It is still going down....

In the last three months I have witnessed the widening of the first financial crisis that I could follow on the news and understand its extent. Despite the fact that I see what are the reasons behind it, I am still stunned when I look at the evolution of shares since the beginning of this year. That it, in average shares have fallen with 70% since January 2008.

What is even worse is that we have been warned by economists that this is not the bottom of the crisis, although for us normal people it seems to be bad enough. Apparently it will become even worse, as the financial crisis extends to other industries and to the entire economy.

I will stop at the latter part of the previous statement as I find that this is where it hurts us. The scarcity in loans and credits allowance that exists nowadays has a direct negative impact on the businesses, that are stopped from growing through the use of long-term credit lines for diversification purposes. What is more, businesses are affected short-term also through the cut of the short-term credits. These ensured a balanced working capital and thus smooth transactions between producers and their customers.

There is even more to this. As firms cannot grow anymore and global demand for all products contracts (see the demand trend for crude oil, whose price fell to 40% of its value this spring), production level decrease. This leads to a decreased employee capacity, which will be met through:
- switching some of the full-time positions to part-time work
- temporary and permanent layoffs

From here you now the way: unemployment -> temporary increasing need for social security -> higher budget deficits + decrease in economic growth -> need for external financing -> increasing role of IMF, European Central Bank -> increasing importance of the state again

All in all, the future doesn't look bright.....it seems grim and this raises my concerns about the conditions of launching into my professional career. For sure it's not the best time for entering the labour market, but there's little room for me to choose.