The Value of Money

The value of money is an abstract concept. Throughout the centuries, economic difficulties have occurred for a number of reasons. The recent worldwide recession is another example of financial difficulty in the money markets leading to hardship for businesses and individuals. There have been many over the years, but the current one has its own unique reasons for its existence.

The Mortgage Market

The largest contributing factor to the economic downturn was the collapse of much of the mortgage market in the United States. Basically, lending practices that have been described as ‘reckless and unsustainable’ enabled millions of people to own their own homes, but led many people to get in over their heads.

These lending practices were adopted in several other developed countries, including the United Kingdom, where the outcome has been just as keenly felt. A run on oil and food prices increased the cost of living and, like a row of dominos, the housing markets began to collapse. Looking back with the benefit of hindsight, it could be said it should never have been allowed to happen.

Job Shortages and Foreclosures

Further knock-on effects included cutbacks in international trade, leading to the inevitable job losses and business foreclosures. Unemployment has risen significantly in many of the world’s most developed countries, a situation that will take many years to repair.

According to the influential Carnegie Foundation for World Peace, the countries which have been most deeply affected by the recession include Hungary, Ukraine, Argentina and Jamaica. Those least affected include Australia, India, China and Japan.