For the first time in several decades, the tough talking developed nations are at their wits’ end. Their citizens have been grappling with the harsh realities of increasing food and gas prices, increased foreclosures, massive retrenchment and massive job cuts signposting an economic meltdown. For instance, the United States alone witnessed one of her worst months in unemployment related matters as provided by the Bureau of Labour Statistics, US Department of labour in http://www.bls.gov/news.release/empsit.nr0.htm
As this was happening, the stock market all over the world tumbled under the yoke of the economic downturn to an all time low. By the last week of October 2008, it was a gloomy picture across the globe. Writing for Associated Press on October 24 2008, Kennedy said “the U.S. dollar sank to a 13-year low against the Japanese currency, falling below 95 yen. Japan’s Nikkei 225 stock average slid 9.6 percent to 7,649, its first close below 8,000 since May 2003…… South Korea’s stock market fell sharply for a second day as figures showed the economy there was slowing. The Kospi dropped 10.6 percent to 938.75, falling below the 1,000 mark for the first time in more than three years…”
Reasons for the Economic Meltdown.
- Negative impacts of borderless markets (globalization).
- Criminal borrowing.
- Incompetent practices.
- Weak regulations.
- Lack of transparency.
- Unrestricted mortgage activities and lending to those with bad credit history.
- Decreased consumer spending as a result of massive job losses.
- Questionable greed.
- Break neck expansion craze.
- Stiff competition by corporate bodies.
- Lack of proactive strategy by the executive, legislature and the financial experts to deal with the symptoms at an earlier stage.
- Absolute freedom of the market economy.
Negative Impact (s).
- Closure of enterprises because of lack of access to borrowing from banks and high interest rates.
- Massive job losses and accentuated unemployment (In the aftermath of the South Asian crises in the 90s, job losses rose from 5,015 in 1996 to 38,217 in 1997).
- Erosion of the middle class.
- Decreased consumer spending.
- Decreased capacity utilization.
- Increased cost of available goods.
- Bad debts.
- Negative impact on our foreign reserve
It is vivid from the above that there is no hiding place for any of the world economies from the negative impacts of the economic meltdown.