Understanding Current Economic Conditions: A Peek At The Global Stock Market

Posted on December 7, 2009
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It’s been a difficult year for economics all over the world. With the tumble of the United States economy, in large part due to the absolute plummet of America-based stock markets, including the NASDAQ, a ripple effect was set into motion that reached further than many analysts could have predicted. While many talking heads experts recommended that it wasn’t a time to sell back in October of 2008, as the picture became clearer, many financial gurus were left scratching their heads in confusion.

Imagine then, the surprise at the turn that the global economy has taken in the past couple of years. People have watched in horror as bank accounts dwindled, companies were shuttered, and loans and credit became something that was increasingly difficult to maintain or apply for a new version of. However, it’s no surprise that after the events set in motion by the United States economy a couple of years back in the mortgage game, the world economy is currently recoiling

The reason that a global stock market could be brought down by a single country is simple: percentage of wealth of that one country compared to the entire world. The United States is a major global economic player, and it is a wonder that the stock market crash of the NASDAQ didn’t have more of a ripple effect around the world. As it is, enough countries were brought to the brink of bankruptcy, including many seen as stable, such as Iceland.

While in the past, the markets might not have been tied together as strongly, with globalization in all areas, especially business, things are a little different now. Markets depend on one another because nations depend on one another. Nations do a great deal of business, relying on one another for markets and raw materials, but more importantly, companies invest in each other’s markets.

It’s possible for Americans to try their luck on the Hong Kong exchange and for those in Europe to buy a great deal of stock in a publicly-traded American company. And the business whose job it is to regulate these sort of trades, as well as the investment companies dealing in mortgages, are supposed to have systems in place to sound the alarm if things start to go downhill.

While there are entities in check who are supposed to be keeping track of the conditions of various world markets, recent events show that sometimes those watchers clearly need to be watched, too. Especially after the near-gloomy crash of the late 1980s, when America vowed to put aside a path of excess and tone things down a bit, it’s shocking to see just 20 years later another difficult financial circumstance to navigate. Only this time, the rest of the world economy’s come with it.

It wasn’t just the market, but the banks, that played a part in the latest near-collapse. With so many banks folding left and right, not just in the United States but in many European nations, and even as far away as Asia, federal governments had to scramble. In some countries, like Iceland, the federal government couldn’t bail out the banks and outsiders had to step in, while in the United States, the government now owns shares in Bank of America, like it or not, and BoA has been an integral part of taking over other failing banks.

Understanding the global stock market is difficult for regular people, especially in such difficult economic times, but it’s always helpful to keep one fact in mind when trying to keep up with the financial news on television and the radio, as well as in the newspaper: the recent occurrences were baffling trained watchers and economists, so whatever doublespeak or deception is currently in place, it was designed not just for regular people to miss, but for highly trained professionals.

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