A Look at the World Economic Downturn

The world economy is showing signs of positioning itself to dive deeper into recession. With national economies around the world shrinking at the rate of 5 to 6 percent, any possibility of future growth looks uncertain.

In Europe, Germany and Great Britain lead the way into the gloom with falling values on the Euro and the Pound. One report lists housing prices in Great Britain as dipping to 5 year lows. Some major retailers, such as, Woolworths have thrown in the towel and ended as much as a century of retail business.

In the middle east, the great oil giants have had to reel in their lavish spending as prices of oil have dipped to near the $35 per barrel range for the first time in many years. Even production cuts have not been able to keep pace with falling demand around the world. In fact, all OPEC producers are scrambling to try to prop up the slide in oil prices. So far, these have only met with short-term limited success before the skid continues.

In Asia, China, South Korea, and Japan are feeling the pinch of contraction. Stock markets, business expansion, and retail sales are all flagging. For these exporter nations, unsold goods are sitting on docks waiting for orders that do not come. This contraction has driven these economies back to near 1998 levels.

In the United States, the recession continues its downward march. Electronic giant Circuit City has headed into bankruptcy and liquidation. The sell off of its products will continue into March with shareholders expected to receive a total loss on their holdings.

Flush with cash from the billions of bank bailout funds, large banking institutions are gobbling up the weak and failing banks at a record pace. Bank of America, one of the largest banks in the world, has opened its doors to the federal government to allow government officials to sit on its board as bailout funds were used to buy a large equity stake in the bank. Bank of America was one of the few strong banks to weather the Great Depression and come out stronger than it went in due to wise banking practices.

Smaller giants, such as, Wells Fargo Bank have beat out some of the large institutions in the rush to buy up big names that are sliding. As this trend continues, the consolidation of banks will lessen their competition and be bad for consumers in the long run.

Another interesting trend has been the move of some companies such as General Motors Acceptance Corporation to become banks. It is now GMAC Bank. This type of move makes these agencies eligible for bailout money from the 700 billion granted by congress in late 2008.

Resources: Some data mentioned in this article was gleaned from MSN.com.