Credit Crunch Uk Essay Example | Topics and Well Written Essays - 2000 words

Credit Crunch Uk - Essay ExampleThe US seemed to sport the biggest problems, if only by the sheer magnitude of their economy and its impact on other nations around the world. Still, massive Britain felt the shock and their economy suffers many of the same ills as the system has stagnated with the same symptoms. Though the semipolitical leaders portrayed the problem as an emergency that suddenly erupted, it was actually the culmination of years of under-regulation, neglect, abuse, and corruption. The confidence crisis in the United Kingdom has come about as a result of over-extended consumer credit and a banking system that has exploited the concept of free market economics.To understand the vulnerabilities in the global banking system it is facilitatory to understand some of the history that got it where it is today. Six hundred years ago the population of England was largely farming(prenominal) and lived as subsistence farmers. Wages earned came almost exclusively from farm la bor and were very sensitive to the fair play of supply and demand. When times were good, the population rose and the labor supply increased. This drove down farm fee and the resulting poverty would decimate the population. As the labor supply fell, wages increased again and the cycle repeated. In fact, the historical wages earned in 1740 were the same as the wages earned in 1400 (Khan 10). However, the industrial Revolution created a larger demand for labor and created concentrated centers of capital. Technological advancements contributed to the growing economy and real wages have risen by approximately 2200 percent in the 200 years since the farm of the 19th century (Khan 10). The escalating wage scale and the concentrated capital resulted in an economy that was ever much dependent upon credit and increasingly demanding consumer goods. According to Khan, in the 19th century, a steady rise in living standards began that has, in some sense, never ceased. As a result,