Global Financial Turmoil

Global Financial Turmoil
Anil Deshpande
Recent thunderstorms ‘Hanna’ and ‘Ike’ really shook USA with their devastating effect leaving many people homeless, but there is one more devastating phenomenon which has sent shock waves across the global economy with epicenter as USA. When one of the world’s biggest and most respected investment banking firm Lehman Brothers filed bankruptcy the global financial fraternity felt the jitters of much talked slowdown, the pain aggravated when AIG (American International Group) stretched its alms for the US Govt to rescue it. This spiral effect was felt across the global economies when their local stock markets tumbled down like a pack of cards. Slowdowns in the past had a silver lining or hope and thought that they were market regulators but this appears to be stealthier and more dangerous than the previous ones. The one in 2001 was due to a dotcom bubble and major terror attacks which created panic.
A very famous adage saying “History repeats itself” has a proof which reminds us about the present situation.
Having said much about the effects and aftermath, time has come to seriously think the cause. It is the working class which is hit worst, when the economy was booming the kind of commitments they made and dreamt for better living standards has landed them into deep troubles due to massive layoffs across the organizations globally.
The US Corporate lobby or the Corporate having an upper hand in the major decision making policies of the super power USA could be one of the primary cause as they look for their own benefits. The country should stop being called as a “global market place” and start thinking about from the sustainability point of view. The present credit crunch which started off primarily with a sub prime mortgage crisis has spread its poisonous web which has almost all the sectors. The recent fiasco of Bear Sterns which set a classic example that something devastating is in the offing. The US Federal Reserve has acted timely on cutting the interest rates which is kind of makeshift solution which cannot be extended beyond one point. The US government’s initiative on biofuel has made an acute shortage of the food which led to an all time high inflation in some countries.
The US government should at least take the present crisis as a serious wakeup call. Even the best financial minds are not able to contemplate how to contain this because this has grown to such an extent which is out of reach from their think tank
Finally , this slowdown calls for a greater commitment from the global citizens, the companies to understand that it’s a global and a recurring phenomenon and should take this into account in their decision making policies in the future so that they can reduce these risks and mitigations.