All Best ONE

In contrast to widespread thinking and also what most of mass media is serving our planet’s populace, the global (financial) economic turmoil didn’t appear as being a surprising sensation, that besets many, if not just about all, the actual countries in the world nowadays. The economic crisis has struck everybody! The majority of individuals tend to be looking for means in order to make some added income in order to endure. Is this situation going to last just for another month, a year or perhaps decade? Just how long before all of us have a new economic collapse?

Corporations hold trillions in cash, slash their workforces, declare record profits and award astronomical bonuses. Financial markets streak to new highs. Lobbyists realize record profits on soaring revenues. The Fed pumps unprecedented amounts of cash into the banking system resulting in: exorbitant bonuses for the financial elite, a freight train market, and inflated commodity prices worldwide. It is probable these particular trends may bring on the subject of the financial crisis.

From late 2009, fears of a sovereign debt crisis developed among investors as a result of the rising government debt levels around the world together with a wave of downgrading of government debt in some European states. Concerns intensified in early 2010 and thereafter, leading Europe’s finance ministers on 9 May 2010 to approve a rescue package worth 750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF). In October 2011 and February 2012, the eurozone leaders agreed on more measures designed to prevent the collapse of member economies. This included an agreement whereby banks would accept a 53.5% write-off of Greek debt owed to private creditors, increasing the EFSF to about 1 trillion, and requiring European banks to achieve 9% capitalisation. To restore confidence in Europe, EU leaders also agreed to create a common fiscal union including the commitment of each participating country to introduce a balanced budget amendment.

While sovereign debt has risen substantially in only a few eurozone countries, it has become a perceived problem for the area as a whole. Nevertheless, the European currency has remained stable. As of mid-November 2011, the euro was even trading slightly higher against the bloc’s major trading partners than at the beginning of the crisis. The three countries most affected, Greece, Ireland and Portugal, collectively account for six percent of the eurozone’s gross domestic product (GDP).

The European sovereign debt crisis has resulted from a combination of complex factors, including the globalization of finance; easy credit conditions during the 20022008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real-estate bubbles that have since burst; slow economic growth in 2008 and thereafter; fiscal policy choices related to government revenues and expenses, particularly high entitlement spending, see welfare state; and approaches used by nations to bailout troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.

One narrative describing the causes of the crisis begins with the significant increase in savings available for investment during the 20002007 period when the global pool of fixed income securities increased from approximately $36 trillion in 2000 to $70 trillion by 2007. This “Giant Pool of Money” increased as savings from high-growth developing nations entered global capital markets. Investors searching for higher yields than those offered by U.S. Treasury bonds sought alternatives globally. The temptation offered by such readily available savings overwhelmed the policy and regulatory control mechanisms in country after country as global fixed income investors searched for yield, generating bubble after bubble across the globe. While these bubbles have burst causing asset prices (e.g., housing and commercial property) to decline, the liabilities owed to global investors remain at full price, generating questions regarding the solvency of governments and their banking systems.

You should start a savings account for emergencies only. Most people aren’t in the habit of saving money and this is a great way to start a money saving habit. If you have a hard time saving money, have it direct deposited from your paycheck so you don’t have to do it yourself. These types of topics lead someone to think about why are gas prices going up, and what effects it will have.

Preparing for disaster entails a plan and communication of emergency procedures with your family, friends and possibly your neighbors. The stakeholders should plan and practice evacuation procedures and escape routes as well as having regrouping or meeting place strategies for a more serious situation. Planing for sufficient emergency supplies for immediate survival needs in different situations is part of total preparedness.

The interconnection in the global financial system means that if one nation defaults on its sovereign debt or enters into recession putting some of the external private debt at risk, the banking systems of creditor nations face losses. For example, in October 2011 Italian borrowers owed French banks $366 billion (net). Should Italy be unable to finance itself, the French banking system and economy could come under significant pressure, which in turn would affect France’s creditors and so on. This is referred to as financial contagion. Another factor contributing to interconnection is the concept of debt protection. Institutions entered into contracts called credit default swaps (CDS) that result in payment should default occur on a particular debt instrument (including government issued bonds). But, since multiple CDS’s can be purchased on the same security, it is unclear what exposure each country’s banking system now has to CDS.

Crisis itself can become a wake-up call. It can rejuvenate our competitive spirit and force us to recognize the most pressing issues of the changing dynamic forces thrust upon us by the current economic recession. Once we awaken from that self induced complacent slumber of easy success and profitability it becomes much easier to recognize the signals and tremors of impending challenge and potential disaster. It becomes much easier to seize the initiative and harness the sense of urgency to create the change required to reposition the company to thrive during recovery.