Tuesday, February 24, 2009

Financial Crisis, 24 Feb 2009: Worldwide Slump, Latvia Collapses

Mountain View, CA (Global Understanding)

Markets around the world are reeling at the pressures brought about by the global economic crisis. It cuts across all sectors: financial, credit, manufacturing, exports, energy, transportation, tech. There are few safe haven economies, few stocks, few sectors. According to reports from the Davos conference, the global crisis in the past five tumultuous quarters has already destroyed 40% of the world’s wealth.

Latvia Collapses, Eastern Europe Teeters

In addition, governments are continuing to collapse due to the strain of recession. First there was Iceland. Now the east of Europe braces itself. Latvia is in the throws of a 12% retraction of its economy. Under intense domestic pressure, including violent protests in January, Latvia’s Prime Minister and government resigned on Monday (22 Feb 2009). The IMF plan to rescue its economy is at risk of faltering. Swedish banks, who hold much of Latvia’s debt obligations, are worried over default.

All of Eastern Europe is teetering on the brink. The Ukraine, a far larger nation than Latvia, is likewise facing a 12% contraction of its economy. An outstanding debt obligation of $1.7 trillion from Eastern European nations towards the rest of Europe represents a hanging sword over the Euro zone economies.

If even 10% of the debt of Eastern Europe defaults, as many fear including Ambrose Evans-Pritchard writing in the 15 February Daily Telegraph, it can cause a panic in the Western European economies and lead to a global economic collapse.

The Human Toll: 400,000 More Children Projected to Die in 2009

To put the global crisis in perspective, the World Bank now estimates that an an additional 400,000 children around the world will die in 2009 due to their families falling into extreme poverty. That is an increase in the overall global death rate of 6 per 100,000.

It is the equivalent of taking the entire urban population of a city the size of Miami, Florida, or Oakland, California, and starving it to death.

Though times are tight, consider providing to an international relief organization this year. You may save a life, or a whole family.

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