5th Anniversary of the World Financial Crisis
The World Financial Crisis
The world witnessed one of the worst financial crises it had ever seen in the past few years and it all began in 2008 exactly 5 years ago. There was a sharp downturn and a financial meltdown in September of 2008. It all began when U.S housing bubble burst in 2008 and the world saw a failure of major financial institutions. The collapse of multinational financial firms like Lehman Brothers and Bear Stearns sparked off a global recession that affected almost every country in the world.
The Secretary of Treasury in the U.S had to formulate a “Troubled Assets Relief Program” (TARP) to inject much needed capital into major financial institutions in the U.S like Banks of America, Citygroup, JP Morgan Chase, Merrill Lynch, Morgan Stanley, Wells Fargo, State Street, Goldman Sachs and BNY Mellon. Major world economies subsequently collapsed as they went into deep recession and also some into depression. Millions of people all over the world lost their jobs, their insurance plans and also many people particularly in the States lost their homes as the housing bubble burst in the U.S. This world financial crisis resulted in Sovereign Debt Crisis in the Euro Zone, higher levels of household debt, high unemployment in many countries across the world, trade unbalances and difficult austerity measures for citizens of failing economies.
Impact in 2013
The world is still reeling from the world financial crisis of 2008, five years after it first started. America is certainly back on the recovery stage as many financial institutions are now making profits and the job numbers every month look better than they were during 2008-10. Unemployment rate is still very high in the U.S and exceptionally high in countries in Europe with major financial woes like Spain and Greece. Developing economies are also still struggling with their currencies falling against the dollar and a drop in the GDP growth rates. As the world economy makes attempts to get back on track there is uneven growth in the world. Some countries like U.S, U.K and Japan are doing better than continental European countries and major developing countries like China, Brazil and India. The prospect of the tighter monetary policy in the U.S is hurting emerging market economies in the last few months as the dollar has strengthened against these currencies.
In the long term future both emerging markets as well as developed economies are likely to make slow progress towards growth, 5 years after the world was hit by the World Financial Crisis.