The Economic and Financial Crisis
The economic crisis which has engulfed the globe in recent times, is sometimes referred to as the Credit Crunch or the Global Financial Crisis. It is generally considered by many economists to be the worst economic crisis since the Great Depression. The economic slowdown resulted in the collapse of Financial institutions with super power status, the bailout of mega-banks by the national governments, and plummeting the economics of stock markets across emerging and developed economies.
However, in 2011, the world may have witnessed something which may be equally big, or maybe even bigger. The WWII economic crisis and conditions are still extremely fragile. Probably turning short-term debt into long-term loans was the biggest trigger for this economic recession in 2011. Many experts may call us to be somewhat more pessimistic in our outlook than is required, but here are some reasons to believe so. But what is indeed judgmental is whether we have truly recovered from the aftermath.
The economy in US is in shackles to say the least, even after 3 years of the devastating calamity. The infrastructure and housing sector is yet to recover and high levels of unemployment are haunting the super-power. The US is drowning in negative equity and job-less homes. Tax cut opted for by the US government may be a short term evasive measure, medium and long term fiscal reforms may be necessary to pull US economy through this period.
The recession in 2008-2009 is still making its presence felt in US, by depleting the reserves of the economic super-power. The tremble caused by major corporations like BNP Paribas and Lehman Brothers are yet to be . Recently, US have been downgraded from its rating by Standard and Poor. The economists are suggesting long term reforms in banking, such as raising capital ratios and switching from wholesale to retail funding, while filling in short-term gaps in capital. However, the banking industry and other services industry which are related, would be subjected to a very slow recovery under such a context.
The major debt that Greece is facing and the crisis could not be cured by the massive Eurozone and IMF bailout. The current bailout support could expire by 2013, and there has been no major economic or financial restructuring within Greece. While the Government of Greece is presently sold out to Germany, this is even a bigger cause of concern because now the government will not even be able to print bills to increase inflation to depreciate its own assets. With the huge debt on Greece, the rest of EURO-Nations are equally strapped in the rear to come out with policy changes that may liberate them from the dire straits. However, in 2014, things look a bit positive for Greece.
With the advanced economies under such severe stress, emerging economies, may be slightly insulated from major impacts, which can cause a huge eruption of their regular life. World Bank advocates that the economic stress for the developing and emergent economies may be actually nearing an end. However, since the developments in these economies are heavily dependent on the FDI from the economic super-powers, the development is likely to hit stagnation. Is this an indication that the next financial tremble will arise from the developing economies? Are we really waiting for another bubble to burst?
About the Author: This has been prepared by James S. James is an alumni of Cambridge University, UK. He shares a keen interest in aquatic life besides blogging and swimming. He is associated with one of the top 3 consumer goods company based out of United Kingdom. He blogs regularly in Business Fundas.
Share this:
Category: Financial Education
