Introduction
The financial crisis that extended throughout the world resulted into substantial back drop in the pace of growth of most of the developed countries and has by this time affecting financial markets and growth prospects in the countries developing. The adjustment measures that were structurally set up, the limited or no protection for emerging markets or economies, globally there were unregulated free markets, and debt accumulation by nations all led to the global economic and financial crisis.
This period was one that saw economies collapse, markets stumble, poverty and unemployment among individuals in various countries increased to alarming levels. This global meltdown extended to nations all over from Russia to Asia, Africa, and Latin America. For instance; Brazil had met the crisis with dismay as huge budget cuts and tax increases of about $22.5 billion, the country Japan describes its financial turmoil of the years between 1990 and 2000 as the ‘Lost Decade’. In addition, this recession hit by the rising oil prices and the continuous rising interest rates in Europe this being due to the re-unification of Germany. In Finland, the real interest rates increased coupled with the international interest rates that were also rising resulted into the plummet of asset prices and devaluation of debts.
The US economy similar to other economies in Europe had a period of growth substantial enough to ensure modest unemployment rates, robust growth and low inflation. The beginning of the economic crunch started to mount around the 80s and precisely on October 1987 the world’s stock markets crunched with S&P losing 65% of its stock value, Dow Jones Industrial Average lost over 22% of its value. In addition, countries’ GDP dropped by 14%, increase in unemployment by 15%. The chart shows the GDP trends of countries in Europe and their GDP levels throughout the years.
The period leading to the financial crisis bringing forth variation in trends the labor shares and productivity in the US as shown below;
The diverse types of ship chartering contracts assists the companies offer massive flexibility to secure their sea transportation necessities while ensuring the costs are kept at a minimum. This sea transportation offers countries the opportunity in trade advancements amongst each other and increased revenue generation. Instead, the period of depreciation in the 1990’s led to massive fallouts in trade agreements and treaties that were null therefore exports to other states reduced and the need for the ships declined hence massive losses in the industry was witnessed.
The freight rates in the shipping industry vary in a considerable manner affecting the transactions and contracts and the cash flows and expenses. The micro-economic factors that influence the freight rates include the voyage determinants, specific vessel requirements. These requirements have made it difficult for companies to operate since the depression deprives the money from the economy. The freight charges would therefore be at an all-time high during the financial period of extensive turmoil and currency devaluation be other states.
One of the parameters of reference and comparative analysis to show the disparity among nations during the crisis include the reduced growth in the total remittances made by the immigrant population to their mother country. The difference in expected wage in the destination country and the wage earned in the source country is what drives migration. Therefore, the crisis in 1990 reduced considerably the wages of individuals and also their capacity to remit home a part of their income.
References
United States. (1991). Economic impact of the Persian Gulf crisis: Hearings before the Committee on Banking, Finance, and Urban Affairs, House of Representatives, One Hundred First Congress, second session, November 27 and 28, 1990. Washington: U.S. G.P.O.
United States. (1991). Rural health care crisis: Hearings before the Committee on Finance, United States Senate, One hundred first Congress, second session, June 2, 1990, Sioux Falls and Rapid City, SD. Washington: U.S. G.P.O.
The, N. Y. T., CBS News., & Inter-university Consortium for Political and Social Research. (1991). CBS News/NEW YORK TIMES Monthly Poll, August 1990. Ann Arbor, Mich: Inter-university Consortium for Political and Social Research [distributor.
Saith, A. (1991). Adding injury to insult: A first estimate of financial losses of Indian migrant workers fleeing the Gulf crisis, 1990. Hague, the Netherlands: Institute of Social Studies.
