Political instability could lead to global economic crash

Alan Di Diego | Contributing Writer

opinion@fiusm.com

In a sheerly morose judgment, British Prime Minister David Cameron estimated that the world could be facing another financial fall in the near future.

The world’s 20 most economically powerful countries gathered in Brisbane, Australia this past Sunday, Nov. 23, for the annually held G20 Leaders’ Summit, where former Leader of the Opposition and current leader of the second European economic titan expressed his worries regarding the global economy’s current path. “The euro-zone economy is teetering on the brink of a possible third recession”, he explained. He also went on to cite high unemployment and falling prices as troublesome “red warning lights” that hint at a potential financial meltdown and suggests European leaders to act quickly.

Subtract sub-prime loans and dying banks, and this seems like exactly the same situation the global economy was under just 6 years ago. Unfortunately, Cameron isn’t exaggerating, and it’s very much evident that the markets that drove growth in the early stages of Europe’s recovery are now slowly, but surely, fading away. However, all of this begs the questions, why haven’t European leaders taken action? Why can’t Germany’s Angela Merkel facilitate trade with Russia, since she has the best relation with Putin out of all European countries? Why doesn’t France’s Francois Hollande open new markets with smaller, willingly bordering countries?

Well the answer isn’t quite clear yet. But what we do know is that every European country wants to protect their own private interests, and when you’re a European country tied to the European Union, you face the burden of having to decide whether you’re going to ignore Britain’s failing economy, which can affect all of Europe, or put aside your agenda to aid the situation. When your currency is dependent on many other country’s currencies, you should care, and a lot.

Even putting lack of collaboration aside, there are plenty of other reasons why this worrying economic forecast isn’t being addressed as it should. The plain fact is that there is just too much going on in the world today, and as every economist could agree, there are a wide range of factors that affect an economy. Instability in the Middle East with an ever-growing and problematic ISIS, ongoing war in Ukraine, and the spread of Ebola, are all issues occupying not just news headlines worldwide, but also the minds of the individuals who need to direct their full focus on avoiding another international financial crisis. When a European leader needs to attend an economic meeting, suddenly there is an Ebola outbreak in North America and he/she must change plans to attend a mandatory emergency meeting with other world leaders. When Merkel seemed to finally have convinced Putin to cease fire in Ukraine, suddenly another beheading took place in Syria by a member of ISIS, and she has to rearrange her productive talks with Putin to address the news. These people just never get a break.

Cameron concluded his speech noting that “Working through the agenda at the G20, it was clearer than ever how vital is it that we stick to our long-term plan”. Only time will tell. This makes us, as FIU students, think about how the actions, or lack thereof, made by politicians in a completely different and far continent affects us. Well, for starters, a bad European economy could cause a bad American economy, and as any student who lived through 2007-2008 would remember, we’ll experience budget cuts. Being a public university, we could witness departments receiving less funding, perhaps some clubs and organizations struggling to gather donations as people are more hesitant to spend their money. We could see the rise of prices, known as inflation, so your daily $2.50 Bustelo coffee run in the morning could turn into a $5.00 agitation. Already pricey textbooks could cost significantly more, and ultimately this could discourage some students from even continuing their studies.

With all this in mind, it’s important to stay optimistic as students and remember that this country has endured a great depression, and FIU survived the deep recession in 1982, so there’s no situation without a solution.

 

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