CURE FOR THE GLOBAL ECONOMIC CRISIS

The need to shade more light on the need for business to establish and maintain an active communication channel between them and their public’s and other business organisations is of great importance.

Such practice would ensure the safe operation of a company, by making it resistant to sudden economic down turns, due to the open and active communication channels established between them and other companies and the publics.

The current global economic crisis rocking the world was the purpose to which the study was arranged, for the sole purpose of managing the global economic crisis before it gets out of control and how to avoid the future occurrence. The current global economic crises particularly came to the notice of the public late last year as a result of increase in the prices of goods and services in the market, but the fact remain that the problem as always being around the corner somewhere waiting like a time bomb for something to trigger its explosion.

The global economic crisis was predicted before it happened, but just a few international organisations were aware of the possibilities of its occurrence. This seminar would address the issue of how the warning information was managed by the organisations equipped with it.

An economy is the realized social system of production, exchange, distribution, and consumption of goods and services of a country or other area. A given economy is the end result of a process that involves its technological evolution, civilization’s history and social organization, as well as its geography, natural resource endowment, and ecology, among other factors. These factors give context, content, and set the conditions and parameters in which an economy functions. An economy does not have to be a specific size. An economy can mean the economy of a city (local economy), a country (national economy) or the world as a whole (international economy), provided that it is involved in the production of goods and services.

Since October 2008 a global financial crisis led to the bankruptcy of many financial institutions in the USA and European countries, threatening the global financial system.

In 2008–2009 much of the industrialized world entered into a deep recession. The complexity of the vicious circles which contributed to this crisis included high oil prices, high food prices and the collapse of a substantial housing bubble centered in the United States, which sparked an interrelated and ongoing financial crisis.

Around the world, many large and well established investment and commercial banks suffered massive losses and even faced bankruptcy. It has been argued that the huge increases in commodity and asset prices came as a consequence of an extended period of easily available credit and that the primary cause of the down-turn was exceptionally financial. This has led to increased unemployment, and other signs of contemporaneous economic down-turns in major economies of the world.

In December 2008, the official arbiter of recession which is the National Bureau of Economic Research (NBER), which assigns dates to the beginning and end of downturns. This non-profit organization’s definition of a recession is slightly different, because it sees recession as a decline in output and employment. The NBER declared that the United States had been in recession since December 2007, and several economists expressed their concern that there is no end in sight for the down-turn and that recovery may not appear until as late as 2011. The recession was said to be the worst since the Great Depression of the 1930s. The unemployment rate has been increasing since September 2008 all over the world. For March 2009 alone, it is estimated that 742,000 jobs have been lost with net loss of 663,000 jobs in the world. The unemployment rate in the United States is currently at 8.5%.

In February 2008, Reuters reported that global inflation was at historic levels, and that domestic inflation was at 10-20 year highs for many nations. Excess money supply around the globe, monetary easing by the Federal Reserve System (FED) to tame financial crisis, growth surge supported by easy monetary policy in Asia, speculation in commodities, agricultural failure, rising cost of imports from China and rising demand of food and commodities in the fast growing emerging markets," have been named as possible reasons for the inflation.

In mid-2007, IMF data indicated that inflation was highest in the oil-exporting countries, largely due to the unsterilized growth of foreign exchange reserves, the term “unsterilized” referring to a lack of monetary policy operations that could offset such a foreign exchange intervention in order to maintain a country´s monetary policy target. However, inflation was also growing in countries classified by the IMF as "non-oil-exporting LDCs" (Least Developed Countries) and "Developing Asia", on account of the rise in oil and food prices.

Inflation was also increasing in the developed countries, but remained low compared to the developing world. The International Labour Organization (ILO) predicted that at least 20 million jobs will have been lost by the end of 2009 due to the crisis mostly in "construction, real estate, financial services, and the auto sector" bringing world unemployment above 200 million for the first time. The number of unemployed people worldwide could increase by more than 50 million in 2009 as the global recession intensifies, the ILO has forecast.

The rise of advanced economies in Brazil, India, and China increased the total global labour pool dramatically. Recent improvements in communication and education in these countries has allowed workers in these countries to compete more closely with workers in traditionally strong economies, such as the United States. This huge surge in labour supply has provided down-ward pressure on wages and contributed to unemployment.

Political instability related to the economic crisis has already started developing all over the world, especially in European countries like, Hostage takings, vandalism and attempted assault which sounds like charges on a terrorist sheet for a hardened criminal. But they’re the collective crimes of people who’ve been laid off recently.

In December 2008, Greece experienced extensive civil unrest that continued into January and some violence continues as of, 21 March 2009. In January 2009 the government leaders of Iceland were forced to call elections two years early after the people of Iceland staged mass protests and clashed with the police due to the government’s handling of the economy. Hundreds of thousands protested in France against President Sarkozy’s economic policies. Prompted by the financial crisis in Latvia, the opposition and trade unions there organized a rally against the cabinet of premier Ivars Godmanis. The rally gathered some 10-20 thousand people. In the evening the rally turned into a Riot. The crowd moved to the building of the parliament and attempted to force their way into it, but were repelled by the state’s police. In late February many Greeks took part in a massive general strike because of the economic situation and they shut down schools, airports, and many other services in Greece.

Police and protesters clashed in Lithuania where people protesting the economic conditions were shot by rubber bullets. In addition to various levels of unrest in Europe, Asian countries have also seen various degrees of protest. Communists and others rallied in Moscow to protest the Russian government’s economic plans. Protests have also occurred in China as demands from the west for exports have been dramatically reduced and unemployment has increased.

Beginning February 26, 2009 an Economic Intelligence Briefing was added to the daily intelligence briefings prepared for the President of the United States. This addition reflects the assessment of United States intelligence agencies that the global financial crisis presents a serious threat to both local and international stability of the United States of America.

The Global response to the global economic crisis was addressed as the G-20 countries met in a summit held on November 2008 in Washington to address the economic crisis. Apart from proposals on international financial regulation, they pledged to take measures to support their economy and to coordinate them, and refused any resort to protectionism.

Another G-20 summit was held in London on April 2009. Finance ministers and central banks leaders of the G-20 met in Horsham on March to prepare the summit, and pledged to restore global growth as soon as possible. They decided to coordinate their actions and to stimulate demand and employment. They also pledged to fight against all forms of protectionism and to maintain trade and foreign investments. They also committed to maintain the supply of credit by providing more liquidity and recapitalizing the banking system, and to implement rapidly the stimulus plans. As for central bankers, they pledged to maintain low-rates policies as long as necessary. Finally, the leaders decided to help emerging and developing countries, through a strengthening of the IMF.

Many countries experienced recession or depression in 2008. The countries/territories currently in a technical recession are Estonia, Latvia, Ireland, New Zealand, Japan, Hong Kong, Singapore, Italy, Russia and Germany.

Denmark went into recession in the first quarter of 2008, but came out again in the second quarter. Iceland fell into an economic depression in 2008 following the collapse of its banking system.

The following countries went into recession in the second quarter of 2008: Estonia, Latvia, Ireland and New Zealand.

The following countries/territories went into recession in the third quarter of 2008: Japan, Sweden, Hong Kong, Singapore, Italy, Turkey and Germany. As a whole the fifteen nations in the European Union that use the euro went into recession in the third quarter. In addition, the European Union, the G7, and the Organization for Economic Cooperation and Development (OECD), “international organization founded in 1961 to coordinate the economic policies of industrialized nations”, all experienced negative growth in the third quarter .

The following countries went into technical recession in the fourth quarter of 2008: United States, United Kingdom, Spain, and Taiwan.

Out of the seven largest economies in the world by GDP, only China and France avoided a recession in 2008. Many jobs have been lost world-wide. In the US job loss has been going on since December 2007, and it accelerated drastically starting in September 2008.

US job losses by month

* September 2008 – 284,000 jobs lost

* October 2008 – 240,000 jobs lost

* November 2008 – 533,000 jobs lost

* December 2008 – 681,000 jobs lost

2008 total = 2.6 million jobs lost

* January 2009 – 598,000 jobs lost

* February 2009 – 697,000 jobs lost

* March 2009 – 742,000 jobs lost

2009 (to date) = 2.037 million jobs lost

Over the years research and events as shown that, the survival of business depends largely on the ability of businesses to communicate and share information among their-selves, communication was rated as the most important factor in making a manager “promotable” by subscribers to Harvard Business Review. Therefore in-order for there to be a significant progress in the area of economic development of a country, organisations has to build a good, reliable, intra and inter-organisational communication channel among their selves, because the existence and survival of any business organisation depends largely on their ability to interact and share problems which are threatening their various businesses.