How will economic crisis affect people life?

The global economic crisis has been in the news for a long time to an extent of triggering the attention of even those who are not interested in current issues. Its effect has hit and shook all corners of the world, which has made people to be anxious and uncertain about the future. The changes in the living standards have been the first to be affected, where they have declined due to high costs of living (Devine, 2008). The cost of housing, and basic products have gone up and become less affordable to many people. Collapse of businesses has hit the markets with major collapses and effects in the banking sector e.g. Lehman brothers.

Unemployment has been another effect on the people; unemployment has risen highly in the last few years of the economic critical situation (Khor, 2009). Collapse of the firms leaves people unemployed and even companies are divesting as the easiest way to pull out of the crisis. The investments have been largely decreased since the incomes of the households have been adversely affected by the increasing inflation and declining purchasing power, thus translating to low investment (Baily, & Elliot, 2009). The stock market has also been hard hit by the financial critical situation causing a downward trend on most of the stocks and reduced investor confidence.

Some companies have considered mergers to raise their capital base which has been affected by the economic crisis, e.g. General Motors. These mergers tend to destabilize the labor market, causing unemployment either directly or indirectly. The effects of the crisis have been far wide and reaching; it calls for government intervention in eliminating and minimizing the effects through better fiscal and monetary policies which will boost investor confidence and cushion the companies from further financial difficulties and awaiting collapse. Giving subsidies and improving lending of banks will be a better way to approach the crisis in case that we see the economies of the world fall down and split (Noble & Ravenhill, 2000 p. 22).