China hosted the Beijing 2008 Olympic Games from August 8-24, 2008. A total of an estimated US$42 billion was spent, making it the most expensive games ever. The Olympic games showed the world that China has finally come of age. The Communist China dazzled it's economic might causing some angst in the West. The western world who always saw that democracy and free enterprise exist hand in hand are forced to accept the emergence of Communist China as an economic and military super power.
According to a USNews report, China is teaching the West something new. Its economy, growing at 9 percent per year, will most likely become the second largest in the world by 2020, behind only the United States.
Americans continue to spend billions more on Chinese goods than the Chinese spent on U.S. products. And that gap has been growing by more than 25 percent per year, as China moves from building toys into more-sophisticated appliances, auto parts, and semiconductors. China's consumer class, meanwhile, is spending like lottery winners on everything from bagels to Bentleys--and will soon outnumber the entire U.S. population. China's explosive growth "could be the dominant event of this century," says Stapleton Roy, former U.S. ambassador to China. "Never before has a country risen as fast as China is doing."
The year 2008 has shown the policy makers and countries of the world that everyone lives in a truly global community. The startling financial crisis that started in US due to the subprime lending has quickly spread to other economies. Lehman Brothers, a global investment bank became the largest bankruptcy filing in the US history totalling over $600 billion in assets.
The American economy is built on credit. Credit is a great tool when used wisely. For instance, credit can be used to start or expand a business, which can create jobs. It can also be used to purchase large ticket items such as houses or cars. Again, more jobs are created and people’s needs are satisfied. But in the last decade, credit went unchecked, and it got out of control.
Mortgage brokers, acting only as middle men, determined who got loans, then passed on the responsibility for those loans on to others in the form of mortgage backed assets (after taking a fee for themselves originating the loan). Exotic and risky mortgages became commonplace and the brokers who approved these loans absolved themselves of responsibility by packaging these bad mortgages with other mortgages and reselling them as “investments.”
The United States treasury has committed US $700 billion as a rescue fund to prop up financial lenders. While the Treasury Secretary Mr Paul Hanson, a respected Wall Street veteran was criticised on the collapse of Lehman Brothers, the Treasury secretary’s supporters point to failures that were averted – including Bear Stearns, Fannie and Freddie, and AIG, the insurance giant.
As markets around the world felt the impact of the financial crisis, the FTSE Asia Pacific index dropped by more than 43 per cent in value – its worst annual loss since the benchmark started in the 1980s.
Students of the markets say the only recent parallel with the current turmoil is Japan in the 1990s, but other than that they have had to study the 1930s, the Great Depression.
Ben Bernanke, chairman of the Fed, spent years as an academic studying the Great Depression and his actions over the past six months have been interpreted as a sign that he is determined the lessons from the past should be understood.
America and the world are looking upon US president-elect Barack Obama, the first black president to create the jobs, spur economic growth and make the world a more peaceful place.