Hello ladies and gentlemen, I hope you all are having a relaxing start to your long weekend. You know, I've been thinking (I know, scary), while we continue to watch the state of the American economy closely and consider its future, it's easy to forget that the United States is not the only country involved in this crisis. In fact, I often find it fascinating to watch the global markets throughout the day periodically, and it's obvious that the entire world is feeling the heat. I hate to make Great Depression comparisons because I hope that we do not sink to that, but it is interesting that we do see a similarity to one thing in particular that occurred in 1929 after the American stock market crashed-- the ripple effect worldwide. If you think that it is only the United States that is watching its economy tank, you have not been watching the world news. There really are three major markets in the world in 2008-- the American market, the European market, and the Asian market. Because all three markets are attached to one another, not only the United States, but also Canada (not in terrible shape comparatively [in fact, Canada was just ranked as the most stable banking system in the world last week. Comparatively, the U.S. was ranked #40, literally behind Namibia!]), Mexico, Argentina, Brazil, Britain, France, Germany, Italy, Spain, the whole EU really, umm... Iceland (yeah, no joke, they're in bad shape there as they find themselves in a bankruptcy situation), Russia, Japan (THEY'RE IN REALLY BAD SHAPE AT THE MOMENT), South Korea, Hong Kong (a separate market from China actually), Australia, Indonesia, India, and China are ALL feeling the burn from this GLOBAL crisis (India and China are not as bad off, but still falling, just not as fast). So what does this all mean? What does the future hold? Ashes, ashes, we all fall down? While nobody seems to know for sure, an ominous forecast was just released by the International Monetary Fund (IMF) today, a global economic agency that was founded after WWII to promote market economies, free trade, and high growth rates (essentially one of the major promoters of global capitalism in the world). The IMF is currently predicting that the world financial system is on the "brink of systematic meltdown." To read the BBC coverage of this major announcement, click here. It's interesting, the debate over communism vs. capitalism has been furious since the late 1800s. In 1991, when the Soviet Union collapsed (and communism along with it), Russia instituted a market system, and the Cold War ended, so many considered this to be the end of economic history as capitalism had finally triumphed over communism. However, fast-forward 17 years to 2008 and it's apparent that the debate clearly continues as the flaws of capitalism are being clearly exposed. So much so in fact, that the United States government, the world leader in capitalist thought and economics, just announced yesterday that it will buy up bank stocks (maybe permanently?) to help settle things down. Just to clarify an economic point here folks, if you are a stock-holder, YOU ARE AN OWNER OF THE COMPANY. Essentially what we're looking at here is the United States considering partial bank ownership (and no small chunk of ownership either). You can read the details on that by clicking here. Is this a reversal of open free market principles? Indeed, the debate continues. The point of this post is this folks, the current economic crisis is not an American issue only, IT IS A GLOBAL ISSUE! As a result of trade that we really saw take off and expand during the post-classical period in the Afro-Eurasian world, and that later expanded even more in later periods, we live in a truly global world in 2008. Especially when it comes to economic issues, no country is an island. Yes ladies and gentlemen, a clear understanding of the unit we just finished is essential, not only to a full understanding of world history, but to a full understanding of the current world, now more than ever in fact. Finally, if you feel a little behind in your understanding of this historic crisis still, click here for the BBC's full coverage of the crisis. There are some EXCELLENT maps and charts on this site to help make the situation much more understandable. Also, click here for an incredible timeline of the crisis dating back to September 14th and goes through yesterday, October 10th. (although I would argue that a timeline for this could date back a few years [2004 perhaps?]). Now your thoughts...
Saturday, October 11, 2008
Are We on the Verge of a GLOBAL Economic Meltdown?
Hello ladies and gentlemen, I hope you all are having a relaxing start to your long weekend. You know, I've been thinking (I know, scary), while we continue to watch the state of the American economy closely and consider its future, it's easy to forget that the United States is not the only country involved in this crisis. In fact, I often find it fascinating to watch the global markets throughout the day periodically, and it's obvious that the entire world is feeling the heat. I hate to make Great Depression comparisons because I hope that we do not sink to that, but it is interesting that we do see a similarity to one thing in particular that occurred in 1929 after the American stock market crashed-- the ripple effect worldwide. If you think that it is only the United States that is watching its economy tank, you have not been watching the world news. There really are three major markets in the world in 2008-- the American market, the European market, and the Asian market. Because all three markets are attached to one another, not only the United States, but also Canada (not in terrible shape comparatively [in fact, Canada was just ranked as the most stable banking system in the world last week. Comparatively, the U.S. was ranked #40, literally behind Namibia!]), Mexico, Argentina, Brazil, Britain, France, Germany, Italy, Spain, the whole EU really, umm... Iceland (yeah, no joke, they're in bad shape there as they find themselves in a bankruptcy situation), Russia, Japan (THEY'RE IN REALLY BAD SHAPE AT THE MOMENT), South Korea, Hong Kong (a separate market from China actually), Australia, Indonesia, India, and China are ALL feeling the burn from this GLOBAL crisis (India and China are not as bad off, but still falling, just not as fast). So what does this all mean? What does the future hold? Ashes, ashes, we all fall down? While nobody seems to know for sure, an ominous forecast was just released by the International Monetary Fund (IMF) today, a global economic agency that was founded after WWII to promote market economies, free trade, and high growth rates (essentially one of the major promoters of global capitalism in the world). The IMF is currently predicting that the world financial system is on the "brink of systematic meltdown." To read the BBC coverage of this major announcement, click here. It's interesting, the debate over communism vs. capitalism has been furious since the late 1800s. In 1991, when the Soviet Union collapsed (and communism along with it), Russia instituted a market system, and the Cold War ended, so many considered this to be the end of economic history as capitalism had finally triumphed over communism. However, fast-forward 17 years to 2008 and it's apparent that the debate clearly continues as the flaws of capitalism are being clearly exposed. So much so in fact, that the United States government, the world leader in capitalist thought and economics, just announced yesterday that it will buy up bank stocks (maybe permanently?) to help settle things down. Just to clarify an economic point here folks, if you are a stock-holder, YOU ARE AN OWNER OF THE COMPANY. Essentially what we're looking at here is the United States considering partial bank ownership (and no small chunk of ownership either). You can read the details on that by clicking here. Is this a reversal of open free market principles? Indeed, the debate continues. The point of this post is this folks, the current economic crisis is not an American issue only, IT IS A GLOBAL ISSUE! As a result of trade that we really saw take off and expand during the post-classical period in the Afro-Eurasian world, and that later expanded even more in later periods, we live in a truly global world in 2008. Especially when it comes to economic issues, no country is an island. Yes ladies and gentlemen, a clear understanding of the unit we just finished is essential, not only to a full understanding of world history, but to a full understanding of the current world, now more than ever in fact. Finally, if you feel a little behind in your understanding of this historic crisis still, click here for the BBC's full coverage of the crisis. There are some EXCELLENT maps and charts on this site to help make the situation much more understandable. Also, click here for an incredible timeline of the crisis dating back to September 14th and goes through yesterday, October 10th. (although I would argue that a timeline for this could date back a few years [2004 perhaps?]). Now your thoughts...
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9 comments:
It is really amazing the ripple effect that countries have on one another. It is scary to think that most of the major world economies are doing bad. On the bright side, the United States should feel a little bit better knowing that they are not doing so bad in relationship to everyone else. When is all of this probably going to turn around?
Last week and over the weekend, it has been really bad(the crisis thing affecting the whole world). For example, i think last thursday, the excange rate from $ to Korean currency ￦(won) has increased i think 55% from normal. Basically, $1 is supposed to be ￦1200-ish and it has gone up to ￦1460 as far as i've seen it. People in Korea were seriously freaking out about it; Koreans living in America were joking about how they should take there money and go back to Korea or buy something there, but it has been a serious issue for the families who have financial supporters(usually the dad) living in Korea and sending money to U.S. I think the situation is getting a little bit better, is it not? I see that the exchange rate has been brought back to normal, and i hope it stays that way because i have close relatives or friends who are in that situation.
Wow. What a chain reaction. And we act like not trading with other countries and being all isolated is a bad thing, well, not being dependent on one another should would help now. But what's new? Hasn't everyone always been talking economy crisis blah blah, stocks falling blah blah, tons of people ticked off at government blah blah blah, and we're SURPRISED by it finally happening?
Its really hard for me to grasp how bad the economy is really doing. But you telling us in class today that we were ranked 40 something is really bad. When will we finally be able to see if the bail out bill is truly going to help our economy that is falling apart?
it's going to be another couple of weeks miss stewart before we begin to see the rescue package take effect. i trust that paulson and company are working around the clock on this, but the bottom line is that you can't just pump $700 billion into the economy overnight, it does take time.
I am really glad that we all are living in a time that will make history. This really is overwellming for only one month. I just hope that the bailout works just fine.
wow i was suprised looking at the chart of when the meltdown started . i thought that the meltdown just happend like 3 weeks ago.and it shows that if one country is in bad times that most likely alot of other countries are in bad times also.
after looking at all this i just wanted to know if this is something that has happened in the past, like really really early on. because all the world powers probably affected each other back in like the 1200 CE right?
so im really confused i don't get if they are doing this bail out then was that because of the crash of the economy on september 15?
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