Sunday, August 11, 2019

To what extent might Globalization be seen as disadvantageous to the Essay

To what extent might Globalization be seen as disadvantageous to the world in which we live - Essay Example There are several severe disadvantages as well and they include: The first disadvantage that talks about flow of manpower from developing countries to the developed countries is a phenomenon that many developed countries have witnessed. Countries like US, UK, France, Germany, and other developed countries have witnessed a flurry of demands of visas from people from developing countries who want to immigrate to them for better opportunities and lifestyle. Now, this puts pressure on the employment levels and many people might lose their jobs. This specifically applies to the economic situation prevailing now as the unemployment is ruling through the roof and is in vicinity of 10 percent in the US. Another problem is that of the drop in wages and salaries that people in developed countries might have to witness as a consequence of cheap labor entering into their countries. Another big disadvantage of Globalization is the something that the world is witnessing these days. This will be best explained in one of the points to follow. There is a sharp drop in growth of countries with a drop in growth of the Unites States. Also, the countries are facing a sharp liquidity crisis because of the subprime crisis of the US.The subprime crisis started with the subprime lenders lending at higher rates than usual to the borrowers with bad economic history and lesser ability to pay back. The subprime lending functions on the principle of no collateral and higher interests. There debt instruments are then traded and are passed on to other banks or institutions which are ready to take them for the higher interest they get out of them. Effects of the crisis on the US and World Economies and Recent Shutdowns Due to the passing on of the debt instruments some prominent hedge funds have failed to declare their current asset values. The problem has led to a total crunch of liquidity in the US. The markets witnessed BNP Paribas announce that it had frozen 3 of its hedge funds due to evaporation of liquidity, totaling around 1.6 billion pounds. The reason was that, it was not possible for the bank to value units of the funds due to the affect of the US subprime market on them. The funds contained the bundles of subprime loans, the demand for which have fallen drastically over the last few months. Banks around Europe feared a total liquidity crunch as they feared that they might run out of cash to sustain day to day lending. ECB went to the extent of injecting 155 billion pounds to ease the system of. Investors around the world started backing off

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