Quote:
Originally Posted by Rochard
That's just it. Because of the recession people are loosing their jobs. It's a downward spiral.
"Bob" invests all of his money into opening up a Wendy's restaurant in a town that saw a 200% population increase in the past six years. Easy money to be made there because everyone except for Baddog has a fast food burger every now and then. Two years later the housing market crashes, no one is buying his burgers, and restaurants are closing faster than porn programs. Suddenly he's out of business.
But that's just the beginning.
He had a modest house with a small mortgage payment, but he lost everything he invested into the business, and on top of that he's unemployed. No one is interested in hiring a failed business man, not to mention he is competing with everyone else in the job market. Through no fault of his own, he's out of work and now loosing his house.
What about "Kenny" the guy who flipped the burgers at Wendy's? He barely made minimum wage, but now he's out of a job. For every restaurant in town that closed, twenty people joined unemployment and he's trying to compete against them for their jobs. More people looking for jobs and less jobs to be had.
In the mean time, both Bob and Kenny have less disposable income to buy fast food burgers from Burger King or the Mexican restaurant or whatever. And because so many other people can't afford to buy burgers or whatnot, now other businesses are at risk.
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you pretty much nailed it here
and since bob can't pay his mortgage, among thousands of people in the same situation, suddenly the bank gets in trouble as the bundled mortgages they sold or lend out to other financial institutions are now worthless.
Bob also cannot afford his insurance, suddenly AIG is in big trouble (stocks went from $18 to $0,35 NO KIDDING !), the US government needs to put a stunning 170 billion into AIG to keep it alive
And it goes on and on.
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