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A lot can be heard and read about the US financial crisis; as huge news it is, how exactly will it affect the Juan dela Cruz’s of New Zealand? To get a firmer understanding of the situation, we begin where it all started. The US government enacted laws where it became very easy for people to buy houses that they couldn’t afford with mortgages that are too steep for their financial capabilities. It was a precarious balance for a while because heaps of houses are constructed to offset the increased demand. However, very soon the bubble was punctured when the banks realised that people really cannot pay their mortgages. Foreclosures became common, bankruptcies are aplenty, businesses are loosing money, and unemployment rose dramatically; on top of the highly controversial cost of the Iraq War ($600 Billion and still going up). The factors above (plus a whole lot more: politics, greed, irresponsibility, dodgy policies etc.) took a toll on the US economy.

Okay, we do not live in the US, in fact we are on the opposite side of the globe, what does it mean to the Pinoys down under? For starters, US have a large population, immense military strength, and undeniable influence in international influence. An economic crisis would send ripples of consequences to the rest of the world, in particular the decrease of economic aids from the US to the developing countries.

It is a known fact that China manufactures almost everything, and a decreased demand from a large nation like the US would be detrimental to the growing economy of China. Again, we do not live in China, so what does it mean to us? Even if the factories are in China, they still import raw materials from overseas.

One notable New Zealand export is wool. A decrease in demand from China will hurt the small farmers and small wool businesses, which in turn will affect the NZ economy. New Zealand officially is under a recession. A recession is defined as a “state of the economy declines; a widespread decline in the GDP and employment and trade lasting from six months to a year”. Unfortunately for us though. it is just starting. Food and oil prices may continue to rise, we may see more businesses downsizing, the NZ dollar exchange rate may slid farther down.

In the midst of all these sad circumstances, is there hope? There definitely is hope. A bailout plan was enacted to help the ailing US economy. Let us just hope that they are wiser now. After the NZ elections on November, the government can now focus on policies that will benefit the economy. The global uncertainties also brought a renewed faith in God, when the world has become very materialistic.

This dark storm is just but a phase in our lives. Pinoys are known to be very adaptive to any circumstances that fate will throw. Empower yourselves with WISE financial advises. Read more, and be updated with the current news and events. Study and learn new skills. Save. Stop the squabbling and be united for a change. Lastly pray often.