You hear the words, “Global Financial Crisis” everywhere these days, in newspapers, television and all over the internet. We all know its bad and we all know its about money and for the majority of us we don’t really need to know ever little detail of the current economic problems, but what exactly is this GFC and how does it affect me, an everyday regular Joe? (from an Australian point of view).
What is it?
Basically the current economic problems the world face all started in September 2008 when a number of financial firms (loans, capital, etc) based out of the United States basically went bust or merged which then resulted in the failure of the business.
In the lead-up to this, many business journals commented about the financial stability of many investment banks, insurance firms and “loaners” (mortgagers) both in the US and Europe basically about what they were doing wrong which led to the sub-prime mortgage crisis felt largely in the US.
This the resulted in a global credit problem. Lenders stopped lending and everyone kind of froze in shock, dragging the rest of the economy with it.
How does it affect me?
Well over the last few months as we’ve seen fuel prices went sky high, then fell to their lowest point in years.
In early 2009 it will be easier to buy cars but up to a point. Anything imported 2009+ will likely be more expensive as most major currencies rally and loose like crazy. This means you may still get a good buy on 2008< plated models and you may have seen some car companies advertise this fact already so if you’re in the market for a new car get in quick.
Electronics have been cheap in Australia the past 6 months or so mainly because our dollar was so high 6 months ago compared to the US dollar so importing these products cost us less money, but same with cars in Australia…this won’t last forever. Many economists believe early Feb 2009 will start to see these products to rise sharply.
Basically, things at this point can only seem to get worse before they get better and we can see evidence of the Australian government trying to allow for this to bolster the economy. You may remember mid December the government gave a ~$1000 bonus to many families to encourage more spending and the fall of petrol prices is certainly helping this to happen also.
What will happen when/if things get worse?
Who knows? Not me anyway. I’m not a business analyst, economist or anything else. I’m just an interested guy and many others don’t really know either. We’ve never really experienced anything like this on such a scale for quite some time but globally a more conservative view on most.
Personally I can’t speak for the rest of the world but in Australia at least, unemployment is rising and as a consequence of that its getting harder and harder to find a job, and many people in jobs are having a hard enough time trying to keep it! I’ve had to take a reduced workload at work for the business to save money and stay afloat during this tough time, but its better than totally loosing my job I guess.
What do you think about the current global financial crisis? How has it affected you?