Economic Crisis

Many people are facing an economic problem, and with that some may question what the real reason behind this is. If everyone is still doing the same thing they did ten years ago, for example spending the same amount monthly according to their paycheck, then why is there such a problem? People begin to blame President Bush and that he was doing bad things for his country, but I wonder, was it really all him and is Obama going to be the fix for the economic failures. Americans tend to blame large mortgage companies for the financial crisis, but the citizens need to take responsibility also.

As people look into loans they are convinced that they can afford it, generally leading them to get the loan and worse things to come. Some had an escalation clause where the interest rate and payment was low for a certain amount of years. This idea sounds like a good deal and most would agree which is why people get the loans. What they do not know though is that after the certain amount of years of low payments are up the payments increase, essentially making the home completely unaffordable to buy. (Bawaba) As people talk to a consultant at a large mortgage company they need to beware that they are selling a product. Always, when about to purchase something big, people need to calculate the cost and know what exactly and how much they are paying for something. Someone nowadays can easily get a car or house loan, go buy that car or house and five years down the road not be able to pay for it. Unfortunately this happens a lot and this is a large problem in the economy. Mortgage companies and other companies are good for baiting someone, giving them a low payment rate, and then switching the payment higher once they have been in the home for a few years. (Bawaba) Even though this is not a good thing that businesses should do, it is how they make money. From my experience because I just bought a car of myself, I knew that I had to get a small loan because it was all that my income can afford. Many people today get large loans and hope that they can pay them off and afford it, even when they cannot. Such actions lead to a bad economy because the businesses are not getting paid and credit card debt.

Credit card debt is something that millions face in America, due to peoples bad choices. I myself know a few people that have made bad decisions in this economy and max out their credit cards just so they can afford to live. Some do not realize that there are other choices beside maxing out a credit card and paying off later. Again when people max out a credit card they are bringing the economy down by not paying the banks. The past decade of economic growth has clearly been based on consumers taking on larger and larger amount of credit card debt and the unrealistic expectations of paying the money. (The Herald) This statement shows that people are getting more in debt because they have this ideal payment plan that they eventually cannot afford. People can be persuaded to get a credit card to build their credit or to just have in case of emergency but in the end it is individuals who say yes to the responsibility. Credit card debt today is a common thing to have, and to me that is a sad fact. It is surprising at times that there is several older adults that have major credit card debt and they themselves are to blame.

My opposing side would say that the economic crisis is because of mortgage companies and simply any company that persuades someone to buy something expensive, is the main problem of a bad economy. I disagree with this because in the end it is always an individual who says yes, who buys a house at a bad time, and who puts many items on a credit card they cannot pay for.

As the economy is getting worse people are starting to feel fear about going into a depression. Ironically this fear tends to lead people to spend more money that they do not have. If most people would simply hold off on buying the wanted items and only getting the necessities then I believe that changes will be made for the better in this economy. After being persuaded to buy something it all comes down to one individual and that person needs to take some responsibility for this economy.