À quand une fin de la crise économique?September 15, 2016

When Will the Economic Crisis Come to an End?

In 2008, the world was hit by the biggest economic crisis since the 1930s. Faced with the economic uncertainty that continues to hover on the horizon and the economic recovery that keeps us waiting, more and more consumers are asking if the crisis will end and, especially, when. Here is an overview that will attempt to clarify the situation and suggest the resolution.

How Did We Arrive Here?

The origins of the crisis are complex. Basically, the economic crisis of 2008 (known as the subprime mortgage crisis) began when low-income American families found themselves unable to repay high-risk mortgages that the banks had granted to them.

Finding the lenders unable to repay the mortgages, the banks foreclosed on a great number of their homes. Panic took over the property market and the banks involved in this type of loan then found themselves with a huge amount of real estate on their hands, but unable to sell it. This led to a significant drop in stock market investments, a decline in property prices, and bankruptcy of many banks and corporate institutions.

What Can We Expect Now?

The bursting of the housing bubble caused a global recession that began in 2008-09. This recession has led to a sharp rise in unemployment, a fall and freeze in wages, and austerity measures implemented by the vast majority of governments around the world (cuts in programs and operating budgets, reduction in the size of the civil service, etc.). Although several measures have been taken by various central banks (US, European, etc.) since the beginning of this recession, the global economy remains fragile.

Indeed, the many economic imbalances (particularly unemployment, trade imbalances, and debts) are still with us and the financial and banking structures that caused the crisis have not been fundamentally changed. If these structures remain unchanged, the related imbalances could lead to lower consumption, greater insecurity, and an increase in social inequalities (impoverishment of the middle class and poor).

What Does the Future Hold for Us?

Unfortunately, the end of the economic crisis is not in sight. It's likely that inequalities will increase in the coming years. However, all is not hopeless. In 2015-16, the growth rate in the US was over 3% and 3.5% worldwide. It is also good to remember that economic downturns are a cyclical phenomenon of the capitalist system, like the phases of growth and prosperity. The main thing is to adapt to change and have an adviser or a counsellor to help you, regardless of whether you are good or bad financial shape.

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