We’re still feeling its effects today and it has caused so much trouble. I’m talking about the Global Financial Crisis that has left no one untouched. So many people lost their money because of it and a lot are still reeling under its blow. Experts see it as the worst financial crisis to have rocked the world since the Great Depression of the 1930s and we are still to recover from it.
How it All Began- It all started when the housing bubble of the United States burst. The housing industry there has been expanding since the 1980s and the problem is that the housing boom was fuelled by debt backed consumption. It’s a complicated process but it would be enough to say that it was a disaster waiting to happen.
Soon the crisis affected the banking system of the United States and after from there it spread to the rest of the world. The United States and Europe are the worst hit in the crisis, but no country was left untouched. Even Australia has felt the effects of the crisis and it has caused many local businesses to alter their operations because of it.
Effect on Local Businesses- Some people might feel that the crisis really does not concern them, as it is something that would only have an effect on large businesses. Statistics show that before the crisis hit, there were more than 520,000 small businesses in Australia that employed anywhere from one to four workers. Statistics gathered from last year however has revealed that more than 30,000 of these businesses have closed shop since then. That means more than 120,000 people lost their jobs because of the crisis, many of these people are cleaners.
One of the major reasons for the closing of many small enterprises is the fact that it is more difficult to get loans today than ever before. Most of them rely on borrowed money in order to expand and in more difficult times to keep their operations open. Inability to get those loans means that the business will be forced to close down eventually. Another reason cited is the red tape. Many small business owners are accusing the government of making things a lot more difficult for them.
That’s how the financial crisis has impacted the small businesses in your area. You might have even noticed some of them closing shop.