The Economic Ramifications of Credit Crunch - Essay Example

Credit Crunch Credit crunch has plunged the world into literal darkness. What this means is that for the last 2 years or so, the world has changed upside down. The economic ramifications of this credit crunch are such that one is left astounded and surprised. The banks have come down and so have the financial institutions. There have been job cuts, firings and downsizing – all of which have hampered the basis of sanity within the world’s domains. It goes to show that credit crunch has played havoc with the world order and the people who have brought the globe under such a situation must be brought to justice. The people have started to understand the real issues behind this credit crunch because it has impacted their lives in a very negative way. It has turned the rich into poor very quickly and the poor have no where to hide as well (Author Unknown 2008). In essence, the credit crunch has played absolute havoc with the people of this world and there seems to be no stopping on this premise at all. Much needs to be done and for that to happen, the world’s biggest financial and economic bodies need to sit down together and devise a way for further progress and resilience within these areas. The historic basis of this credit crunch started when some of the world’s leading banks and financial institutions came down crashing some 2 years back. It brought with it a plethora of issues and troubles for the people, be them within the small sized markets or within the big institutions that played with the economic issues of the people. The move destroyed the basis of any economic activity within the world and hence these activities came to a standstill all of a sudden. American and British companies started to see downsizing and job cuts, which meant that more people started to lose their jobs and they had to bear the direct consequences due to this credit crunch. What was worse was the fact that the established companies which were doing pretty well within the global contexts also came down crashing (Anderson 2007). The liquidity basis was therefore hit very badly and the people within the financial groups were blamed for such a situation that had arisen in the first place. The historic basis of credit crunch has resulted due to a number of reasons apart from these as well. The dependence of one money regime over the other has also been the root cause behind such debacle in the first place and therefore the blame must be shared amongst all concerned. What is worst is the fact that people have been at the mercy of such financial institutions and banks, and same is the case even to this day. Some of the causes related with this credit crunch entail of the fact that banks made loans of amounts which were staggering in nature and these paid little heed towards the repayment clauses. The mortgage loans were increased in numbers and hence a number of ways were found through which common man on the street could benefit but this turned out to be completely different in the end. The credit crunch came down hard upon the people and basically hurt their cause more than anything else. It also made these banks and financial institutions stand on a hard line as far as their pertinent undertakings were concerned. The people who used to matter the most within these banks and financial institutions are therefore the ones who brought the whole system under a serious quagmire – one that has to be dealt with even today (Wallace 2008). The sales pitches that were presented by the financial presenters to the people were aggressive in nature and this led into believing on the part of the people that their money will be safe in the future. The credit crunch has resulted due to a host of issues, one such being the ways and means through which people envisaged making fortunes out of their money matters, which essentially was not the case in the end. People could be spared the negative repercussions which came about because they lacked the vision which other financial gurus possessed, however the latter must be taken to task for what they have done to this world and what more sins will be coming to the fore with the passage of time. The recent approaches towards the credit crunch are somewhat promising, as the world is recovering from the turmoil that it passed through in the past. People have realized that they need to learn from their mistakes and need to move on. Some form of sanity has come about which is surely a very good sign and one can expect sanity to return within the relevant ranks in the coming times nonetheless. However there still is a long way to go before normalcy can be achieved in entirety. It is a sure fact that the world’s paradigm shifted due to the credit crunch that took place a couple of years back. It would only be natural to comprehend that such a credit crisis in the coming times will surely play an even destructive role for the people and hence it is a very avoidable proposition to keep away from such ranks, as much as possible in the future. Perhaps the role of the world’s top governing bodies as far as the economic matters are concerned, would be important towards understanding the domain of the credit crunch that the world finds itself plunged within (Armstrong 2008). This would surely play a very positive role in the times to come. Nearly everyone has been at a serious loss due to the credit crunch that took place so it would be a wise move on the part of the world’s top economic bodies to devise ways and strategies through which their actions could be termed as clean and very feasible for all stakeholders within the aegis of these financial institutions. There is a need to remain very positive about such undertakings in the future. References Anderson, S. (2007). How a Liquidity Crisis Becomes a Credit Crunch. ABA Banking Journal, Vol. 99 Armstrong, S. (2008). Drowning in Debt: Todays Twenty Somethings Were Brought Up to Spend Today and Forget about Tomorrow. but Now the Loans Have Run out and the Banks Want Their Money Back. Stephen Armstrong on the Young Victims of the Credit Crunch. New Statesman, Vol. 137, June 2 Author Unknown. (2008). The Credit Crunch; What It Is, and How to Survive It. New African, October Wallace, J. (2008). The Credit Crunch: A Domino Effect. 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