Financial melt down is one of the major problems that are faced globally. The reason why this is a big problem is because of the effects that come with it (Mead, 4). The world has faced economic melt down for quite a long time and the impacts that come with this condition go very deep. The melt down if not well taken care of and be allowed to go to its climax can affect the monetary foundation in the whole world (Mead, 7). The effects on the individuals in America and the world at large are just drastic and something that one would not wish to happen. From 2007, the economic melt down that faced the world was brought about by a decline in liquidity in the banks (Mead, 9). This has since then caused falling of big organizations that handle cash. According to statistics, the worst financial crisis was experienced in 1930 (Mead, 11). If what the economist deduce is anything to go by, the crisis during that time led to decline of major businesses, economic activities were reduced, and the government committed quite a lot of money to contain the situation (Mead, 14). In this research paper, the focus will be on the effects that emanate from financial meltdown economically and socially. The paper will proceed to propose the solution to the problem that does not really change the behavior of human being.
Financial melt down come with a lot of implications both economically and socially. Economically, the financial melt down brings implications in markets, the world's economy both at the country's level and in the world at large (Mead, 24). All these institutions are left in a mess by the financial crisis. Still on the economy, the stock at the market is brought to a crisis. In most situations, the financial melt down is just like a third world war because the implications on the economy are far reaching (Mead, 26). If what statistics indicate is anything to go by, the expenditure that comes with financial melt down is in excess of $480 billion. The business in such areas as real estates is affected by far. For instance, in 2007 the real estate is estimated to have lost over $450 billion in United States only. Internationally, the loss was very big and was estimated to be almost several trillions (Mead, 34).
In the social setting, the implications that are brought by financial melt down are very many. To begin with, many families find it very hard to cope up with the situation which mainly puts the bread winner of the family at stake (Mead, 43). The spending habit of the family is drastically reduced, and in most cases, it leads to a lot of family conflicts. A lot of conflicts emanate from the fact that, the bread winner of the family decides to fore go such things as entertainment funds to cater for food and other important things (Mead, 47). According to statistics, almost 30% of the families in the United States decide to forego luxuries to cater fro important things such as education. In yet another study on the same, almost 35% of the families in the United States were having constant quarrels in 2007. All these were caused by financial melt down (Mead, 49).
On another implication which comes with financial melt down, many financial institutions such as banks and cooperative unions are faced with threats of solvency. The rate at which they give credit is declined. Due to this, the people who would like to take part in investment are discouraged (Mellyn, 133). In 2007, study carried out indicated that, 25% of financial institutions in the united states faced solvency while 45% of the banks and other institutions of giving credit found it very difficult to give loans to investors (Mellyn, 131). In the same year 60% of investors in that particular year lost over $600 billion owing to the financial melt down (Mellyn, 136). This left many of them discouraged and they even left investment for good if what the study which was carried by World Bank is anything to go by. The study which was carried out last year but one indicated that, 12% of the investors who had taken credit from financial institutions to start investments did not manage to survive the financial melt down in 2007 and they end up paying back the money they had borrowed having not benefitted from the kitty. The same study deduces that abut 6% of the investors who were already operating before the economic crisis end up being pushed out of the system completely (Mellyn, 138).
On the other hand the financial meltdown led to a lot of implications socially. In the year 2007, most of the towns wee filled with a lot of criminal activities all because of financial melt down that hit the world badly (Mellyn, 146). In some cities like Gabriel valley, the rate of crime was reported to have gone up by almost 50% compared to other years. In some towns like Covina theft of property and crimes which were violent went up in the same year. This was blamed on the financial melt down which was felt by al in the world (Mellyn, 148). The reason as to why the rate of crime went up drastically was due to the high rate of unemployment as result of many being sacked from their jobs when the employees could not make to remunerate them (Mellyn, 149). In the United States, it is estimated that, over 15% of the total number of people in the industries were sacked following the financial melt down. After being sacked, most of the people who live in the city are left with no choice but to engage in criminal activities in order to continue meeting their bills. It is obvious that one cannot stay in town without money (Mellyn, 150).
In yet another implication as result of financial melt down is the number of women who opt to take into such immoral behaviors to get money (Mellyn, 152). In most cases, if those who have been sacked do not take into crime, they opt to engage in selling their bodies in a bid to feed their children and cater for other bills. These are implications that are brought by financial melt down which does not spare even the innocent children (Mellyn, 156).
Still on the economic implication, countries in Africa were equally not left behind. The stock market in Africa went down by 39% in Uganda. In countries like Ghana and Ivory Coast, the bonds of over $800 million, were postponed thus causing a delay in building of roads and pipes for transporting gas. For most countries which get oil from other countries the reduction of prices led to almost 16% loss of the GDP in 2008 (Mellyn, 163). In the United States, the country witnessed a reduction in stock market with almost 50% when the financial melt down was recognized. The economy simply went down and a lot of things were just slow. Once the prices of oil products go down, countries like Nigeria which depend on oil to keep their economy growing were worst hit when the prices of the same went down. This affected most of the country's budget and things were just difficult to cope up with (Mellyn, 166).
On the other hand, the financial melt down comes with yet other implications socially. In families, many break ups were witnessed in many families in the African countries and other parts of the world (Mellyn, 170). As result, the number of street children increased by 20% in many cities of Africa. In most cases the father and mother of the children would quarrel due to poverty after they loose their jobs in the industries (Mellyn, 173). As a result, kids are left and they have nowhere to go or anybody they can turn to apart from the streets. In some situations, the fact that, prices of things go up and the salary remains the same, it becomes s very difficult for one to feed the family. As a result, the parents decide to part ways when situation becomes extremely difficult to bear anymore (Mellyn, 175). In 2007, in every given big cities in African countries, 40% of the marriages were broken, owing to hard economic times which could not allow the bread winners to support their families (Mellyn, 178).
The World Bank has taken it upon itself to guide nations and the world at large how to contain the situation anytime it arises. The institution has gone further to warn that, if not well taken care of the condition can result to problems which are even politically related (Blue & White, 123).
In a bid to solve financial melt down amicably, measures which are well calculated must be put in place. These measures involve management which is proper in regard to funds which belong to the public (Blue & White, 125). Some programs which are stimulus and straight principles in the world markets have to be put in place in order to arrest the situation before it becomes destructive beyond control (Blue & White, 128).
Leaders across the world are advised to have forums with their people and talk to them about the problems and risks that come with this menace of financial melt down (Blue & White, 132). The citizens in any given country must be brought on board and taught on how to cope up with the situation as they can also offer solutions to the situation at hand (Blue & White, 133).
In yet another solution to the financial melt down, programs which are financed from developed countries can help a lot because they tend to control the rate of falling (Blue & White, 134). While making investments, most people and the government are advised to do so in places which are secure and free from the threat that comes with financial melt down. Countries are advised to spend money in infrastructure as yet another solution to this menace of economic melt down (Blue & White, 137). These will help in recovering the countries economy once the situation goes back to normal. This also acts as a catalyst for bringing investors who will help the economy to grow through creation of jobs. The reason is obvious, they target those countries that retained their strength and survived the economic fluctuation (Blue & White, 138).
Most popular orders