2008 - the crisis in Russia and the world, its consequences for the global economy. World financial crisis 2008: causes and background

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:45

In 2008, the crisis swept the whole world. The beginning of world financial problems began with the collapse of the stock market. In the railing from January 21 to 22, chaos reigned on all exchanges. Not only stock prices collapsed, but also stocks of companies that were doing well. Even such large corporations as Russia's Gazprom suffered losses. Shortly after the fall of shares in the world oil market, oil began to fall in price. A period of instability began on the stock markets, which left a significant imprint on the commodity markets. Despite attempts by economists to justify the situation (they publicly announced the correction in stock prices), on January 28, the whole world had the opportunity to watch another stock market crash.

How did the crisis start?

In 2008, the crisis did not start on January 21st with a fall in stocks, but on January 15th. Banking group Citigroup recorded a reduction in profits, which was the main impetus for a decrease in the value of shares on the New York Stock Exchange. The following events took place:

Dow Jones fell 2.2%.
Standard &Poor's down 2.51%.
Nasdaq Composite - by 2.45%.

Only 6 days later, the consequences of price changes manifested themselves on the stock exchange and left their mark on the situation around the world. Most of the currency market players finally saw that in reality, many companies do not feel very good. Behind high capitalization rates, behind the high cost of shares, chronic losses are hidden. Many economic experts predicted a crisis in 2008 back in 2007. It was suggested that two years later Russia would face hard times due to the fact that the resources of the domestic market would never be exhausted. For the global economy, the downturn was predicted earlier.

Messengers of the world issues in 2008 and developments

Although the global crisis of 2008 began with the fall of stock exchanges, there were many prerequisites for its appearance. The fall in stocks was only a warning signal of a dynamically changing situation. Overproduction of commodities and a significant accumulation of capital were recorded in the world. Exchange instability testified that there were certain problems with the sale of goods. The next damaged link in the world economy was the sphere of production. The global economic changes brought about by the 2008 crisis had a significant impact on the lives of ordinary people.

For the global economy was characterized by a situation where the possibilities and prospects of the markets were completely exhausted. Despite the opportunity to expand production and the availability of free funds, income has becomevery problematic. As early as 2007, working class incomes could be seen falling in countries such as the US and the UK. The contraction of the markets could hardly be contained by an increase in both consumer and mortgage lending. The situation escalated when it became obvious that the population was unable to pay even the interest on loans.

The first global crisis in human history

In the period from 2008 to 2009, most of the world's countries faced a financial and economic crisis, which led to the phenomenon receiving the status of "global". The crisis of 2008, which was remembered for a long time, affected not only the capitalist countries, but also the economies of the post-socialist states. The last regression in the world until 2008 on such a large scale occurred in 1929-1933. At that time, things were going so badly that cardboard-box villages grew up around large American cities, since most of the population, due to unemployment, could not provide a living wage. The specifics of the development of each individual country of the world determined the consequences of the phenomenon for each people.

The dense coexistence of the world's economies, the dependence of most of the states on the dollar, as well as the global role of the United States in the world market as a consumer has led to the fact that America's internal problems have been "reprinted" on the life of almost all countries. Only China and Japan remained outside the influence of the "economic giant". The crisis was not like a bolt from the blue. The situation blossomed gradually and systematically. A possible collapse of the economy was indicated by strong uptrends. In addition, the United States during 2007 managed to lower the interest rate by 4.75%. This is an uncharacteristic phenomenon for a period of stability, which did not go unnoticed by fundamentalist speculators. It is worth saying that the fact that there was no reaction on the foreign exchange market to the rate cut in America as such spoke of the upcoming difficulties. What happened on the eve of the crisis is just one of the standard initial stages of the phenomenon. States already have problems during this period, but they are hidden and do not make themselves felt clearly. As soon as the screen was moved and the world saw the actual state of affairs, panic began. There was nothing to hide, which led to the collapse of the economy in most states.

The 2008 financial crisis around the world

The main characteristics of the crisis and its consequences are common to every state in the world. At the same time, there are also important differences that are characteristic of each country. For example, in 9 out of 25 countries of the world, a sharp increase in GDP was recorded. In China, the figure rose by 8.7%, and in India - by 1.7%. If we consider the post-Soviet countries, the GDP remained at the same level in Azerbaijan and Belarus, Kazakhstan and Kyrgyzstan. The World Bank focused on the fact that the 2008 crisis led to a general fall in GDP in 2009 by 2.2% worldwide. For developed countries, this figure was 3.3%. Developing and emerging markets saw not a decline, but an increase, albeit a small one,only 1.2%.

The depth of the fall in GDP varied significantly depending on the country. The biggest blow fell on Ukraine (the fall was 15.2%) and Russia (7.9%). This has led to a decrease in the overall competitiveness of countries in the world market. Ukraine and Russia, which relied on the self-regulating forces of the market, suffered more severe consequences of a socio-economic nature. The states that preferred to maintain either command or strong positions in the economy endured the "economic chaos" easily. These are China and India, Brazil and Belarus, Poland. The crisis of 2008, although it left a certain imprint on each of the countries of the world, everywhere it had its own strength and individual structure.

Global economic crisis in Russia: beginning

The causes of the 2008 crisis for Russia were not only external, but also internal. To knock out the ground from under the feet of the great state was the decline in the cost of oil and metals. It wasn't just these industries that were hit. The situation worsened significantly due to the low liquidity of the country's money supply. The problem started back in 2007, between September and October. This was a clear signal that the money in Russian banks had almost run out. Demand among citizens for loans many times exceeded the available supply. The crisis of 2008 in Russia was marked by the fact that domestic financial institutions began to borrow funds abroad at interest. At the same time, the Central Bank of Russia offered a 10% refinancing rate. As early as August 1In 2008, the size of the external debt in the country amounted to 527 billion dollars. With the onset of the global crisis, in the autumn of the same year, Western states stopped financing Russia due to the situation.

The main problem of Russia is the liquidity of money

For Russia, it was the liquidity of the money supply that formed the crisis of 2008. General reasons, such as falling stocks, were secondary. Despite the annual growth of the ruble money supply for 10 years by 35-60%, the currency has not strengthened. When the global crisis of 2008 was just about to manifest itself, the leading Western countries formed a certain state of affairs. So, 100 c.u. The GDP of each state corresponded to at least 250-300 USD. bank assets. In other words, the total assets of banks were 2.5-3 times higher than the total values of the GDP of states. The ratio of 3 to 1 makes the financial structure of each of the states stable in relation not only to external changes, but also to internal ones. In Russia, when the financial crisis of 2008 began, there were no more than 70-80 rubles of assets per 100 rubles of GDP. This is about 20-30% less than the money supply of GDP. This led to the loss of liquidity in almost the entire banking system in the state, banks stopped lending. A small glitch in the functioning of the world economy had a detrimental effect on the life of the country as a whole. The situation in the country, brought about by the 2008 crisis, is fraught with repetition until the problem of the liquidity of the national currency is completely eradicated.

The Central Bank of Russia itself caused the crisis

The 2008 crisis in Russia took place largely due to internal factors. External influence only increased the regression in the country. At the moment when the Central Bank of the Russian Federation decided to raise the interest rate, the level of production dropped sharply. The number of defaults in the real sector, even before the 2008 crisis manifested itself, varied within 2%. At the end of 2008, the Central Bank increases the refinancing rate to 13%. The plan was to balance supply and demand. In fact, this led to an increase in the cost of loans for small, medium and private businesses (18-24%). Loans became unsustainable. The number of defaults increased by 3 times due to the inability of citizens to repay banks. By the autumn of 2009, the percentage of defaults in the country had risen to 10. The result of the decision on the interest rate was a sharp reduction in production volumes and the shutdown of a large number of enterprises throughout the state. The causes of the 2008 crisis, which to a greater extent the country created itself, led to the collapse of the economy of a developing state with high consumer demand and high economic performance. It would have been possible to avoid the consequences of world chaos by injecting funds into reliable banks by the financial bloc of the state. The collapse of the stock market did not have such a significant impact on the state, since the economy of companies has little to do with trading on the stock market, and 70% of the shares are owned by foreign investors.

Causes of the global crisis of a global nature

In 2008-2009, the crisis covered almost all sectors of government activity, especially oil and those that were directly related to industrial resources. A trend that had been growing successfully since 2000 was brought to naught. Prices for agro-industrial goods and "black gold" grew. The cost of one barrel of oil peaked in July and stopped at $147. More than this cost, the price of fuel has never risen. With the rise in oil prices, gold prices have risen, which has already formed investors' suspicions of an unfavorable outcome of the situation.

For 3 months, the price of oil fell to $61. From October to November, there was another $10 price drop. The fall in the cost of fuel was the root cause of the decline in indices and consumption levels. In the same period, the mortgage crisis began in the United States. Banks gave people funds to buy housing in the amount of 130% of their value. As a result of the decline in living standards, borrowers failed to repay their debts, and collateral did not cover the debt. The deposits of US citizens simply melted before our eyes. The consequences of the 2008 crisis left their mark on most Americans.

What was the last straw?

In addition to the events described above, some phenomena that took place in the world in the pre-crisis time left their mark on the situation. For example, we can recall the misappropriation of funds by a full-time trader of one of the largest French banks, Societe Generale. Jerome Carviel not only systematically ruined the company, he clearly showed the public all the shortcomings in the work of the largestfinancial organization. The situation clearly demonstrated how freely staff traders can dispose of the funds of the firms that hired them. This stimulated the 2008 crisis. Many associate the reasons for the formation of the situation with the financial pyramid of Bernard Madoff, which strengthened the negative trend of the global stock index.

The global financial crisis of 2008 was exacerbated by agflation. This is a sharp rise in prices for agro-industrial products. The FAO Price Index has been systematically increasing against the backdrop of a global stock market decline. The index peaked in 2011. Companies around the world, in an attempt to somehow improve their own state of affairs, began to agree to very risky transactions, which ultimately brought great losses. We can say about the reduction in the volume of purchases of goods from the automotive industry. Demand fell by 16%. In America, the figure was - 26%, which led to a decrease in demand for products of metallurgy and other related industries.

The last step towards chaos was the growth of the LIBOR rate in America. The event took place in connection with the depreciation of the dollar in the period from 2002 to 2008. The problem is that in the heyday of the economy and with its development at an incredibly fast pace, it would not be out of place to think about an alternative to the dollar.

Consequences of the 2008 crisis for the global economy

The global economy experiences ups and downs from time to time. There are events in history that change the direction of economic life. The financial crisis of 2008 completely turned the world economy upside down. Looking at the situationglobally, the world economy after the chaos has become more uniform. Wages in the industrialized countries, which were lowered during the depression, have almost fully recovered. This made it possible in its time to rehabilitate the development of world industry in the capitalist states. A significant rise has been seen in countries that are just starting to develop. For them, the global depression was a unique opportunity to realize their potential in the world market. Not directly dependent on the stock exchanges and the dollar, the underdeveloped states did not have to deal with the situation. They directed their energies towards their own development and prosperity.

The centers of accumulation remained in the US, the EU and the UK, which led to an industrial boom. The technological component began to improve, which continues today. Many countries have revised their policies, which has made it possible to build a reliable economy for the future. For some states, the crisis had very impressive positive effects. For example, countries that had cut off external funding due to the situation in the world got the opportunity to rehabilitate domestic economic activity. Left without material supplies from outside, the government had to pour the rest of the budget into domestic sectors, without which it is impossible to ensure the minimum comfort of the standard of living of citizens. Thus, the directions of the economy, which previously remained outside the zone of influence, have changed today.

How will the situation in 2015, whileremains a mystery. Some economists are convinced that the current situation in the world is a kind of echo of the 2008 crisis, one of the colorful, but full-blown consequences of the global depression. The situation is reminiscent of the 2008 crisis. Reasons converge: