Supply creates its own Demand and Job Loss in America

Reuters News Mail on July 3rd put the first number one top news “Non-farm payrolls declined 62,000, more or less in line with the forecast of a decline of 60,000. Jobless claims came in at 404,000, a little higher than the 385,000 expected.

If we look back to 1997 when Most Asia Countries were attacked economic crisis, the fundamental reason is property business and mortgages. Property, real estate plays the storm for potential crisis. America is also attacked by this virus, subprime mortgages.

I would like to share my opinion to metropolis why Mortgages and Property Business could blast an economy. We put that land price is constant and have increasing trend in price for our assumption and Property Businessmen get their capital from loans.

Business property takes a biggest portion of Money from lenders (read: Banks). We see that a property from null to become standard house will spend less than $10.000 USD. When Demand from home is declined, businessmen couldn’t payback their loans, and in the long term will impact on credit problems, couldn’t payback will raise the sum of loans. This case goes worst when payday (salary) is being declined both in short and long term.

I put an example: How many employers are needed in Property Business Project?

Reuters News Mail said,” There were 43,00 jobs lost in construction in June as the housing slowdown continued to bite, while manufacturing shed 33,000 jobs. Both of these sectors have lost jobs in every month over the past year.

John B Say in Supply Create its own Demand will explain the phenomena. There are many job were lost. Then we can say the unemployment has no longer job, no job means no money. As the result their Purchasing Power Parity will lower and lower in the long term. Less in Demand will cause to industries sectors. Goods are full in storage, unsold able. Low in sales and low in profit will raise a fundamental decision, Efficiency, and the job cut (fired) is available on Managerial Mind.

We don’t talk about others errors in this case, such as lowering on Dollar, High Flying on Oil Crude and multiply effect to others sectors.