the hedge that had protected against recession for so long (Barbaro and Uchitelle 2008). Not simply financial, this information has magnificent implications for society and culture change. Instead of seeing themselves as privileged and entitled, Americans are now beginning to value cutbacks and saving, a trend that is new, and a result of financial woes.

The impacts of this new attitude toward spending are far-reaching, affecting society's family values. As family incomes decrease, parents are forced to say no to their children's wants, cancel family vacations, and watch as stress levels rise. Children are taught to save, rather than to spend frivolously, and more learn what it means to sacrifice something that the really want, rather than receiving it from wealthy parents. Furthermore, attitudes toward the importance of work, both psychologically and financially, may arise. On the other hand, families may react positively to the recession, viewing it as a chance to change their ways, live simply, and cultivate better attitudes.

Potential Solutions and Conclusion

Because analysts are still… READ MORE