Barely a decade after the Asian 1997 financial crisis, this time it's the much graver global meltdown threatening mankind in all fronts. Experts predict the magnitude of such pandemic spin-off is worse than the Great Depression of 1929 until '33.
Even the variety of nomenclature is too daunting, evoking dire buzzwords as, recession, downturn, bailout, meltdown, crunch time, low-down, economic slowdown/crisis/catastrophe, international banking crisis/collapse, leverage/deleverage, etc.
This phenomenon had been spawned in USA in mid-2006 yet when the subprime housing among small and medium earners found difficulty meeting their amortized mortgage debts. Banks holding the mortgage-backed securities (MBS) were hard-up in cash liquidity. Two of these tight MBS holders were government-backed "Fannie Mae" and "Freddie Mac", eventually propped up by the US Treasury through Secretary Henry Paulson for $100 B each, or a total of $200 B bailout.
In bailouts to the financial US credit crunch hitting the American lending banks and the Wall Street, no less, the US Federal Reserve has already sunk in more than $800 B, aside from the Treasury Dept.'s $700 B separate bailout package, other than the "Frannie" duo (short for "Fannie" and "Freddie") $200 B bailout, and the $120 B for the American Insurance Group.
Oddly, the American credit has taken quite a beating. It's also a wonder for the US dollar to stay long resilient despite all odds, such that, TIME tags it as the "buck has pluck". Who could believe that USA is the world's "biggest debtor", with Japan and China as its leading creditors?
The world without borders due to globalization, and shrunk by meteoric rise in info and cyberspace technology, any Wall Street meltdown jars the whole world. Regardless of highly developed, or developing, or crippled countries in economy, the "tsunami" is felt all over.
From USA as leading superpower with an expected record $1 trillion in budgetary deficit this year and collective household debts of $13.8 trillion, to Japan as second in economy, to the 27 European Union, and to all continents, none is spared from the global crisis.
China and India are fast catching up in progress with USA, also both in world oil consumption and greenhouse gas emission, but will surely meet their due in this global catastrophe. Like USA, China and India share "blame" in the recent oil and food crunch, grabbing and guzzling both food and crude and, resulting in food and oil prices upturn.
2008 and 2009 mark the most number of nations already suffering from recession, like USA, Germany, France, Spain, Singapore, Taiwan, and Japan, and others will imminently figure in similar downturns.
Consecutive two quarters of a given year of economic and financial contraction, as in a slump, or negative development or stagnation in overall financial systems, as in no or slow growth, constitutes recession in fact with domino effect worldwide, as if orchestrated.
For instance, when the US Treasury and the Federal Reserves did separate bailouts of multi-billions in banks and credit facilities as "deleverage" efforts to stem the financial paralysis, others in the EU, like England, France, Germany, Spain, etc., and in Asian capitals and other central banks elsewhere, followed one after another with their deleverage stave off.
That there is now an on-going global recession is a fact felt by mankind. For how long will it last until the economic and financial experts shall have come up with an effective and efficient remedy is an open-ended question.
There's the consolation though, that the RP's economic fundamentals allegedly in place, it can hopefully swing with the global crunch. May this year of the ox be not only a passably happy one, but also with ample strength and stamina to tide us over the critical hump!
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Email: lparadiangjr@yahoo.com