Impacts of the Current Economic and Financial Crisis on Trade Essay

The current scotchal and fiscal crisis is the least the knowledge base expects and wishes to happen at this time. Considering the policy-making, social and environmental upheavals happening in almost any unblemished around the world, concourse have to face yet a nonher pass water of crisis that hits them right in the pocket and through their stomachs.Everyone hopes that the economic and financial crisis decline out soon because of the myriad of other problems and issues the world is confronting. These problems already wreaking slaughter in many parts of the world include climate commute and the adverse forge it is slowly creating in many risk atomic number 18as, the political turmoil in the Middle East towards Western Asia where extremism, the oil crisis and combativeness atomic number 18 depriving the people their right to peaceful life and goodd future. In addition, the curse of nuclear proliferation is again showing its ugly head in countries non exactly kn cau se for its civil discretion record and democratic estimation to governance.Henceforth, the global financial crisis is hitting its toll hard on the economy of some(prenominal) the genuine and the developing areas. Whatever caused the crisis is something for people of all nations to consider and give solutions to. There is no other time that a crisis of this order and potential toxic effect on everyone has happened since the great depression in the United States back in the 1930s.Because no one in every positive and developing countries forget be spared by this financial and economic tsunami, there is a need for every nation, organization, private heavens and every concerned citizen of this world to talk to each other, discard their differences and find enduring solution to a turmoil whose long term effects is not so such(prenominal) kn take in let alone the consequences of every possible solutions each economic unit adopts to avoid, control, face or even hump it.Drivers of the economic and financial crisisThe financial crisis is believed to be caused by several factors that helped trigger off the wave of the meltdown causing more than problems and issues to mount creating more havoc along the way.May sectors point to simple greed and irresponsibility in overreaching corporal goals and objectives at the expenses of good governance and ethical accept? Key corporate executives were known to have concocted various schemes to make money, expanding honorable mention to dangerous limits, creating financial derivatives that are not backed by secure assets giving to market place balloons waiting to burst at the prick of the restrictive pin by the government.Banks knew that the symptoms of the crisis appeared when collections on subprime mortgages developed to slowdown pinning down the fluidity positions of banks and financial institutions that rely on prompt payments for that all-important shareholder hold dear which banks have to deliver to the s tockholders.Such drive for shareholder value gets harden by the grand compensations and benefits enjoyed by the key executives of Wall Street financial firms. Credit cards transactions substituted for the liquidity that consumers have started to omit. People started to lose homes through foreclosures exiting in more defaults. Borrowers in the market managewise defaulted as sanitary creating a vacuum of bad debts and worthless assets.Accountants and auditors started downgrading, depreciating, and impairing their assets to match the current deterioration in the values of financial resources. While assets were being alter for overvaluation, liabilities were being litigated for non-payments and defaults. Stockholders and depositor, fearing the loss of their money to provisions for loan losses and solicitude withdrawals, withdrew their enthronisations as vigorous and kept them under their pillows until the market conditions stabilize and start to recover.In the meantime, the general sentiments in the market were gloomy, further eroding investor impudence stalling the normal black market of credit money to the business sector. incarnate managers, facing the impact of bankruptcy and tight liquidity, sought government interventions and protection from the economic slide.A number of cunning executives even would create deceitful transactions to cover up their inability to create profits. Financial scams were observe along the way, worsening further the already dampened moods in the market. Here, globalization, once taunted as a phenomenon carrying a bunch of opportunities for countries which have erased their boundaries to gain headway in the borderless economies, started to carry the tentacles of the crisis and carried the waves of defaults, unemployment, depression and recession, slackening demand for consumer goods, investments drying up to other countries express than ever.Immediate and subsequent impacts created by the economic and financial cr isisThe immediate impacts created by the financial and economic crisis are the loss of investor confidence in a market haunted by bad debts and slow collections, deteriorating values of properties, illiquidity in the market, mergers, consolidations and buyouts, credit squeeze, downsizing of corporate structures, and ultimately bankruptcies for those unable to find possible solutions to the financial mess. Derivative instruments burst creating a market vacuum that troubled related derivatives.Money stopped flowing into the credit-hungry manufacturing sector threatening more unemployment and job cuts. Credit card defaults started to create more defaults and payment moratorium and debt restructuring, place laid off employees in desperate positions for more defaults.Impacts on the developed countries were small. Luxury and semi-luxury goods suffered a steep slide in demand caused by dampened market outlook and wait-and-see stance. People kept their money while those without started to bet about more drastic financial solutions that reflected despair and chaos.Industries such as the automotive, electronics and other luxury players in the market faced an empty market not much buyers. In the meantime, borrowed funds to sustain the manufacturing sector ballooned to huge levels triggering rush for bailouts from the government. Liquidity has to go back to the economy, but many corporate investments were earlier brought to the developing countries to take advantage of higher returns and assurance of stableness in certain self-contained developing markets like China, Malaysia. India, Philippines and Indonesia. These countries were likewise jump to face the scenery of huge repatriation of capital investments back to their home countries already facing the brunt of the category 5 financial storms.On the other hand, the government of the developed countries commenced bailouts and hoped to sustain market demand by creating a gamut of stimulant drug packages to keep co nsumer spending going. This was thought to at least confront the cast down market for imported and even local anesthetic goods. Importers reviewed their orders with many stopping their get spree from foreign markets, mostly the developing ones. Here, the effects and impact of the crisis started to exude into the doorsteps of the developing countries.On one hand, the repatriation of capital back to the developed countries failed to happen in the volume as expected due to restrictions and time to ware and repatriate. Bankruptcies in the developed countries resulted to more lay offs and retrenchments. Purchasing power for this sector alone dropped significantly and social security and unemployment benefits helped provide buffer to those who anomic their jobs. The luckier ones just suffered pay cuts and salary freezes.In the meantime, exports from the developing countries trickled to low levels, suppress as well the manufacturing sector in their areas. Job cuts and lay offs simil arly plagued the labor market with already low wages and salaries overtaken by inflationary pressures from the economy. At the social front, workers started to troop to foreign markets not so much implyed by the crisis with the hope of repatriating dollar remittances to their families in the developing countries. The confuse for few jobs and the overall dismay employment sector is threatening to prodding the rise in criminalities and social unrest. The tourism industry on both sides of the political divide similarly suffered a setback.The maturity of the developed countries think their efforts on the stimulus packages and bailouts which their governments can very well afford to do so even for the long run crisis that may still affect them.The developing countries, however, already saddled by inflation, poor manufacturing sector, social unrest, insurgencies and the like had to look for new courses of development financial from the IMF, World Bank, the Asian outgrowth Bank and e ven the Euro market for dole outs, grants and soft loans to soften the critical impact of the slowdown. In some countries, corruption aggravated the already depressed government budgets creating more social and political problems and totally compounding the prospect of early solutions to their issues.Barack Obama, the US President assured the market that bailouts and stimulus packages will be deployed by the government despite branding the crisis as the result of the greet and irresponsibility in the market, his remark given substance by the discovery of huge compensation packages given to Wall Street executives of firms that benefitted from the bailout packages. This exasperate the president who continues to crack the whip to impose discipline and order in the market. While this is being done in the United States, other developed and developing countries have started to address certain cultural solutions to prepare their people on the long-term effects of the scenario.How and to w hat extent the crisis has resulted in adverse consequences to the make do and business is staggering and difficult to quantify at this point considering the polar impacts and the magnitude that these impacts have on the other aspects of the socio-political and environmental issues. Already, the effects and impacts enumerated are being felt and its end not seen in the immediate future.Economists and everyone else are looking for the signs of recovery that will more or less apologize the apprehension over the uncertainties looming ahead. Solutions such as the bailouts and stimulus packages are reasoned concerns but have limited utility to address the big problem. take down trade liberalization can begin to help smoothen the flow to recovery through abolition of restriction and protectionism. But these are not enough. Trade blocks and protectionism might only aggravate the situation.Certain solutions from the economic and financial sectors might not help much. In fact, they caused the crisis but definitely, the holistic approach path to the measures that will prevent and control the resurgence of another crisis should come from a value-based approach that will address all the impacts created from the perspective of those impacts as well which means a social approach can solve the economic issue, etc. Those in control and have the power and influence to do so should move and talk their way out of the crisis. The ordinary citizen of the world can only do as much at his own level. The gravity of the crisis demands an equally big solution and the willpower to implement it. expiryWith the economic and financial crisis continuing to create and change the social, political, technological and environmental configuration of the entire world, the civilized world has the responsibility to stabilize the painful effects and consequences of these events. The trade and business sector has borne the brunt of the crisis both at the local and international fronts.Much of th e responsibility to mitigate and reverse the disastrous effects of the crisis rests on the heads of states, their budget experts, the businessmen the private sectors and the general structure of the bureaucratism in response to the distinct kind of measures the market needs to fix discipline, order and sanity to the economy. Capitalism is at the center of this crisis henceforth, all components that make capitalist economy work must revisit their strategies, social values and responsibilities, their investment priorities, personal motivations and corporate groupthink syndrome that brought this crisis all along.The solutions will not be patrician because decisions will come from most people who helped instigate the crisis at the outset. Here, capitalism will have to reengineer itself, to protect itself from its own malevolence as well as help create a mechanism that will train the positive and beneficial aspects of its sustainability. Otherwise, capitalisms and the captains of the industrys inability to reconfigure and redeem themselves and reverse the adverse consequences that it failed to solve and the factors that were ignored to implement everywhere might just be the key to its own irrelevance in a new form of economy that might emerge from the ashes of its own demise.Reference list(No sources required. Just knowledge of the subject).