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.
While those scientists of the stock market might have just been bewildered, regular people all over the world were more like stupefied. With so much faith in global economic systems, including the overall stock market, and the understanding that governments are supposed to have a series of checks and balances in place to avoid potential catastrophe, the grim dismal situation was first met with disbelief by regular people.
The world stock market’s value has been estimated at close to seven hundred trillion dollars, with the role of the United States economy in that market significant, at around forty trillion dollars. However, the last year or so has been a see-saw ride of recovery, with times looking up and times looking extremely dismal. Entire countries have been bankrupted through the cause and effect of foreign investments. Famously, the entire country of Iceland, a small island nation with only two or three national banks, managed to lose the entire country’s savings just because of the faltering power of the dollar and the Euro in unison.
One of the reasons that the last stock market crash led to a global stock market crash is that industry is much more international now than ever before. Large corporations don’t simply do business in a single country: they are located on numerous continents, trading in more than one stock market, and generating large revenue by conquering the global market. Thus, if investments and capital are tied in on such a wide scale, it’s no wonder that something that upsets the balance of one or two markets could continue to ripple and have such a far-reaching impact around the world.
It’s not just the economy, either. Many investment companies have recommended branching out from one’s home country and trying various markets around the world. When the American dollar is the base of so many financial interactions and it starts to slip, it takes a whole lot of value and wealth along with it.
Unfortunately, in the past ten years, that hasn’t happened fast enough. With the real estate market booming in the United States, a number of different companies represented on the floor of the New York Stock Exchange by hordes of high-strung brokers were dealing in mortgages that the borrowers could never have possibly paid back. When the banks and mortgages houses finally got wind of what was happening, everyone made such a fuss about backing away quickly that the economy went right with them.
The most recent mess was further helped along by people bailing out immediately, with no concern for local governments stressing the importance of the system keeping participants. Many banks in Europe and the United States tanked or were on the brink of tanking, requiring extensive government bailouts that are doing their own personal number of large nation’s economics, and thus, the global economy as well.
While many people chalk their confusion of recent economic events up to simply not understanding, the fact of the matter is that even those people who understand are surprised at the turn that events have taken, and at how far markets were allowed to fall before government stepped in to intervene. While playing the stock market used to be a pastime worth recommending, now is not a good time to start in with investing, regardless of if the market turns bear or bull.
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