Monday, April 20, 2009

Spiralling Effects of the Financial Crisis

(The global financial crisis is now at a stage where the debate is transcending from one of decline in bottomlines of companies, falls in stock markets, tightening of credit and the like to wider issues that have greater social ramifications. If these issues are not dealt with appropriately, it could lead to disastrous consequences. In this behalf, one our readers Courtney Phillips sends us the following post that reminds us of the need to look beyond the realm of pure finance, business, commerce and the law and to other equally important issues)


The financial crisis that’s currently affecting people all over the world could go on to have more serious ramifications than just the loss of jobs and the slowing down of markets on a global scale. In fact, it could result in food scarcity and higher levels of starvation in developing countries, according to the Food and Agriculture Organization (FAO) of the United Nations.

The global meltdown has made people tighten their belts, and it’s no different with governments worldwide. The FAO is concerned that agricultural aid to developing nations from developed nations could be stopped, and as a result worsen the plight of people who are poor and cannot afford food. Countries whose agricultural produce is affected by the vagaries of the weather and/or their unstable political climates are in need of continuous aid, no matter what the global financial status.

But when recession hits, nations are forced to undertake conservative measures and this may lead them to stop honoring their commitment of aid to nations that do need them. And when this happens in relation to agriculture, there’s the risk of:

  • An international food crisis
  • People starving and being driven to poverty

And for those who argue that commodity prices are bound to go down because of the recession and the slowing economy, this situation also poses a significant threat. When prices go down, there’s no incentive to plant new crops, and this means that there are reduced harvests. When countries who are major exporters of food crops reduce their agricultural growth, it spells a crisis for food on a global scale.

Besides this, the financial crisis lends itself to other drawbacks in the way people live by affecting interest rates, borrowings, savings, salaries and job security. All these factors affect people who live in poverty. They are forced to adjust to a vicious cycle of hunger, malnutrition and disease. And stopping financial aid to these countries, even though the financial crisis is all too real, is only going to make things worse.

This post was contributed by Courtney Phillips, who writes about the worlds best university list. She welcomes your feedback at CourtneyPhillips80 at

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