The economic crisis that the world is currently experiencing is on the same level as the great depression in terms of effects and seriousness. The business journals started writing about the crisis months before everything came out in the open. The crisis started in the United States of America and it quickly spread to the rest of the western world. Many investment banks, insurance firms and mortgage firms were affected by the mortgage crisis. The crisis spread from across the Atlantic to Europe and it become a liquidity crunch as no bank wanted to lend money to another for the fear of not having enough money to pay its depositors. The liquidity crunch prompted world leaders’ especially central bank leaders to come up with measures to stop the crisis from becoming an epidemic. The crisis continue is to evolve from a liquidity crunch to a currency crisis as many investors are placing their investments in currencies that are stronger like the yen which were not affected by the liquidity crisis.

Currency trading is being affected by the financial crisis as well; the forex traders are having to investors that are seeking the yen or the Swiss francs. Investors are people who will always look for a safe heaven when stock markets tumble. The financial crisis has made sure that global stocks tumble and thus investors are now investing in gold and other currencies. Many reports that people read will talk about how Bear Stearns has gone down or almost went down but they for get that the biggest losers in this financial crisis are the ordinary people that work five jobs trying to make ends meet. The family that has a house that has been repossessed, they have lost their homes cars. Some people have lost their jobs especially those people that worked for small businesses, the firms they worked for had to close down because they could no longer get credit from banks to sustain their operations. The employees of the banks that went bankrupt some of them were retrenched and they lost their source of income.

Governments allover the world have come up with bailouts, the funny7 thing is that the money that is being used to fund the bail outs is tax payers money the same people that are suffering because of the financial crisis. They are many causes that people have come up with to explain why the markets behaving the way that they are. There is one explanation that I think most people have over looked. The public itself, ordinary people are to blame to some extent because they did not adhere to financial self discipline. Most people during the low interest rates they went to the banks to take out a second mortgage on houses and cars. They went to take those mortgages fully aware that they could not either afford to do so or were already struggling to pay mortgage s that they currently held at that time. Basically what I am trying to say is that people did not leave within their means but decide to, leave a life they could not afford. It is interesting to note that most people took the second mortgage to buy things they already had or to buy luxury items.

The bailout plan in the United States leads to other central banks in the world following suit and not all of them were having or introducing their own bailout plans. Countries that were affected by the crisis especially in the European union are the ones that came up with their own bailout plans. The likes of china cu8t interest rates, the central bank of china reduced the rate at which commercial banks borrow from it. The Indian and Australian banks come up with injections of cash into their banking systems. The smaller countries in Europe like Luxembourg, Belgium and Dutch nationalized a partly nationalized a banking group. The question that is left in many peoples minds is how this was allowed to happen by the authorities the truth of the matter is that they could not do anything because Wall Street has always had little federal control exerted over it.

The question that many people have been asking them selves is that what should be done to prevent this from happening in the future. Before I get into that, during the great depression the same question was asked and eight or so years on the world is facing the same dilemma. Unlike the great depression whereby speculation was the biggest cause, the crisis that were are facing now is very complex and does not have speculation as its biggest cause. What this means is that the possibility of this happening again in the future is as good as the chance that was there when the great depression happened.

The financial crisis is starting to evolve becoming a crisis to many people who thought they would not be affected for example the car manufacturer Disclamer Chrysler and general motors are also looking for aid package from the federal reserve to help out their merger. Japanese investors are being affected by the increase in value of their currency against the dollar because of traders that are favoring the yen. This has the effect of making Japanese exports very expensive and thus lose market share overseas. The falling oil prices have lead to oil producers feeling the pinch of the financial crisis. Such is the seriuosne4ss of the crisis that it has become an issue in the presidential campaign between Barrack Obama and John McCain. McCain suspended his campaign to help out in the development of the bailout plan in its early days. The economic policies of both candidates now contain an element that has to do with the crisis especially on how they would solve it.

Whether it ends tomorrow or in a few months the crisis has lead to many people coming down to earth and not leaving in a cloud. The possibility of anything happening in the future I have always said is subject to whether it has happened before and if it has then it will definitely happen in the future the question this time is what will be the causes be?