Some see an economic crisis as an opportunity for renewed regulations as well as democratic restructuring of the global economy. Others see the lack of strong global institutions. An economic crisis can occur when assets or institutions are overvalued & when businesses and consumers cannot pay their depts. Financial institutions may also experience liquidity shortages. The impact of an economic crisis can affect all regions of the world, thus making different countries struggle from financial pressure.
Financial pressure also affects healthcare, which creates a ripple effect and impacts those living in poverty. Income distribution is largely affected in developing countries. But the global economic crisis not only affects developing countries; it affects developed countries such as the United States of America. You are possibly asking yourself: How does the global economic crisis affect me?
My answer is that global recession affects every single person; no matter age or gender. In the U.S., the global economic crisis will increase unemployment, meaning that our government will not have enough taxes to use on public affairs. Businesses of all sizes will also struggle, because the consumer will not be able to buy their products; meaning no profit will come to the business. Declines in foreign direct investment especially affects developing countries such as Afghanistan, Haiti, Paraguay, Ukraine, and all other developing countries.
Falls in export revenues due to lower demand for commodities, a recession in global tourism, and rising unemployment rates are all factors and causes of an economic crisis in developing countries. In 2008, the global economic crisis caused for panic in most countries. The housing market declined, mortgages no longer become affordable, there were drops in wage income (which heavily impacted those living in poverty), 5.5 million more American jobs were lost due to this economic recession, and stock values dropped eventually loosing investors.
Market economies were affected because of huge losses with the failure of Bear Stearns that had investments directly linked to the subprime mortgage market. This was considered the worst financial crisis since the Great Depression. There needs to be a solution to the global economic crisis, right? Yes. But it isn’t an easy one. The solution is cooperation. The cooperation of countries with political differences is a crucial step to end global poverty caused by economic crisis. It is important to raise awareness that global recession literally affects all countries globally but all in different economic areas. Society must act together to improve the spreading of importation that can be beneficial towards economies of different countries.
The government should also adapt to different economical issues not only in their own countries, but all countries globally. When an economic crisis hits a country where the government does not have the means to help those living in poverty and those that are being heavily affected by the crisis, other countries must help solve their issue. This will prevent the crisis from spreading internationally. Injustice and inequality between poor and rich countries is increasing at a staggering rate. Causes of this include corruption, violation of export/import and trade laws, as well as global economy.
Today’s economic issues include equal pay, minimum wage, taxes, paid sick leave, corporate tax, welfare drug testing, corporate mega mergers, basic universal income, government spending, labor unions, welfare, NAFTA, capital gains tax, economic stimulus, estate tax, overtime pay, tariffs, China tariffs, federal reserve, property taxes, farm subsidies, domestic jobs, offshore banking, cryptocurrency, trans-pacific partnership, pension reform, government pensions, and online sales tax.
Seems like a lot of issues to tackle right? Yes, but by analyzing each issue, you could understand that all economic issues lead to global recession if not properly handled. Some issues apply to particular countries, yet it is important to note that if we work together and allow for the spreading and flow of economic data from country to country, it is clear that we will be able to help each other conquer the circumstances of the global economic crisis.
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- “Poorest Nations Face Large Financing Shortfall Due to Credit Crisis – World Bank | UN News.” United Nations, United Nations, news.un.org/en/story/2009/03/293352.
- “Financial Crisis to Deepen Extreme Poverty, Increase Child Mortality Rates – UN Report | UN News.” United Nations, United Nations, news.un.org/en/story/2009/03/292832.
- Veeke, Justin van der. “Home.” Welcome to the ISI Website, www.isi-web.org/index.php/resources/developing-countries.
- “The Impact of the Global Economic Crisis on the Health Care Systems of Belgium, France and the Netherlands.” World Health Organization, World Health Organization, 21 Dec. 2015, www.who.int/health_financing/documents/GlobalEconomicCrisis/en/.