The Financial Crisis Has Made The World Economy A Turning Point In History

The financial tsunami that broke out in the second half of this year not only swept the United States, but also spread to the whole world.

Under the impact of the crisis, the developed economies are in recession and the world economy is struggling. The international financial situation is changing.

The financial crisis was caused by the collapse of the US housing market bubble, which led to the subprime mortgage crisis, and then the crisis spread to the whole financial sector and spread to the real economy.

The impact and the scope of the impact are beyond expectations.

Many people including the former chairman of the Federal Reserve Committee Greenspan and now chairman Bernanke believe that they have underestimated the seriousness of the crisis and some of them have also made mistakes.

The United States and the western financial industry are undoubtedly the hardest hit areas of the crisis, and many of the most powerful star enterprises have fallen victim.

For example, the two giants that occupy half of the US mortgage market - Fannie Mae and Freddie Mac were taken over by the government in July; AIG, the world's largest insurer, sought refuge from the US government in September of this year; the five major investment banks in the United States were hit hard, and the 158 year old Lehman brothers finally went bankrupt.

Citibank and general motors, which have long been the symbol and pride of the American economy, are also facing unprecedented survival crisis.

In addition, the unemployment rate in the United States has increased, consumption has declined, and the economy has been seriously declining.

The National Bureau of economic research has identified the US economy as falling into recession since December last year.

According to Goldman Sachs Group's forecast, the US economy will probably suffer 5% negative growth in the fourth quarter of this year, and will drop by 3% in the first quarter of next year.

The financial crisis seems to be entering a "vicious circle": the crisis has been fully invaded into the real economy, and the decline of the real economy has further aggravated the financial crisis.

World Bank President Zoelick warned that as the crisis continues, the "unemployment crisis" will emerge.

President elect Obama also acknowledged that the United States is facing a historic "economic crisis" and that the economy may continue to deteriorate in the future. Full recovery is unlikely to happen in the short term.

The financial crisis has also made the world economy at a turning point in history.

According to the International Monetary Fund's forecast, the world economic growth rate is expected to be only 3.7% and 2.2% in the next two years, the worst performance since 2002.

Some developing countries are facing a double blow. On the one hand, the developed economies fall into recession, resulting in a significant reduction in their foreign investment and assistance; on the other hand, exports from developing countries are seriously hampered.

According to past experience, the poorest and most vulnerable countries are always the most affected by the crisis.

For this reason, UN Secretary General Ban Ki-moon and World Bank President Zoellick have warned repeatedly to prevent the financial crisis from turning into a "humanitarian crisis".

Although emerging economies such as China and India still maintain relatively fast economic growth, they must not underestimate the challenges posed by the financial tsunami.

In many emerging economies, a large number of enterprises are forced to close, and many workers are unemployed.

In some countries, a sharp decline in the economy and rising unemployment may lead to social unrest, thus affecting regional stability.

The global crisis has prompted all countries to take joint measures.

Since the beginning of this year, the world's major economies have significantly strengthened their cooperation in fiscal policy and monetary policy. The world has been in the era of "joint interest rate cuts". Many countries have also launched a large-scale stimulus plan.

China's recent 4 trillion yuan plan to stimulate domestic demand has been highly praised by all sides.

Blanchard, chief economist of the International Monetary Fund, said that if countries stimulate economic policies to achieve results, the world economy is expected to take a favourable turn in the second half of next year.

The financial crisis has greatly overturned the view of the western financial system and fully exposed the drawbacks of the current world financial system.

Reform of the current financial system and prevention of similar crises have become the voice of the times.

At the international financial summit held in Washington in November, emerging economies first joined the makers of the world financial system as an important decision-maker, thus opening up the prelude to efforts to establish a new "Bretton Woods system".

In the current world situation, both the reform of the international financial system, the overcoming of the financial crisis and the recovery of the world economy are inseparable from the joint efforts and concerted efforts of various economies.

Yang Jing: editor in charge