Financial Crisis

Why would you buy twenty-five years of un-perishable foods? Newspapers claim the horrifying truths about national deficit and global financial crisis that seem never ending. Many people consider backup plans for when the economy collapses and the dollar is worth next to nothing. There is no certainty that devesloped countries, like the US, will stay an international leader. Financial crisis are avoidable but only if the government adheres to the warning signs. If there is a lack of governance then a financial crisis may occur resulting in national and international economic suffering for the people of the world.
Financial crisis have proven to happen time and time again over the course of history in both developing and developed countries. The single most important factor that contributes to this demise is the lack of governance within a country. Due to the lack of authority there is an absence of management. Thus leading to the greater problem of member states being unable to balance domestic interests with global obligations. Asset bubbles are the result of the imbalance of the system. Further the government proves unable to acknowledge warnings, understand the situation, and managing the risks associated within the system. When there is a doubt of political stability foreign and domestic investors tend to result in capital flight. Through this action there is a shortage of funds in the debtor nation’s banks leading to national interests rates to skyrocket. This places pressure on authorities to place value on their currency often leading to the devaluation of the currency. Once a currency has been devalued the economy and society are destabilize which creates negative impacts on individuals, corporations, states and global...

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...ces. Consumer spending dropped substantially due to lower incomes, however, personal debt increased based on the increased use of credit cards.
The recessions could have been avoided if the governance had not been weak in both the Asian and global crises. Societies in developed and developing countries must instill regulations to ensure that such weak governance will not repeat history. By doing so there will not be a negative chain reaction of economic, political and social effects. The collateral damage of crises will not on the responsibility of real people and real communities. For these people and communities did nothing to contribute to the financial upheaval. In today’s media, financial crisis are debated nonstop as to what precautions should be taken place. After this financial crisis analysis, strengthening governance will lead us into the right direction.