Global Financial Crisis

Last updated Saturday, December 11, 2010.

Following a period of economic boom, a financial bubble—global in scope—has now burst. The extent of this problem has been so severe that some of the world’s largest financial institutions have collapsed. Others have been bought out by their competition at low prices and in other cases, the governments of the wealthiest nations in the world have resorted to extensive bail-out and rescue packages for the remaining large banks and financial institutions.

Some of the bail-outs have also led to charges of hypocrisy due to the apparentsocializing of the costs while privatizing the profits. Furthermore, the institutions being rescued are typically the ones got the world into this trouble in the first place. For smaller businesses and poorer people, such options for bail out and rescue are rarely available when they find themselves in crisis. There is the argument that when the larger banks show signs of crisis, it is not just the wealthy that will suffer, but potentially everyone because of the ripple effect that problems at the top could have throughout the entire economy.

Plummeting stock markets have wiped out 33% of the value of companies, $14.5 trillion. Taxpayers will be bailing out their banks and financial institutions with large amounts of money. US taxpayers alone will spend some $9.7 trillion in bailout packages and plans. The UK and other European countries have also spent some $2 trillion on rescues and bailout packages. More is expected. Much more.

Such numbers, made quickly available, are enough to wipe many individual’s mortgages, or clear out third world debt many times over. Even the high military spending figures are dwarfed by the bailout plans to date.

REACTION:

                Because this was our lesson last meeting in Economics 210, I've decided to choose this as my topic for my blog today. Now, we all know do know "The Great Depression" that brought down the United States of America's economy down. People were brought down to misery and into the grasp of poverty. It all happened in just one market crash in one day.

                 In our time today, we are closing in on the day that "The Great Depression" would happen again. It would only be just a matter of months or weeks if we don't do something. As a student and a member of a family of 6, it would always sadden me to think of my family struggling just like the people during "The Great Depression". Although they do say that there are many ways to prevent this crisis, and one of the biggest solutions could be the government, but come to think of it, even the government is full of problems today including corruption and many others. Still, it would be happy to think that people working in the stock market are doing the best they can to prevent the stock market to fall down again.

                 Today people are beginning to fear that "The Great Depression" may happen again in our economy. And not only in the US, but also in Europe. It is painful that I as a student cannot do any big solution about this. Perhaps all I can do now is wait for the outcome.