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The global financial meltdown that hit the U.S economy and the world over has had a more of a lasting effect on several world economies. Various factors have been attributed to the cause of the meltdown that has been branded the worst financial turmoil in over a century. The filing for bankruptcy by the Lehman Brothers is largely thought of as the trigger that sent shockwaves across the New York Stock Exchange (NYSE) and what has been termed as sub-prime mortgage sector in the USA. The congressional research services state that imprudent lending in the mortgage sector, the house bubble (the cost of houses rising to unsustainable level) and global financial imbalances where some countries operated on deficits (for example the USA) and others operated on surplus (for example Japan) and lack of transparency and accountability are some of the several factors that contributed to the financial meltdown.
The crisis had far reaching effects to the major economies of the world and the general population. Most companies downsized because of the unavailability of funds to cater for a large workforce and there was little business. All facets of the economy were affected; the transport industry, banking sector, export business and real estate. The share values of stocks trading at the NYSE reduced starting with the Dow Jones which reduced to a record low. People feared in trading in stocks and investing further in stocks. The most affected people were the middle income earners whom were thought to be redundant in a particular company setup. Developing countries also were affected because there was little cash flow in terms of aid and business.
The recession also affected me, though in quite an indirect manner. It was sad to see my uncle who worked for one of the airlines as a cargo handler given early retirement because the company was afraid that there was going to be enough business and record losses were forecast. The management therefore had to look for ways to cushion itself from the impending losses and that is when the resizing was announced and the seemingly inevitable dismal of my uncle.
As the various world economies continue to recover from the effects of the economic crisis, one thing is clear though; the damage caused will stay with us for some time to come.