Essay: The global financial crisis

25 Apr

Essay: The global financial crisis

Global Financial Crisis

Since the year 2007, the world has experienced a major setback in the economy as a whole. This condition is commonly referred to as the Global Financial Crisis. This effect emanated because of liquidity shortfall in the banking system of the United States. This has lead to the closure of many businesses around the world including big multinationals like the American insurance group (AIG). This downturn of economic events has fully been transmitted to the common citizens in almost all nations across the globe. As a result, consumer wealth has dropped making the standards of living poor with many countries have opting to borrow from big financial institutions such as the world bank to supplement their budgets. The overall impact is the changes in the way we spend available money however scarce it may be. Capitalism is a status regarded by many as an economic vice. In this system, the means of production are owned by private individuals who operate them for a private profit. Workers are paid normally and profits generated sent directly to the owners. These owners are the sole operators of how goods and services move into the market and how they sell. Decisions about price, supply, and distribution of goods and services are made by these owners who manipulate for their own gains. Despite the fact that the origins of the recession are still being discussed, the crisis spread quickly across the international economy. Normally, the United States has a major impact on world capital markets and stock trading. This suggests that the crush had a negative effect on both the United States and other nations around the world. When the American financial crisis escalated in 2008, financial institutions such as banks worked to curb their spending, especially on foreign investments. This exacerbated the global crisis because many countries rely heavily on US foreign investment to keep their economies afloat.
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