If the United States sneezes, the entire world catches cold.
Nothing could describe the global economical situation much better than this phrase, a phrase very aptly coined.
Global economy we call it which started as a simple trade much earlier. It started as a barter system and was termed unfair by the greedy humans who wanted to establish their superiority and brought about the invention of currencies, well coins to be precise. A dame of nickel with a symbol imprinted having a face value was going to shape the world. Little did everyone know it was going to bring about the ultimate end?
The introduction of money changed every aspect of things in this world. It was at start a very convenient method to settle debts rather than roaming around in search for the one we need. But as the world seemed getting closer to progress, humans changed for worse. The whole idea changed with the introduction of different forms of currencies. Man started to establish his domination. The one with money had the power too. The era of division soon creeped in, the division was all different. It was based on money. The one with money was superior!
The introduction of money changed every aspect of things in this world. It was at start a very convenient method to settle debts rather than roaming around in search for the one we need. But as the world seemed getting closer to progress, humans changed for worse. The whole idea changed with the introduction of different forms of currencies. Man started to establish his domination. The one with money had the power too. The era of division soon creeped in, the division was all different. It was based on money. The one with money was superior!
Money lending took to new heights and on came the banks to capitalize on our savings, reaping profits. After a millennium as we entered the year 2000, the crisis seemed not far way. The power shifted from the politicians to the economists. Meanwhile, in India, our worries were the exchange rate. Once we shifted to the floating exchange system in the foreign exchange market, our worries turned into nightmares.
In 2002, the economic condition of the developed countries like that of the United States, France etc boomed. Banks started lending cash at a nominal interest and every god damn person availed a loan, housing loan to be precise and ultimately landed up in a position of not affording to pay back. Banks’ debts increased and the Government had to intervene taking over the banks thereby leading to the Wall Street crash as we know it. Bailing out banks resulted in reduced exports and imports and in the collapse of the foreign market.
The housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crash had a huge impact in the rest of the world. Unemployment rates increased all over and it became seemingly difficult for one to sustain. The dominoes started falling once the United States’ economy crashed and the Governments of other countries started to panic. The politics worsened the situation. The congress in the United States vetoed the 700$ bailout which sent all the leading banks home!
Recovery was a utopian dream but in the long run seemed possible. There came the role of an economist, one who could foretell the world’s future sitting in a remotely abandoned place. They could make sweeping claims about countries in which they had never set foot in.
They had the power beyond their wildest dreams to bring the world out of crisis. With the financial market in a bustle and the entire foreign trade turning into a gamble, how simple things would have been if the mankind had just stuck to the rice-wheat exchange?
In 2002, the economic condition of the developed countries like that of the United States, France etc boomed. Banks started lending cash at a nominal interest and every god damn person availed a loan, housing loan to be precise and ultimately landed up in a position of not affording to pay back. Banks’ debts increased and the Government had to intervene taking over the banks thereby leading to the Wall Street crash as we know it. Bailing out banks resulted in reduced exports and imports and in the collapse of the foreign market.
The housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crash had a huge impact in the rest of the world. Unemployment rates increased all over and it became seemingly difficult for one to sustain. The dominoes started falling once the United States’ economy crashed and the Governments of other countries started to panic. The politics worsened the situation. The congress in the United States vetoed the 700$ bailout which sent all the leading banks home!
Recovery was a utopian dream but in the long run seemed possible. There came the role of an economist, one who could foretell the world’s future sitting in a remotely abandoned place. They could make sweeping claims about countries in which they had never set foot in.
Very insightful, It's a pity that it's true it will not change for quite some time either after which the world economy is going to become dependent on China's economy.
ReplyDeleteThanks!
ReplyDeleteWell China probably but it ll suck if thats the case!