Introduction to International Politics

Foreign Event Analysis

Locale[]
United Kingdom
Title
New Fears Arise over Global Economic Crisis
Summary
The failure of the sub-prime mortgage market has affected the American and global economies in new and unforeseen ways. The massive uncertainty that has been caused due to the lack of credit available to businesses and individuals, unable to obtain credit to help pay expenses and provide payroll, businesses throughout America and around the globe making it harder for them to meet expenses. Within America, the DOW Jones Industrial average has fallen to its lowest point since 2003, currently holding somewhere around 8455.97. The loss of confidence in the American market has been felt throughout the world, as markets around the globe face a loss of trading power. The trading markets in Europe, Japan and other major economic powers, including Russia and China, are down anywhere from 7 to 10 percentage points, with the market in Singapore saying that its economy has shrunk 6.3% during the 3rd quarter.
Analysis
As the value and strength of markets around the globe shrink and trade slows as a result, there will be multiple effects on the world economy and political situation. Demands for various goods and products will decrease, as people tighten their budgets to in an attempt to reduce expenses. We are already seeing this particular effect in oil markets, as OPEC prepares for a perceived decrease in demand during the next year, they are preparing to slash output to float prices at a higher level.
Beyond this, as trade slows, there will be a loss of connectivity between nations, as people who would normally be interacting with each other on a business level no longer have the opportunity to do so due to decreased demand. This loss of exchange, not only in matters of business, but cultural exchange as well, could be viewed as a negative effect. The increasing interaction and exchanges of all forms of human culture during the past 50 years, while creating tension between more traditionalist and progressive elements within and among cultures, has had a positive effect of generating greater understanding among people. This slow down will decrease these interactions and exchanges among individuals, and that will be a negative effect of this economic recession.
However, these economic matters ultimately concern themselves with money and trade. This final point may perhaps be the most important, because as markets and economies shrink, such as is occurring in Singapore; there will be an overall decrease in people’s income and level of well being. This effect on people’s standard of life will be an enormously negative consequence of the economic woes of our time. Due to the decreased levels of production, less people will be working, prices of goods will rise, and this combination of less people at work and increases in the price of goods will make it harder for people to obtain basic commodities, such as food and drink. Altogether, this economic crisis is providing a serious, but not insurmountable challenge to the trajectory of human development over the past 50 years.
Perspectivel
Liberal
In-Region URL
http://iht.com/articles/2008/10/10/business/11markets.php?page=1
Out-of-Region URL
http://english.aljazeera.net/business/2008/10/200810101211212993.html
Submitted
October 10, 2008 at 11:38 am