Recession in American History Part 2: Quick Payday Loans to the Top

Continuing on with a brief history of recessionary periods in American history–

The federal government has a history of making quick payday loans to large corporations in their times of needing poor loans when they were on the skids.  Many large financial institutions have gotten this benefit from the government, and especially in the last 30 years, whilst curiously this generosity has not been extended too far to the American public.  The 70s and early 80s were the worst economic periods in the nation’s history since the Great Depression, and the subsequent recessions were mild compared to the period of stagflation that was present at that time.  The early 70s and 80s recessions weren’t matched in severity until the current recession began.

The 70s and the aftermath

After each recession, both in 1973 and 1974, the economy experienced a period of rebound for the next 5 years.  Granted, there wasn’t a full recovery made from the 1973 recession until the early 1990s, but it had made some steps back to where things had been.  That is, until 1979.

1980 – 1982:  The recession in the 1980s was the worst since the Great Depression.  After the 1973 recession and stock market crash, stagflation, or a combination of productive decline and inflation, had set in and was adversely affecting the American economy.  It was worsened by the events of the Iranian Revolution, which slowed oil exports throughout the whole world.   The results of the energy crisis combined with the stagflation was post World War 2 record high unemployment, lack of growth in manufacturing industries, and several large bank failures.  Several large banking institutions, especially savings and loans, crashed, and the effects rippled throughout until the 1990s.

1990 – 1991:  A recession was nearly unavoidable after the stock market crash in 1987.  Though the stock market crash was quickly recovered from, the banking sector, especially savings and loans were affected by a decrease of consumer confidence, but the greatest impact was in the manufacturing sector, which still needs quick payday loans.  Production dropped off for about a year, and matters weren’t helped by the Gulf War, but it was brief and it was also not nearly as harsh as the periods of recession of the 70s and 80s.

2001 – 2003:  The 2001 – 2003 Recession was a product of three great forces colliding together, and those being the collapse of the internet boom, corporate scandal on the largest scale yet, and also the events of 9/11.  The stock values of internet businesses hit a peak, and then plummeted when the sheer number of them meant a vast drop in demand, and dozens of companies were exposed as having fraudulently altered their accounting books.  Market confidence plummeted after these events coupled with 9/11.  However, this recession was also mild, marked by slightly higher unemployment for a two year period.

Today’s Recession

The latest recession, according to the National Bureau for Economic Research (NBER), one of the most trusted economic research firms, began in December of 2007, when a decline in the amount of goods produced began as the housing bubble began to shrink.  The collapse of credit firms began when a significant portion of mortgages were foreclosed upon by people that couldn’t possibly pay for a mortgage were lent to by credit lenders, who NOW are the people who need moeny.  The solution that the government has been leaning towards has been to aid those companies that need cash the most, with quick payday loans of sorts to bolster their bottom line so they don’t fail, and to inject the credit market with much needed capital.