The Global Crisis
A discussion on the global crisis is way beyond one’s explanation and scope. But by looking at the developments which have slowly occurred since the last 40 years one can list out a few pointers:
- The global crisis has catapulted into a financial deregulation. Which is basically the ascendance of finance capital over manufacturing, and the growth of a financial oligarchy accompanied by an enormous political power;
- It has also resulted into the global amalgamation of trade and world’s capital, the transfer of productive capacity (mainly to China), and the expansion of trade and financial implications between nations;
- Due to its spread, there is a rapid growth of inequality and accumulation of income and wealth between and within nations; and
- The increasing and unending insufficient consumer demand in relation to productive capacity is also a worrying factor.
By comparing the various pointers and thus, by interrelating and mutually reinforcing, they are products of the rise in the 1970s of neoliberalism — a set of policy ideas that advocate self-regulating markets and minimal government interference — replacing the Keynesian mixed economy consensus.
The global economic meltdown is becoming bad to worse with each passing day. The world’s industrial output is contracting as sharply as it did in 1929. International trade volumes are falling much faster than they did in 1929.
The OECD (or the Organization of Economic Cooperation and Development) has forecasted that the global economy will shrink by 2.75% in 2009, considered to be one of its worst performances since the Great Depression. Even after OECD has set these predictions, they and the other international forecasting agencies have been revising their forecasts downwards for the last six months.
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Another leading organisation working towards human rights’, Amnesty International annual has also released its global report which encompasses information on the economic downfall happening on a global scale which is, in turn, leading to greater repression. It says human rights and other abuses are increasing as marginalized communities demand basic rights amidst worsening economic security. Amnesty International has also warned that, “We are sitting on a powder keg of inequality, injustice and insecurity, and it is about to explode.”
Unlike 1929, the crisis followed a worldwide financial boom reflected in the explosion of foreign holdings of U.S. asset-backed securities.
The United States remained the epicenter of the financial crisis, due to the strength of dollar, however the U.S. economy tends to flutter and spread this tension to the rest of the economies, mainly because the financial market is orchestrated as a single huge market. And the financial crisis and the real economy recession have been interacting in a mutually reinforcing way.
Despite tentative signs that the risk of a full-blown Depression has subsided, no one knows when this global crisis will end, whether an eventual recovery will be weak or robust, or how long its economic effects will persist. Historical research shows that recessions following financial crises are unusually severe and long-lasting.
The Crisis in Canada
By studying the history, it is known that Canada went into recession in October 2008, later than the U.S. and many other countries. But now-a-days, Canada faces recession in full swing.
This ongoing recession in Canada has resulted into an uncountable number of people losing their jobs and the data is quite disheartening. Since last October, job loss in Canada has been proportionally greater than in the United States, although the recession there has been going on for over a year.
People are resorting to part-time jobs, in order to bring their life to normalcy or just to stay afloat. The money worries have also resulted into personal bankruptcies and credit defaults leading into foreclosures on various fronts. Retirement investments have taken a beating and private sector defined-benefit pension plans are under threat.
The Canadian economy is experiencing a more-or-less contracting effect twice as fast as the previously deepest recession in 1981-82.
Even though Canada seems to reflect more of a drowning economy at present, there are certain hidden facts stating that it had entered this recession in a far more susceptible position than compared to the past recessions. Three underlying weaknesses bode ill for the prospects of a rapid Canadian recovery, and these are – rising income inequality, a weakened public sector and its manufacturing woes.