Their Money In American Stock example essay topic

869 words
America's Economy Today With all the bad publicity about the economy nowadays anyone with access to a TV, magazine, or newspaper should be somewhat familiar with the current economic crisis here in America. It seems like the Dow Jones Industrial Index and the S&P 500 Index are dropping lower every day, not to mention the poor condition of tech stocks listed in Nasdaq. Here's some current stock market figures that display the markets current deterioration: The Nasdaq index lost 8 percent of its value, putting it nearly two thirds off its peak last year, the Dow Jones index closed below 10,000, ending its biggest one-week point drop in 11 years, the S&P 500 index is now down 25% from its peak last March. This marks the start of the first bear market in half a generation.

The future certainly looks grim just by looking at the major index's performance, but that is not the only thing we have to worry about. Consumer spending fuels two thirds of the economy and consumer confidence fuels consumer spending. So far this year, consumer confidence has been dropping drastically. People have still been spending at about an average rate, but as the market continues this downward spiral people will definitely begin to hold onto their money a little tighter. Everyone knows about the big tax cut George Bush is promising us, but how much will it really help the economy?

The Bush administration says they are going to cut back $1.6 trillion dollars of taxes we pay over a 10-year period of time. One major problem with this is that only $6 billion will be cut the first year, when we are in need of a major tax cut immediately. Besides that, the majority of the cut will be given to the wealthy, which are way less likely to increase spending, whereas the middle class certainly would when their incomes are increased. Some moderate democrats have proposed that it may take a healthy $125-$160 billion to spark a turnaround in the economy. Bush says that cutting the top tax rate will increase business growth and therefore job availability, but (in my mind) a larger cut seems like the safe way to go. A Newsweek poll showed that voters supported the Democrats' theory more than Bush's by nearly 3-1.

No matter what plan they use, it needs to be put into action as soon as possible before the economy gets too much worse. It is a fact that Americans spend more money that we earn. Last year, we set a historic high by spending $435 billion more than we took in. Other major countries in the world have always looked up to America and our economic performance. In fact most investors in places like Japan, Germany, and Latin America have put all their money in American stock rather than their own country. If our current economic performance scares them half as much as it scares us, then we are in serious trouble.

Last year, we took in two thirds of the capital exported from all countries that had money to spare-twice what we used to take in only five years ago. If any of this money stopped coming in, it could produce a falling dollar, which makes higher interest rates, which weakens stock prices and causes a faster slowdown. In other words, it's bad. Besides the economic turmoil, other countries should still keep faith in us, because of our political system and our basically solid economic history.

I believe that the saying "what goes up must come down" and vice versa apply to the stock market without a doubt. If you share this belief and you have money to invest, then this could be the perfect opportunity. Stock prices are down many times less from what they were at last years' highs. So, maybe the question we should be asking ourselves instead of how bad will it get, is what companies will do well when the market rebounds.

I still believe tech stocks are a good investment, because when the market perks back up, companies will have more money for research and development of the technology of the future. Also, people should be investing in the leading genetic research companies. They will be curing diseases and ailments left and right in a few years. We need to be concerned about the current economy, but we should also look ahead into the future and anticipate the best. Maybe George Bush doesn't come across as the most brilliant man in the world, but he does have many professional people advising him.

I am an optimist by nature, and despite the many problems facing our country, I believe our government will pull us through this crisis. If I had money to spare I would definitely be taking advantage of the current low stock prices. We shouldn't be losing any sleep over this stuff, because there are more important things in the world than money. Wall Street Journal Investors Bussiness Daily.