US Debt Crises Overview

The American economy has remained the pioneer of capitalism which realigned global trade across international borders. Today, countries are brought to the forefront of international partnerships and cooperative agreements on the basis of their economic performance. As trade is inter related on a string of purchases from different countries, it all becomes interdependent. America has so far remained the most important country as it stems the global financial cycle in the form of dollars, which are pegged to the most reliant commodity in the market; gold. A bottleneck is thus created with the global vital partner, resulting in the market conditions worldwide to be determined on a country's status.
 So far, the American economy has seen highs and lows through the passage of history as the country faced instances and challenges in the form of The Great Depression, wartime controls and inflationary setbacks. However, there is a major difference today with the size different sectors have swelled to, not to mention the new sectors which have emerged within the economy like insurance and banking. It has led to the capitalist system being extended out of reach of immediate federal control. Today's American economy is facing a chain of calamities occurring one after the other.The collapse of construction and housing "bubbles" in 2008 triggered a backlash which traveled on to the leading banking and insurance companies like the Citigroup, Lehman brothers and AIG investments. It also infected the gigantic car manufacturing industry including General motors, Chrysler and Ford. The collapse of all these major institutions could spell a major economic disaster which compelled the Federal Reserve pour out massive bailout packages in the form of loans and nationalized shares in such companies worth $700 billion, thus saving them all from tipping into bankruptcy and irreversible damage. In the process, the American debt crisis started taking form.
Why is it phrased as the 'crisis?' Well, the most inevitable fact is that the recession has rendered the market mechanism incapable of functioning properly, where the demand as well as the supply markets are required to play their part accordingly to stimulate economic activity and well-being. While the supply market is supported with a renewed influx of financial support, the demand market has still not stepped up to play their part in the process, which concludes that some time or the other, sagging sales will force the same companies knocking on federal doors to beg for help. A crisis will emerge as newer debts will be required while the previous ones would not remain paid. A cyclical behavior will predictably emerge over time with all the variables directing to the same ultimatum rather than changing the tides.
The presidential committee responsible for the majority of this period also did not take decisions suitable to the conditions of the economy, rather they made the situation more adverse. President Bush slashed taxation by $2 trillion while the federal kitty was burdened with excessive defence spending on two wars, one with Afghanistan and the other with Iraq. Visibly the most rational decision would be to cut down federal spending and raising taxes, but many economists have recommended for the Obama administration to carry out more federal spending to be injected within the national economy in order to fill in the vacuum caused by depreciated private spending. This would ultimately turn the tables and change the cycle, allowing the economy to stand independently on its own feet.