}
Many analysts are more concerned with the variants that could take the current financial crisis than by the consequences it may have on financial markets, in fact, some believe that is too broad and that the strong effects observed, such as layoffs , reduced operations and others are part of a corporate strategy of cost reduction and not a real answer to the negative consequences.
Moreover, several analysts say is possible that this crisis is escalating rate, ie that will cracking different levels of conflict to the extent that the reaction of market participants is more or less negative. For example, those who hold this theory say that if the market reaction to the housing crisis had not been so strong, it is possible that the crisis in the securitization markets would not have occurred with the intensity he had and investment banks may had not collapsed the way they did.
The truth is that the situation has become worse and quite possibly drag on other sectors, and that has created a kind of collective fear about the possible future attacks. Perhaps worth noting that elements may still be affected and what elements might bring about change. United States was primarily the generator of the crisis and its consequences are mainly exacerbated by several factors, such as:
1. A sustained consumer culture, supported by the import of goods and services. What has made the balance of payments deficit is the economy (in simple terms that need to finance the economy to support the level of expenditure.
However, rising raw material prices and the overall increase production costs has led to higher prices that have still beaten more real wage and thus resulted in a reduction of sales and business profitability.
addition, the crisis has caused a deactivation of the credit market, caused by fear of a new banking debacle and the deterioration of payment capacity of individuals.
2. A lack of market regulation, in terms of investor protection and the free convertibility of products. Not that the derivatives market is negative, the problem is to be used deliberately without any control, as Enron and Parmalat had shown the world what happens when these instruments are used unscrupulously, obviously was not well learned lesson.
3. The strengthening of other economies. They have diverted funds from emerging countries to Europe and Asia, generating investment opportunities that have further weakened the U.S. economy and losses have provided space in the international arena.
is obvious that the current situation leads to wonder whether the world economy is in the ability to adjust to the internal problems of the United States, which ultimately must be resolved to reactivate its economy and thereby clear up the overall impact they bring.
Taking this into account, We can therefore say that the overall impact of the crisis on the assumption that the U.S. economy failed to improve could be among others:
1. The generation of subsequent crises, such as credit cards, productive sectors, employment, investment and retirement funds, insurance, remittances, and others. That could worsen the economic growth outlook for 2009, forcing countries to make decisions about budget cuts, devaluation and restrictions.
2. The creation of a climate of distrust credit, very harmful to both borrowers and to lenders as the former does not acquire debt for fear of being affected by rate increases, changes in market conditions and other and the latter simply considered too risky credit profile, given the current situation.
3. The collapse of emerging economies, as their dependence on commodity exports and foreign investment, can affect your cash flows by adjusting growth expectations down by caution and decline more developed markets.
4. Increasing global poverty, because of the greater number of families that would drastically cut their income by massive layoffs caused by business or simply for the voluntary reduction of salary, in order to safeguard the profits of companies.
Although they seem very drastic these situations, the truth is that they depend heavily on how companies and countries in general assume the uncertainty, if take all pessimistic, many of the comments above may fall short in scope but if you take a more focused, then the consequences may be less radical.
Moreover, several analysts say is possible that this crisis is escalating rate, ie that will cracking different levels of conflict to the extent that the reaction of market participants is more or less negative. For example, those who hold this theory say that if the market reaction to the housing crisis had not been so strong, it is possible that the crisis in the securitization markets would not have occurred with the intensity he had and investment banks may had not collapsed the way they did.
The truth is that the situation has become worse and quite possibly drag on other sectors, and that has created a kind of collective fear about the possible future attacks. Perhaps worth noting that elements may still be affected and what elements might bring about change. United States was primarily the generator of the crisis and its consequences are mainly exacerbated by several factors, such as:
1. A sustained consumer culture, supported by the import of goods and services. What has made the balance of payments deficit is the economy (in simple terms that need to finance the economy to support the level of expenditure.
However, rising raw material prices and the overall increase production costs has led to higher prices that have still beaten more real wage and thus resulted in a reduction of sales and business profitability.
addition, the crisis has caused a deactivation of the credit market, caused by fear of a new banking debacle and the deterioration of payment capacity of individuals.
2. A lack of market regulation, in terms of investor protection and the free convertibility of products. Not that the derivatives market is negative, the problem is to be used deliberately without any control, as Enron and Parmalat had shown the world what happens when these instruments are used unscrupulously, obviously was not well learned lesson.
3. The strengthening of other economies. They have diverted funds from emerging countries to Europe and Asia, generating investment opportunities that have further weakened the U.S. economy and losses have provided space in the international arena.
is obvious that the current situation leads to wonder whether the world economy is in the ability to adjust to the internal problems of the United States, which ultimately must be resolved to reactivate its economy and thereby clear up the overall impact they bring.
Taking this into account, We can therefore say that the overall impact of the crisis on the assumption that the U.S. economy failed to improve could be among others:
1. The generation of subsequent crises, such as credit cards, productive sectors, employment, investment and retirement funds, insurance, remittances, and others. That could worsen the economic growth outlook for 2009, forcing countries to make decisions about budget cuts, devaluation and restrictions.
2. The creation of a climate of distrust credit, very harmful to both borrowers and to lenders as the former does not acquire debt for fear of being affected by rate increases, changes in market conditions and other and the latter simply considered too risky credit profile, given the current situation.
3. The collapse of emerging economies, as their dependence on commodity exports and foreign investment, can affect your cash flows by adjusting growth expectations down by caution and decline more developed markets.
4. Increasing global poverty, because of the greater number of families that would drastically cut their income by massive layoffs caused by business or simply for the voluntary reduction of salary, in order to safeguard the profits of companies.
Although they seem very drastic these situations, the truth is that they depend heavily on how companies and countries in general assume the uncertainty, if take all pessimistic, many of the comments above may fall short in scope but if you take a more focused, then the consequences may be less radical.
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