THE GREAT DEPRESSION.

THE GREAT DEPRESSION
International financial corporation is the private arm of the Breton wood system and IMF and world bank is now regarded as the united nation system essentially, the International bank for reconstruction and development (IBRD) is a developmental bank while IMF deals with problems of balance of payment based under strict conditionality.
Nigeria have had course to go to the International monetary fund (IMF) during the Babangida era and Nigeria has been going to them to borrow which the debt rose to 336, billion dollars.
If America raise the value of their domestic interest rate, it will affect the economy of the borrowing countries because the dollar is the currency for world reserve. They regulate the international financial system and they were basically set up for development system, world bank and IMF.
The sub prime crisis base on the sub prime housing and lending rate.
City bank is a global which was one of the affected banks that had a global present.
Bank were primarily responsible for the crisis due to high mortgage crisis. The inability of customer to pay for the mortgage (city bank e.t.c) lead to the collapse of these banks that brought about financial crisis.
The influence or effect of the great depression on international economy particularly, lead to the emergence of contemporary economic system such as kensiamism and neo- liberalism The architect of the contemporary economic system.
We have said that the 1929 great depression was the longest in the history of the depression and lasted for 10 years and led be the global crisis of 1939. That year (1939) the second world war started and lasted till 1945.

great-depression

The immediate course of the great depression was a clash of the American shock market. Between may 1928 and September 1929 the American economy was experiencing a sharp fall, the slump’s in the economy were sharper previous depression. By April 1928 , they experienced the highest growth in their economy. Now, the first identification course was the look at diversification of the American economy. The prosperity of the economy that brought to its height in April 1928 was actually the outcome of its dependence on construction automobile sectors , so there were only two sectors that were the divers of the economy even though other sectors were developing but had no strength to drive the economy. Price were going down and when price goes down the stock market of course will run into crisis.
Secondly , there was mild distribution of purchasing power i.e the pre 1928 prosperity was not well distributed only few that dominated the construction automobile sector that enjoyed the prosperity and per capital income that was not distributed well and so purchasing power limited and it is one’s ability for effective demand. All these collectively led to the depression.
Secondly, the structure of credit facilities in the American economy . By 1928, the American economy was struggling to retain its prosperity . The pre 1928 property stimulated excessive speculation , ( speculation stands out as one of the devastating part of recession) i.e when credit facility will be given out without .
On the other hand , farmers did not enjoy the same facilities as those in other sector did before the agricultural productivity collapse.
Fourthly ,the role of the u.s in the international economy by 1928-1929 which was decade after the first world war and after it the entire world such as Europe and japan after they obtained loan , they could not pay and what they did was to go to the u.s to take loan to upset the previous loans. Since the American economy was experiencing deflation , the crash in the stock market , the world economy could not be helped because of the dependence of the world economy on the American economy . 1929-1939 , the effect of the great depression was profound and in the u.s there was a regime change and however was deflated .

Frederick Rossevelt took over and there was change in government all over the world and they basically introduced stronger measures to deal with the crisis. The u.s introduced the new deal and its core content tampered capitalism to restructure liberal capitalism, i.e , to enable government to intervene in the economy and restore confidence to American economy, by so doing the new deal introduced two most important aspect of contemporary economic system and it led to the emergence of workers unionism , secondly the new deal became the historical root of the neo- liberal ideology . thirdly , the new deal led to origin of welfare state. By 1939 JOHN MAYNERD KEYVELS and HARY DEXTER WHYTE came together to sign what is known as ANGLO- AMERICAN PACT. The essence of this pact was to enable Britain to obtain a large sum of money from the united states.
The provision of the pact which originated from Maynerd Keyvels was that it was necessary for multilateral international organization to be established to help in a management of the international economy.
N/B

European countries adopted the better neighbour policies while u.s adopted the new deal.
By 1941 the u.s was dragged into the second world war.
When the war broke out , it was kept abase but was not abandoned and by 1945 when the Breton wood conference was held , Anglo – American pact was the basis of the structure of the international financial and economic management by 1946, these institution: The international bank for reconstruction and development (IBRD OR WORLD BANK) Then international monetary fund (IMF) were established . The agreement that would have brought into existence the third institution: international trade organization was not ratified the united states and that institution died a still birth but in its place , the general agreement on trade and tariff was established.

FUNCTIONS OF THE MULTILATERAL INSTITUTIONS( IBRD OR WORLD BANK)
Primarily, the IBRD was assigned the role providing long term loans to European countries and other allies to them reconstruct their shattered economies.
They also provide long term loans for development purposes while the IMF primary role was to help in the stabilization in the exchange rate system . secondly , to provide short term loan to correct balance of payment depth deficit while for GATT it has the responsibility of negotiating trade and tariff terms i.e they were to provide to provide the platform for members. State international terms on trade and tariff is also responsible of regulating international trade. However , with the passage of time time , their was a reformulation of the objectives and functions of these institutions.

 

Like, share and subscribe to RM Blog.

About Mina

I am a blogger who is passionate about the Education Findings, and the entertainment industry, the superstars that make it glamorous and what goes on behind the scene. Send me tips, stories happenings around you - admin@realmina.com

View all posts by Mina →

Leave a Reply