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Recent Credit Crisis Effects on the world

The credit crisis has deeply affected the economy over the last few months, both domestically and internationally. In November 2008, 533,000 people lost their jobs! That month proved to be one of the worst months as far as layoffs go in the history of the United States. With unemployment drastically rising, this past holiday season fulfilled its promise of being of the worst on record. In addition to this drastic decrease in consumer spending, 1 in 10 homes were facing foreclosure.

By no means were we the only nation facing an economic crisis during that time.Taiwan‘s economy is 75% reliant on exports.In November, those numbers dipped by 23%! This was the worst drop in 7 years. As a result, the Taiwanese central bank lowered the bank to bank lending rate to 2%–it’s lowest in 26 years—to account for the loss of exports.

In Q2 France’s economy was down 0.3%; in Q3 it grew by 0.1%. But what really is 0.1%? As Q3 closed out, France narrowly escaped having to use the “R” word to describe the state of their economy. A recession is two consecutive quarters with losses to a country’s overall GDP. Russia also experienced economic hardship during this past year. In November, Russia’s unimplemented was at 1.5 million. It is expected to rise to 2-2.5 million by the end of 2009. The economic crisis America faces is by no means limited to our boarders.

So Long to Declare a Recession

Why did it take so long to declare that America is in a recession?  If a recession is defined as two consecutive quarters of negative growth, then why did the government finally declare that we have been in a recession for 12 months?  I mean come on—did they think the public was that stupid?  You and  I knew it.  We knew it every time we went out to eat, every time we filled up our gas tank, every time we looked at out bank statements, and every time we heard about another close friend getting laid off.  Why did it take  the National Bureau of Economic Research so long to “officially” confirm it? My guess is they didn’t see it when more and more mortgages were going into default.  I guess they didn’t see if after more and more homes were going into foreclosure.  Did they see it   when the government set up $700 billion to bail out the banks?  Well actually we did hear about the recession in early December, so maybe the bailout triggered in the light bulb?

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