The economic crunch experienced by the world over today has been the worst seen the 1930s, expert economists and historians say. Recession is at an all time high. The rate firms are declaring bankruptcy, everyone is in constant fear of losing their jobs and as the proverbial dominoes would fall, their houses, cars and other property as well.

The consumer driven global economy has reached a certain point where it has relied solely on credit to finance the daily economic activities despite very little or no actual money to support the transactions. Hence, the strain on the banks and other financial institutions became too burdensome for them to handle. It is only a matter of time until the great bubble of debt explodes in front of everyone's faces.

As a rule of thumb, economists would call an economy in recession if in two consecutive quarters, the GDP has contracted. Therefore, it safe to say that since 2002, the US economy has already been experiencing recession.

An article by Roubini, a professor at Stern School of Business at NYU, showed how serious he current situation is. He showed the domino effect that fill follow after the housing market crash. After which, the mortgage market will collapse. Consumer credit will also falter and so will there be corporate defaults. Bankruptcy will be imminent, which will lead to widespread recession all over the country and will spill over the rest of the world.

Given the financial and fiscal measure the government has been formulating to help ease the effects of the recession on the banks, the recovery form the condition would be easier and faster. However, if the banks and economy do not respond smartly, the effect of the recession will still be felt for 2-3 years more.

Here are signs to watch out for that will indicate that we are coming out of the economic pit that we are in:
Home prices show sign of stability.
The price of basic commodities such as food declines.
As any other cycle, it is but normal that we experience such. Therefore, new need not worry too much. The government is trying its best to formulate policies to aid ease the economy and its detrimental effects on the citizens. The best thing to do now is help, in our little way by supporting locally produced goods and save up on energy spending such as gas and electricity. The human race has known to be resilient since day 1. It's just a matter of time that we are back on our feet and ready to on the challenges that lie ahead.

What is the best way to plan your financial future and stay debt-free? The answer is improve your financial literacy. You might be amazed to know that the Obama administration encourages financial literacy by providing government funded low interest personal loans to qualified individuals who decided to improve their debt management knowledge.

Reverse mortgage California can enable a homeowner to maintain financial independence and an adequate standard of living by converting a home's equity into tax-free cash.