The decade of 2000 and especially the year 2007-08 saw a great boom in economic activity all over the world. And of course the leaders of this rat race were none other than the major holders of the international market i.e. America and some European states. This resulted in soaring prices of commodities, real estate and oil at breakneck speed. By mid 2008 prices went so high that it marked global inflation to historic levels. Domestic inflation reached 10-20 years high for many nations. Inflation also increased in developed countries but remained low as compared to the developing countries. This scenario caused the formation of economic bubbles largely consisting of the real estate bubbles all over the world.
GLOBAL RECESSION | Financiere.co.uk
Ironically and as predicted by many economists, especially in America, this booming economic activity resulted in the global financial recession. One of the major causes of the recession is the absence of a responsible role of states in the international financial market. There is always a huge risk of such recessions in non-government institutions like IMF, WTO and multi-national corporations rather than the states themselves controlling the global economy. The self-regulatory mechanism in markets, generally known as free market, is a utopia and not practicable in the long run. It might work for the economic leaders for a certain period of time, due to their leadership, but will ultimately fail as it failed for Asia, Africa & Latin America.
The global financial crises had been brewing up for a while, and it actually started to show its effects in mid 2007 and finally came out in the open after mid 2008. All around the world the real estate crashed and oil prices bulled, resulting in fall of stock markets and collapse of large financial institutions. Even the wealthiest nations had to come up with rescue packages and Bailout plans for their financial system. 300 banks were bankrupted only in United States due to the contemporary recession. In its repercussions, 10 banks were bankrupted in Europe. The story does not end up here, thanks to the trickle down effect, the global financial meltdown will effect everyone in this highly globalized world; from developed countries to developing and 3rd world countries.
