Economic Recession in USA

Economic Recession in USA
I am concerned about Recession that happens globally. It happened to us (Malaysians) once in the year 1997. That year was bad. My friends, those who were under scholarship could not continue their study to overseas. Those who were under scholarships from International Giant Corporations like BP, Shell or Petronas would have the opportunity to fly. They were lucky. Those who were supported by Malaysian Government and were studying in UK had to come back. They were called back. Our currency was really bad compared to Pound Sterling which was Ringgit Malaysia 7.50 to one Pound Sterling. Motivation to study dropped down for us that were doing A-level course for a preparation to study overseas. We were demotivated. We said Goodbye to Aberdeen, Scotland. We said bye to Eiffel Tower too. Those were our targets during summers if we managed to be there. Our currency (Malaysian’s Ringgit) value dropped tremendously in terms of its value compared to dollars (USD). Our currency had less value due to the work of speculators that kept daunting our government. Preventive measurements were taken in order to stop it from being worse. One of it was pegging our currency. We did not want to be the next Indonesia.
It did not just happen to my country only as it affected the whole South East Asian regions. After ten years, the cycle starts again. Now, it happens here. It means it happens globally because we are using the same economic system. This fact is very interesting as we are in fact in the same ship. Every country is affected badly. My friend used to tell me that recession will continue to happen in every 10 years. It has deep impact upon me, as during the years, I can see major changes that happen to our socio economic and people are worried. In fact, this issue matters so much to me as we (my wife and I) don’t want to be called back due to Economic Recession that happens globally. I really hope we can finish our education here. Few months ago, I have been discussing this matter with my wife telling her that if worst comes to worst, maybe we just should apply to be research assistant here. This worry leads me to follow major economic changes that happen in USA and Malaysia too. I always get myself informed.
In 1997, when the first wave of recession happened, I was in the hospital at that moment where a doctor was cleaning up my hands from blood. I was involved with minor accident, but after receiving a paged, he looked worried and hurriedly left me. He directed a hospital attendant to continue his unfinished work. I asked the hospital attendant and got to know that a business man just slit his throat with a razor due to the excessive crash of BSKL. The doctor hurried to the ICU to save this man’s life.
I was clueless at that moment. Later on from the news, I realized suicide actions due to the recession were many. In Jakarta, protestors use this momentum to end the tyrannical era of Soeharto a year after that. Due to the chaos and instability, Americans were being evacuated within 24 hours from Indonesia especially Jakarta. Chronologically, more chaos and demonstration were held everywhere in this region. There were demonstrations against IMF solutions to interfere into the Indonesia economy. The injection must be taken in order to save the economy from the abrupt of bankruptcy. Indonesians mostly refused because it is a trend of silent colonialism. However, they did not have much choice. As for Indonesians and Malaysians, we believe once you take IMF injections, you will let International foreign banks to interfere into your policy. In fact, as a result of this, as one of the largest Muslim population in this world, Indonesians can not stop Playboy to be sold in the country. Their markets are open as wide as sky. Luckily for Malaysians, our currency reserve in off shore banks are strong enough, we had ability to peg our currency.
In Malaysia, Bailout was being declared by Mahathir Mohamad in order to save Malaysian Ringgit from becoming more worst in terms of its value. He used money from Danaharta which mainly gets its money from the export of petroleum. Here, the bailout comes from tax payer’s money. He did not have so many obstacles as he is already our prime minster at that moment but here,in United States when bailout is being introduced, two nominal were winning every American heart on how they are going to use it to save American Economy. Americans made decisions by participating in the 2008 elections. Every presidential candidate was given enough time to proof and convince Americans. I am amazed by how democracy is really implemented in terms of this. I just love the statements in Deb Riechmann’s article when he mentioned that two presidential candidates, John Mc Cain and Barack Obama, were made aware of the summit and they were supportive of the idea. This is another expectation to see how open we should be together even though we are from different camp. As for me, I dare not to comment about the actions taken by Mahathir Mohamed fearing that the same disaster might happen to me as what happen to Anwar Ibrahim. Plus, I am under Government’s scholarship. Malaysians are not so open when it comes to criticizing the policies or leaders. Internal Security Act will wait for those who go against the current.
“The New York Times, Wednesday, October 29, 2008: 2 Rivals Plans on Fiscal Issue Add to Deficits.”
I love reading and analyzing anything related to recent recessions that affect this country though I am not an economist. Firstly, it puts me into realization of how powerful it is, because the problem that starts from the Lehman Brothers, continued and spread to all over the world, and at the end, it becomes a global recession. This put me into another perspective that we are inter related to each other. We are using the same system. I can say, it is not just technologies that abide us together like a spider web, but indeed it is the same economic system that is being implemented all over the world. It is capitalist economic system. In addition to that, this system is being supported by the advancement of globalization forces. Not to forget exactly as what being mentioned by Bush that any international effort should preserve what he calls democratic capitalism- free markets, free enterprise and free trade. We have internet, we have powerful communications, and thus the ideas can be accepted vastly without having any problems.
Under the economic system that we use together, we can come into our own consensus to determine the level of modernization and economic growth of every country in this world and they are determined by GDP growths. Not just that, the solutions are expected to be various as key players are many. I predict, the solutions must be creative too as it involves many countries and nations. A report dated on October 23, 2008 by Deb Riechmann from Associated Press titled,” First summit on global crisis set for Nov. 15” mentioned about this whereby the summit is intentionally to bring together leaders of Japan, the United Kingdom, France, Germany and etc to bring about and discuss different approaches about what needs to be fixed with the system.
Also, in terms of news coverage (USA and Malaysia) it is almost the same subject. Economic matters so much, that’s why it is the same. Further more, Malaysians as any other countries, look forward to know what happen here in order to prepare. As hip hop waves hit USA first, it hits Malaysia too. The matter is time. The trend will come here soon. We live in the era of globalization.
Technology is secondary when it comes to this. The important issue to discuss here is the economic system. It is tool to execute our philosophies of life, on how we exchange, produce and consume goods. Importantly to address is our decision on what system of economic that we choose and we use it to manage. The system now is having problem again after it attacked Asia in 1997. This time was not a second attack on America, in fact since 1945-2007; they are at least 10 recessions happened here. For economic giant like Japan or United States, it comes every 25 years. Due to this fact, there is a voice in Malaysia to replace this capitalist economic system. It seems this cycle will continue again after 7 or ten years from now as no real cure has been found so far. It leave to some interpretation from my country that it is not compatible anymore. Further more, the economy system that is being used is based on the philosophy of materialism that is totally alien to Muslim’s principles ways of life which is Sharia.
This recession can only be understood when we can accept the fact that interest from borrowers are used to mobilize the economy. Credits will be offered and lots of them can not pay the loan. It will create financial bubbles. Secondly, Federal Reserve will allow printing more money which then will lead to inflation. It leads to inflation as lots of money in the market will drop the money values itself. It is important to mention that Dollars that we have today is valueless because it is paper which is not backed by gold or silver. It is based on commodity and shares market. As I will explain below, the shares market is more based on speculations and it is considered gambling.
This again reflects greed on behalf of lenders. When I interviewed my American friend, he told me that when he was in 60 banks that will send credit cards so that you will use it to spend thriftily. In a way, it is very convenient as it is easy, but in reality if we look at it closely, we will realize how dangerous it can be as you will have to pay the interest that will keep accumulate. At the end of the day, if you can’t pay it, you will be bankrupt.
I am very careful when it comes to spending, even though my credit report is good. They give you extra credit so that you will spend and use the specialties but at the end, the interest rate is high. It is like luring you into a deep hole. This actually happen in Malaysia too as many sales representative will come and find government servant in order for them to accept and have a credit cards offer by their bank. Once they get your phone number, they will make a call in the name of advertisement. A lady once offered a date with her in order for me to take and use American Express. I kindly rejected her offer by saying, how much the company pays you in term of it so that you will hook me up with this debt. Harsh?
“Dow again takes a dive” by Ellen Simon. It says “Louder warnings of a deep recession and weak corporate earnings took the Dow Jones industrial average down 514 points amid fears that government intervention won’t be enough to prevent global economies from faltering” The idea of free market must be free from government intervention. It solely depends on itself, the capitalist and the customer relations. Government can not be interfered in it because, it is afraid that those in power will manipulate the opportunity to use the bail out helping the cronies or any conglomerates that have good ties with them. That happened in Malaysia. As the result, wealth will be on the hand of a few rather than to the mass. Due to seriousness of this problem, Congress has to intervene and as the result, the bailout from taxpayers money will be used to save Conglomerates.
When I read a book written by Naomi Klein, it becomes a fear when Leteliar said that the free market rules is a another wave of dictatorships, they were not creating a perfectly harmonious economy but turning the already wealthy into the superrich and the organized working class into the in disposable poor.
Issues from the readings that were most significant to you.
Some people manage to manipulate the fall index of Dow Jones by buying shares as the prices are very low. They expect it will rise again and then sell it back when the price goes high so that they will generate income. It is easy money for those who have capital to buy it. It depends on luck actually, it is like gambling. What about if the index of Dow Jones keep falling? They will be on trouble then as the shares that they buy will loose its value. It becomes cheaper. It is like gambling because it is unpredictable. It is no worry here as the Congress already promises that it will have bail out that will give life to the USA economies. In Malaysia, those who are driven by greed keep buying shares hoping that the price will be raised again but unluckily for them, the help came late. The Index keep crashing day by day and left them hopeless and on the edge of bankruptcy. The easiest way for them is by committing suicide.
Maybe it is not an issue here, as I have never heard about anyone committing suicide in USA due to recession or bankruptcy dealing with shares in Dow Jones. I highlight this issues that from my perspective is important because firstly, from our cultural and religious points of views, life is very much valuable, committing suicide is out of context as it must not be our choice. Failure in business is not the end of day. There will always be ways to go out from the problem. There will always somebody to help you out. There will always be someone who cares about your problem. That is a beauty of living and being human. We are interconnected and being responsible towards each other. Everyone is not an island. Those who are commit suicide, based on our religious ruling, is doomed to be in Hell, unless God forgives he/she. It is like abusing the faculty of mind, that is to think and decide what is wrong and what is right. Taking our own life is giving up the ability to use minds to decide on our own actions. In fact, animals don’t simply kill themselves although they don’t have faculty of minds to differentiate what is good or bad. They only have instinct to survive. Why must we, then as human fall below their level? Secondly, any drive/intention or action that is directed by greed, can lead to disaster. It is putting your capital into market forces that is unpredictable during this time. It is highly risky. Is not it like a gambling? At the same time, it is putting your hope into a game. You don’t have power over this game as the rules and the results are not determined by you. There are other major key players here. Indeed it is very speculative. It is not that I am against taking risks but I prefer to take risks to the things that I have knowledge that I can succeed. Thirdly, I believe by giving your capital in order to buy low price shares during the time of recession, is helping the capitalist economy but at the same time, allowing yourselves to participate on the expense of others miseries. During recession, people will loose their jobs that will give bad impact not only on our socio economic life, but also for traders or speculators, they will short sell the shares and generate incomes for themselves. Further more, the bail out comes from taxes payers’ expenses. The injection will be given to the banks by bailing out them, (as everybody involve with banks nowadays) who’s in return will charge interest to us. In fact, banks will always seek to maximize profit from lending. Are they more equal to us? As a matter of fact, we (tax payers) absorb their risks and the reaps are for bankers. I don’t blame the bankers as they are merely workers. What we must look upon to re evaluate the economy system that we use now.
Fifth, I realize Economic Turmoil that happens here, affecting my country in term of food and petrol prices. In our local newspaper back home, there were demonstrations putting pressure to Malaysian government to lower down the petrol price as we are a nation that produce and export it to overseas. Petrol price should be lowered from the profits that we make by subsidizing it (the cost). Petrol does not belong to certain individuals or corporate, so it goes with the profit and in fact, it should be returned back to Malaysians by lowering the prices. The 3 Billion USD profits should be liquidized so that the effect of global recession won’t be affected so much on Malaysians. As a result from various demonstrations, Malaysian government provided USD 400 rebate per year for every household, but I believe it is not enough as other goods prices are sky rocketed too, and other Malaysians could not agree more than me. They prove it during election 2008. Five states are now in the control of opposition party. This is the biggest lost for Barisan National. Malaysians have spoken.
What ideas or questions relevant to issues of personal/professional concern were raised for you?
As Economic Turmoil has so many effects, it is important for educationists to provide circle of supports to those who are badly affected. I did mention about the suicide rates among shareholders. They might be solely bread winner for our students. It is important to always keep us alarmed not just on major cases (suicide cases or involving in crime as they way to attain money) but minor as well (losing jobs) as it will affect our students performances. Schools must work together with other elements of social supports available in community in order to overcome problems related to it. It is the time to take care of each other. The key point is to make students realize that they are not alone and are always welcome to get help as everybody is being affected by it. It might not be obvious that the problems do exist and teachers must be highly sensitive to detect them by being concerned and care about students. In order to avoid the insensitivity of teachers towards students, it is crucial to have pre assessments of students’ background. This will give knowledge and information whose going to be in the dire list for the teachers. It gives alert siren that helping intervention is needed. At the same time, assumption is not good. Thorough checking and assessments must be done professionally and ethically.
It opens the opportunity for teachers to integrate their lesson plans to related topics. In this case, teaching students how to manage their finance or comparing the benefits and the disadvantages of using credit cards are among the examples. I can tell them to be very careful to spend their parents’ credit cards limits to buy and wish for presents during Thanksgiving as overspending will make Bank happy due to excessive interest charges that the parents have to charge. At the same time, emphasizing the concept of being thankful to God and make students realize their parents capabilities to spend the money. The gist is to be thankful to God not particularly on that particular day but in fact everyday. I think that is integrative enough.
It is important to address here that circle of supports must be diversified in their frame of actions and well organized. These two criteria are important as first, we don’t know whose going to be the clients as our students are diversified, and the intervention helping process must be accordingly and suitable to the culture of students. Ignoring this fact will create more problems instead of help. Religious organizations, social clubs and etc can work hand in hand with school community.
Implications on me:
Economy system that we adopt, implement and use is the force that moulds the society today. The society becomes what it is due to the economy policies. It comes from policy makers after thorough studies have been done by intellectuals to decide which models are the best. Every model has its own philosophy where of it is originated from. Understanding the society needs us to look at the economy system as the whole. In order to understand the economy system, it is important to reflect back its own philosophical nature of origins/orders. It is called understanding worldviews.
Westerns worldviews of capitalism have been mould for centuries, due to the impact of Enlightenment, which is grounded in the name of science. In the name of science too, corruption and despotism in the Church is greatly repudiated, thus starts the age of secularism. Secularism itself is an active process reducing religious matters to a matter of individual preference. This was the breeding ground of emancipation from religion that later becomes catalyst for atheism. It is very horrible as religion as the safeguard of our collective conscience is deeply negatively affected by utilitarian (capitalism) points of views. Based on utilitarianism, moral values is assumed on what gives pleasure is good and what causes pain is bad, thus good and bad or right and wrong were to be determined by the measurable criteria of pleasure and pain. What is important is individual human self interest as we are driven for that. It is very horrible thinking. It denigrates the status of me from human to the beast that matters fulfilling self interest/desires only.
These sets of worldviews create the society now. In the USA past history, I believe, in the name of progress and economy which was based on above worldviews, slavery was not an option for them. It was a must. It is okay to enslave human so that the farms will have workers. We need to eat, so it’s okay to lynch Black American so that farms will be continued to be operated, and we have corns to eat. We will not starve to death during incoming winters. That’s their thinking. From what I read in our textbooks during class discussion, I will always believe slavery is the system. Also, I believe most that the system creates slavery. The system now creates global and powerful slavery that it affects every strata of society. We become the slave of those who have control over the economy. For example, in the name of profit making, it is okay to use woman body to advertise, it is okay to impose concept that beauty belongs to those who have Pamela Anderson’s body (don’t worry, I am not imagining her body now), child slavery is still continue up until today due to the fact that they have low wages and the lists of cruelty are on and on.
I am not a communist because I am against it, also by believing in socialism means putting a seed of atheism into my soul. However, I believe that the economy system that we are using now is not compatible anymore; firstly, I already explain where it is originated from in the above paragraphs. That’s the reason I said that it is not compatible. It is based on human greed. Secondly, from my experience, recession is a vicious cycle. Now, it happens again at the centre of capitalist system, now beginning from 2008. It happened to us in 1997. I can see that it is a complete ten years and the cycle goes on. If the system is compatible, why continuous financial aids do not work? Why the vicious cycle keep coming back again? I won’t be shocked if there will be another recession in any regions within 5 years or 10 years. Indonesia followed the solutions by IMF, but it does not help at all. If the system works, why the solution by IMF does not work at all? It is still among the poorest country in South East Asia region. In fact, when I collected news article on what were happening in Malaysia and USA, there were demonstrations on food crisis in Indonesia. The prices of food soared high. It affects Malaysians too. When I called my mom, she complained about the price of rice and flour which are high, at the same time asking about the price here at WalMart. It created tension and panic among Malaysians. Those who have money will buy excessively to make stocks afraid that the prices will go up again though preventive measurements have been taken in order to stop it such as controlling the price and even punishing merchants that hide them. People hurriedly go to the shops to grab food. Anyway, here, it does not happen. I can see that when it comes to proper planning of managing crisis, the panic and tension can be avoided.
That’s the implication of the importance of good managements that should be have among Malaysians leaders and its citizens too. Secondly, based on this, it creates a realization that we always have to be prepared ahead of time. We have to be aware of what happens around us so that during emergencies, we won’t be panicking and stay calm. In addition, with the good financial management, we do play a small role in affecting the economy. If the small portions combine, it might make give an impact towards the economy.