well I'm a little freaked out now

Date: 10/06/13

Title: The Great Reset: Five years after the economic collapse

News source: NewsOk

Article date: Published: October 6, 2013

Author of article: BY BERNARD CONDON

Summary: People are still being very cautious after the economic collapse five years ago, they are retreating from stocks, shunning debt, and hoarding cash. Even though economic good times have returned people are being extremely frugal and it is hurting the economy. The lack of spending is making the economy weaker which could lead to many more problems. It just seems like people have been burned before so they are trying to stay safe.

Issue: Shunning debt and spending less can be good for one family's finances. When hundreds of millions do it together, it can starve the global economy.

Argument: spend more money to support the economy vs. don’t invest in the economy it failed you already

Supporting evidence:

·         “It doesn't take very much to destroy confidence, but it takes an awful lot to build it back,” says Ian Bright

·         “The AP analyzed data showing what consumers did with their money in the five years before the Great Recession began in December 2007 and in the five years that followed, through the end of 2012. The focus was on the world's 10 biggest economies, which have half the world's population and 65 percent of global gross domestic product.”

·         “Debt per adult in the 10 countries fell 1 percent in the 4½ years after 2007.”

Claims:

“We had credit cards and we didn't worry about a thing,” says Madeleine, 55. –but now even though most of the debt is gone, overspending is happening less and less frequently. “My brokers said they were really safe, but they weren't,” says Stonecipher, 59, a substitute schoolteacher. – So this person lost something and doesn’t want to take the chance of losing anything (mostly money I assume) again.

Analysis: I predict that if people don’t spend more money the economy could dip down to scary levels again – however steps should have been taken –honestly the people who rely on the economy and trading are sort of burying themselves here, it was their fault that it happened. Now they have to lay in the bed they made.

Relate to economic concepts: if the economy crashes again because of lack of spending it will make the problem worse and we will continue a downward circling spiral.
Scary stuff that idea.