Economy in the 1980s
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In the early 1980s, the popular myth held that America would lead the world into the "postindustrial age" and that in the future American competitive strength would be based on service industries. During the 1980s, the American business community began to see itself as failing to keep pace with developments elsewhere, notably in Japan, allowing the Japanese economy to move ahead of the American economy in some ways. Another issue raised in the 1980s was the inflated situation of the savings and loan industry, leading to the failures of many savings and loan institutions and even banks. This was also an era in which corporate raiders developed new ways of taking over companies, issued inflated stocks and developed other schemes that would lead to a crackdown, and challenged the viability of the U.S. economy in other ways as well. A number of banks crashed in the 1980s because interest rates in the economies stayed relatively low while their economies grew steadily. Deregulation at the same time removed many of the rules that had up to then limited competition within the industry. The result was a massive credit-driven boom in property and share prices that encouraged bankers to increase business, but when interest rates rose sharply in 1989, the bubble burst, borrowers started to default in large numbers, and many banks in different countries were submerged in bad debts ("Coping with the Ups and Downs," 1996, 3-4). In the United States and Great Britain, bankers had ma
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l prices collapsed, taking the price of Texas real estate with them, and the economy passed through a massive recession (Krugman, 1997, 160).
The shift in oil prices affected the world economy and certainly the U.S. economy. By 1982 there was an oil glut, and OPEC again was concerned about prices and about the need to stabilize prices and production. Saudi Arabia had an enormous capacity and so would become the swing production for the organization:
If in the face of production restraints a market surplus still existed, Saudi Arabia would cut its production to bring supply and demand into line and to defend the price of oil established by the cartel. If the price rose, the Saudis would increase production (Mackey, 1990. 365-366).
By the mid-1980s, OPEC was faced with a problem as it had to choose whether to cut prices and where that would stop once started. It could also continue to prop up the price:
But if it did that, it would be holding up an umbrella under which non-OPEC oil, competing energy sources, and conservation would all flourish, guaranteeing itself a shrinking market share. To make matters worse, more oil would be coming out of the OPEC countries themselves. . . . (Yergin, 1992, 747).
By 1985, the costs were be
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Some common words found in the essay are:
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Approximate Word count = 1581
Approximate Pages = 6 (250 words per page)
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