Economics in 2009

Crisis and solutions

Global financial and economical crisis was the main topic of previous year, just like a year before, too. Its symptoms in different countries and its effects over the working domains were the most visible in 2009, but there are few more events you shouldn't forget


By ROXANA CIUPARIU (roxana.ciupariu@wavemagazine.net)
from Bucharest, ROMANIA


The year 2009 has been marked by economical struggles, mainly by the financial crisis and its implications. On the list of economical and economical-related events of 2009 WAVE magazine decided to put, first and foremost, the economical crisis as a whole, its symptoms in different countries and its effects over the working domains; one relevant example here would be the collapse of the Icelandic banking system, that triggered also political effects, the most important and mediatised being the decision to discuss about its entry into the EU; the big and wealthy Dubai found itself struggling with its debts, the Burj Khalifa being the last building of its kind, since plans for other majestic skyscrapers and islands like the Palm Islands are definitely not going forward; the G-20 Summit that took place in Pittsburgh preferred watching ahead on solutions to prevent another crisis like this; one happy tone this year was the inauguration of the Euro in Slovakia, event which proves that amid the crisis there are some countries that can look and also move forward as scheduled.

The continuous economical crisis

The crisis in the financial system started in 2007, but hit the boom in 2008. Banks were among the first ones hit, with US being the country most affected by it. It neglected basically no sector, it continued with people being fired and, as a result, increasing the level of unemployment, first in America, then followed by Europe and Asia. While President Barack Obama's Economic Stimulus Package seems to be working slowly, but with good results, the rest of the states tried and still try to cope with the crisis as they deem it better for each of them.

The crisis brought a collapse of the banking system in Iceland (later discussed in this article) it meant a struggle for power in Romania as the government collapsed in autumn and Presidential elections were approaching at the dawn of winter, but, for some it meant also a pressure upon European states to choose some decisions. The best example here is the Irish vote in favour of the Lisbon Treaty. The Celtic tiger, as Ireland was called for some years now, transformed into a somehow powerless cat.

The collapse of the Icelandic banking system

Iceland was one of the countries hit really badly by the financial system, suffering the most of all countries in the economic history, as the December edition of The Economist presented the situation. The end of 2008 brought the nationalisation of three major banks in Iceland, while in January 2009 both the government and the banking system collapsed, leading to a series of demission from the part of ministers primarily starting with the Prime Minister, Mr. Geir Haarde. The Icelandic Krona, which suffered from a significant decline in 2008, was now at its lowest point since the beginning of the crisis. The entire country, formed of approximately of 300,000 people, suffered as well, as jobs had to be reduced in number and unemployment went up. That triggered protest from the part of the people, which gathered in front of the Parliament mainly, blaming both state institutions, Parliament and Government, for their incapacity to act to prevent this. An investigation started in spring 2009 to investigate certain financial criminal actions previous to the crisis and in what way they contributed to the crisis and its worsening.

What the crisis brought in the realm of politics was the naming of Mrs. Johanna Siguroardottir as Prime Minister, making her the first open-lesbian in such a high position.

G20 Pittsburgh Summit: how to prevent another financial crisis?

The September 2009 Summit took place at the invitation of President Obama in the end of the London G20 Summit that took place in April. This much needed second summit regarded the perspectives on the financial crisis, but not necessarily from the point of view of how to tackle the current global financial situation, but how and what can be done to prevent it from happening again, what are the means and requirements to be fulfilled. The panel of discussions included a debate about what to do with the International Monetary Fund and how to reform it, as The Independent in UK presented in April 2009, because the reform was likely debated and considered as necessary by Mr. Brown. What kind of reform should be applied in order to have a certain insurance that the crisis will not relapse, but, most likely, that certain decisions and changes adopt will prevent both a prolongation and worsening of the current crisis as well as a new crisis in the (near) future. The summit ended with the conclusion that the G20 will most likely replace the usual G8 summit and that collaboration and communication between governments is necessary.

The reign of skyscrapers in Dubai is over

Dubai is known for a couple of constructions meant to impress, such as the ship-shaped hotel, Burj Al Arab, the artificially build Jumeirah Palm (the Palm Islands) and the biggest shopping Mall, to mention only a few of them. As the richest of the seven Arab Emirates, its fortunes were initially based on oil, but quickly expanding to trade and manufacturers. What Dubai has tried to do is continue to impress, such as with the tallest building in the world, the now called Burj Khalifa. This was a part of a project that included one or two several islands, like the Palm ones, and expansion of the shopping centre and many more investments of the kind. Unfortunately, news about the financial problems of Dubai were rumoured already in mid-2009, while an article published in Wall Street Journal in October 2009, as well as multiple publications on Yahoo! News in November in December, confirmed that the rich city is now asking for postponement of its payments, since it has around $50 billion debt. This was the effect of the financial crisis which affected the real estate domain, registering a downfall in prices. The rescue came from the part of the rich-in-oil Abu Dhabi that loaned its Arab neighbour, but it made it lose the top position as the richest of the seven Emirates.

Slovakia adopts the Euro

On 1st of January 2009, Slovakia - member of the European Union since 2004, adopted Euro as its currency, renouncing its Slovak Koruna. The government was so interested in this change that it spent around 6.5 million Euros before the introduction of the currency in order, to educate its citizens about the new monetary value. The process of adoption of the new currency went smoothly, being viewed as a good decision, that will help bring stability in the middle of the continuous crisis, as the EU press releases observed a couple of days later. Hence, Slovakia became the 16th EU member which respected the requirements and entered the Eurozone, and the fourth of the new member states, as Times classified it in December 2008, to have the Euro.


(Published: 15.01.2010.)