Global Economic Crisis – Yes it’s here

Posted by Sven

March 10, 2009

Global economic crisis & worldwide inflation

We have all been affected by the global economic crisis that faces our world today. From the average American Family with 2.2 kids and a dream to own a home to some of the largest financial institutions in the world, the failure of the economy worldwide has had a major impact.

The global economic crisis began with steadily increasing prices on necessities such as groceries. As the price of milk, eggs, bread, fruits and vegetable rose to unseen heights, the price of oil also increased making it almost impossible for companies worldwide to make a profit, without increasing their prices.

As prices inflated across the nation and across the world, the individual became the most affected by the global economic crisis. Salaries were not increasing at the same rate as products. Companies could not afford to give pay raises due to the rising costs of other products. It seemed as if the global economic crisis could not get any worse, but it did.

Along with worldwide inflation, several other industries were also in crises. The banking industry was dealing with a credit crisis that was only made worse by a legislative act that was only meant to help – The Emergency Economic Stabilization Act of 2008. The effect was bank failure across both the United States and Europe. The housing industry was also facing a crisis.

Bank failures caused a liquidity problem that led to the rise of the sub-prime mortgage rate. A section of the Emergency Economic Stabilization Act allowed the federal government to pay interest on the increasing amounts in the Federal Reserve. These interest payments led to problems in credit markets around the world only worsening the global economic crisis.

As this was occurring, the subprime mortgage rate increased, once again placing more of a burden on individuals worldwide and exacerbating the global economic crisis. Thus, the stock market, the banking industry and the housing industry all fell to the lowest level in recent years.

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