Honor Mishcon (England/Canada, AC 07-09)
It is a year on since the credit crunch came into effect on the global economy, on the 9th of August 2007, the effects of which are being felt all over the world. However, some people and places have been affected far more than others.
Without a doubt the worse affected companies are those involved in the economic sector with an estimated loss of one trillion dollars. This will consequently effect the general population through further restrictions on mortgages and borrowing. This then leads to the property crash that we seem to be experiencing at the moment. Due to finical difficulties within companies many people are being made redundant. Companies are being forced to get rid 20% or more of their work force. Therefore, the outlook of many employees has changed dramatically from wanting promotions and higher bonuses to just wanting to keep their jobs. This is then in turn creating a vicious cycle of those who need money to pay for mortgages and other finical debt, which is leading to the repossession of property. This is particularly bad in the states with 2% of the populations’ homes being repossessed and the amount of foreclosures has risen 171% since last June. Moreover, the change in GDP has gone down by 1% and is expected to plummet even further by another 1.5% over the next year. This coupled with the falling house prizes, the rising in fuel and food costs, and higher rates of inflation has put a financial strain all over the world.
However, some people are benefitting from the crunch. European and US banks are now borrowing money from middle-eastern and Asian investors to help with their debt, which is tern strengthening their economic development. Also those who are in the $30 million and over range are fairing the storm with quite a lot of flare.
The most interesting outcome of this situation is going to be within the political world, with the upcoming US and British elections, much change is expected and the fight for perspective positions will be an exciting but very tight in the race for popularity with many policies having to focus on solving the economic problems.
The question is how far is this credit crunch going to go? Will are leaders be able to salvage the situation or are we going to enter into a form of depression?
– United World College Student Magazine –