Economic Crisis-US
Economic Crisis-US
The current economic
crisis of the US affected the company and business environment to larger
extent. The main cause for this was US subprime loan and debt ceiling and
crisis. The question arises how high US debt levels would hurts Americans, the
answer is obvious that there is much risk due to high US debt levels risk. The
different companies react differently towards the situations of the financial
disturbances. The companies who react quickly can minimize their risk otherwise
they will disappear.
The articles throw
some light on the problem
Higher Interest Rates
High cost of living
due to higher interest rates on mortgages, car loans, and other loans making
the families harder to borrow
Business houses have
to work hard to build the financial security so that they cannot concentrate on
the primary function that is making money and earning profit.
For starter the
business environment become such worse that they cannot think of entrepreneur
activities.
Higher Inflation
Higher inflation reduces
the purchasing power of family so the profit of the business reduces to much
extent
Higher inflation and
longer life expectancies together can mean that some seniors run out of their
savings sooner than anticipated, leaving them completely dependent on Social
Security.
Inflation increases
the prices of essential goods and services, including food, clothing, and medical
care, and it proves to be harmful for the poor and those on fixed incomes.
News Articles that throw lights on how the companies counter the financial crisis
The first way is to respond quickly to the
situation to minimize the loss
The second way is to win the loyalty of
their customer, so the company must act sincerely.
The company should refresh their strategy
by taking some rest, reorganize their team, and do all sincere effort to earn
profit.
The company should be prepared for long term
strategy not the mere immediate goals.
The companies should also be ready to take
some risk and adopt the never tested strategy.
There should be also plan B for the unseen
situation in the form of contingency planning.
How does a debt limit crisis differ from a government shutdown?
The articles throw
some light on this topic
A shutdown does not impede the government's
ability to pay interest or principal on its debt as long as Treasury has
appropriate headroom under the ceiling. In other words, a shutdown does not
precipitate a federal default.
On the other hand, if Congress fails to
raise the debt limit, the government can no longer borrow funds, but federal
operations may continue for the period that Treasury is able to use existing
revenue or secure additional resources through special measures
How the companies
counter these problems
First of all the
company lower the production to reduces the cost of purchase of raw material, labor.
Another method is to cost cutting by removing the extra work force and
mechanization of the process. The Companies reduces their expansion to lower
down the shock of financial impact.
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