By Eddy Montilla.
When a financial crisis hits the world, the rich do not become poor: They just see their huge profits reduced. And for the poor? If we approach this problem objectively, they do not become poorer since they cannot go beyond the bottom they are already. Can the collapse of the stock market have significant impact on these millions of people who are dying every four or five seconds in Africa? NO. The unfair global economic order has.
But things are different when it comes to the middle class. During the financial crisis of 2007-2008, in Greece, for example, many middle-class professionals turned into practically beggars. People who belong to this social and economic class usually cringe in fear since they know that their chances to become rich melt as quick as an ice cream in summer and, what is even worse, the change from wealth to poverty stopped being a mere idea to become something real, like a virus in a latent state. But what are those two reasons that can wreak havoc on this group?
First: Lack of time to absorb the hit of the prior crisis. Observe what could be called the most devastating financial crises of modern times: The Great Depression of 1929-1939, The OPEC Oil Price Shock of 1973 and The Financial Crisis of 2007-2008. Between one crisis and another, there are several decades and, therefore, the world had time to absorb its hits. Today, we have a lot people who still are paying debts and loans as a result of the crisis of 2007-2008 and others, who emerged from the crisis at last, are making part payments on loans they received to invest based on the “economic stability” we live in these days. If the next world’s economic crisis breaks out in the next three or four years as many people have predicted, the middle class will not be economically prepared to face it.
Second: The lack of household savings and financial resources. During a decade, for instance, a lot of families in Spain could sail through the global economic crisis of 2007-2008 thanks to the beloved grandparents’ retirement pension or their parents’ savings. Ten years later, not only in Spain, but in many countries around the world the economic scene is completely different: those grandparents have probably died, parents do not have money in the bank and young people have not developed the saving habit and instead, they prefer to use their money to get every six months or something the newest iPhone model. We can already foresee what the future holds for them without looking into a crystal ball.
Crises, like problems, come to make us stronger and wiser. That is true, but only if we are well prepared to face them. The next world’s economic crisis could be the worst people have witnessed in the modern age. When? That is something difficult to predict, so the best you can do now is to try to be as prepared as possible in order to shield yourself against the coming crisis and avoid wrong economic decisions. It seems that many people are playing with fire because they are not thinking about the coming crisis seriously and in some years ahead, they might be in the same position as Fantine (Anne Hathaway) was in Les Misérable (2012) when in her song I Dreamed a Dream, she said: “…But the tigers come at night.”
This article was originally published in the digital newspaper World And Opinion.
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