The aftermath of the global financial crisis 2007-2008 Essay

The aftermath of the global financial crisis 2007-2008 - Essay Example Aftermath of 2008 financial crisis In a nutshell, the financial crisis has been the reflection of the imbalance between the growth of real markets and financial sectors. Some major US banks made easy availability of housing loans to its customers, which in turn had led to unprecedented debt-levels, as accounted to be three times the GDP in the US and Europe. Many of the banks’ customers defaulted in repayments of these loans and this bubble burst added liquidity and caused bankruptcy and closing down of these banks. The total economic impacts of this crisis has been accounted as one third of the total values of all companies worldwide. More significantly and obviously, millions of employees lost their jobs and many of them were pushed to poverty. When the recent financial turmoil has hit several economies worldwide, it was observed that due to the crisis, assets prices have been inflated, currents accounts reported larger deficits and slowed-down economic growth of most nation s. Though these were quite commonly reported and widely discussed impacts of the crisis, changes in equity prices, employment and output were more dangerous impacts being studied and reviewed by some literatures. Reinhart and Rogoff (2009, p. 466) found that financial crisis in rich countries and emerging markets like Brazil, Russia, India and China have caused tremendous changes in economic variables in common. Broadly speaking, there have been major changing-patterns in housing and equity prices, unemployment rate, government revenues and debt. They detailed that major three impacts of the global credit crisis were a) collapse in assets market, b) profound declines in output and increase in unemployment and c) government’s debt explosions. The financial crisis has caused accumulation of stock of wealth with greater risks and losses in stock markets in almost all developed and emerging economies. The losses in stock market have been accounted as between 30 and 70 percent in 2008. The value of fund-assets have been declined by 25 or more percent by 2008 September and 2009 April. A number of companies found that their capitalization as already wiped out and as a result many of such companies became bankrupt. One very significant sign of this crisis has been falling housing prices in all those crisis-hit countries (Germain 2009, p. 672). Another major consequence of the recent financial crisis was decline in real per capita GDP. During the crisis, the decline in real GDP was smaller for advanced nations as compared with those of emerging countries. The financial crisis has been contaminating smooth functioning of the economy as it has generated a decline in the GDP during 2008 and 2009. According to IMF’s findings, the global activity would be contracted by 1.4 percent in 2009. GDP in real terms would be declining by 2.6% in the US, 4.8 % in the Euro-zone, 6.2 % in Germany and 4.2% in Spain (Pike and Tomaney 2010, p. 507). The 2008 financial crisis has increased the rate of unemployment worldwide. As a result, absolute poverty was more likely to rise in many countries. income disparities were found in most regions of the world due to severe financial crisis. It was projected that global unemployment would be increased by

Country Case Report Essay Example | Topics and Well Written Essays - 1000 words

Country Case Report - Essay Example Also India is the direct neighbor of Pakistan and this makes matters more interesting and viable for investing within the industries of Pakistan on a longer basis. However the affect that terrorism has had in the post-9/11 era has really thwarted the economic upsurge of Pakistan and thus trade investors and finance stakeholders are always skeptical for one reason or the other. The Pakistani Rupee has been devalued many times but since the early 2000s, it has been consistently stable when one compares the same with the United States Dollar. Democracy returned to Pakistan in the year 2002 and its economic graph started to rise ever since. Much stability is present within the economic actors of the state and there seems to be less tension than was present a decade back. Investors are given the confidence to invest within Pakistan in a free and more open manner and there are assured time and again as per their respective investments. Recently international observers remarked Pakistan’s Karachi Stock Exchange as the most viable for investors within 2007 – which speaks highly of the confidence that the investors, brokers and stakeholders have had in the past and even in the present times. This speaks volumes of the right and adequate steps taken by the government of the time as they understood that Pakistan would only be able to make it big within the international economic domains if there is more room for the trade investors, financial concerns and production industries. When it comes to Pakistan’s global participation, one finds that it has played an active role at nearly all the fronts within the international domains. In fact Pakistan is a key ally in the War against Terror and has supported United States, United Kingdom and the allied forces on a consistent basis. Pakistan has been a member of United Nations ever since it achieved independence. Till recently, it was a member of the Commonwealth but since Pakistan imposed emergency in