Chapter One

States in Crisis - Scarcity of Jobs leading to Disaster

Source:http://news.yahoo.com/s/ap/20100826/ap_on_bi_go_ec_fi/us_economy

Summary

In the States, one in 10 households has missed at least one mortgage payment, and more than 2 million have been reclaimed possession due to failure to pay mortgage. The supply of unsold homes on the market keeps getting bigger. At the same time, the number of people being terminated from the right of their property is increasing. All this that has happened is pushing down home prices significantly. A major problem is that many people have homes that are now worth less than they owe on their mortgages. More than 2.3 million homes have been repossessed since the recession began in December 2007 and 6 million more will be lost over the next three years. If that happens, home prices will probably sink further, and the economy will suffer. Builders will keep construction rate to a minimum, and Americans will be less willing to spend because of their lost home values. The number of Americans missing payments and falling into foreclosure has gone up along with unemployment. The jobless rate has remained near double digits all year. Losing a job or having health problems that lead to high medical bills are among the reasons many people fall behind in their mortgage payments.

Connection 

This article relates to one of the most important terms in Chapter One – Scarcity. Scarcity refers to “an insufficient amount of supply.” In economic terms, anything that has a limited supply is referred to as scarce. As a result, almost everything on this planet is scarce because very few things actually come in unlimited quantities, in other words infinite.

In this case, what are scarce here are the job opportunities available in the United States of America due to recession. The scarcity in jobs is causing a great downturn for America’s economy. As people lose their jobs, they are moneyless to pay for their mortgage which would eventually be taken back by the lender. And without the ownership of a property, people tend to stop spending money in markets which would be disastrous for the American economy.

Reflection 

I was aware of the definition of scarcity on an Economics textbook or even in a dictionary, but I did not realize what kind of impacts it would cause if a specific resource actually did become scarce in our society. For instance, I drink at least 2 bottles of water per day; a meal wouldn’t be complete without my cup of water. If water were to become undrinkable one day due to pollution or any other factors, I can only imagine the price of a bottle of water sky rocket to an unimaginable amount. I think America should really seek for some help soon, or else their economy would be crashing down really soon. But I, for one, would be happy to see Canadian dollars higher than the Americans.