Socioeconomic Aftermath Of The Crisis - 1883 Words

SOCIOECONOMIC AFTERMATH OF THE CRISIS Despite the overall success of the International Monetary Fund and the United States to prevent additional contagion from the Mexican peso crisis throughout the broader global financial systems, the crisis nevertheless proved devastating to the Mexican economy and its population. The devaluation of the peso and capital flight plunged the Mexican economy into a deep recession, national GDP dropped by 6.2% throughout 1995, and multiple banks collapsed as poor quality assets and fraudulent lending practices came to light, forcing the financial sector to bare the brunt of the crisis (Pereznieto, 11). The average Mexican, however, would argue otherwise and angrily proclaim that it was them that suffered the most. Many Mexicans could no longer keep up with the rising interest rates and thousands of mortgages went into default, resulting in widespread repossession of homes. Prices rose by 35%, hyperinflation resulted in a real wage decrease of 25-35%, a nd unemployment rose to 7.4% in 1995 from its 3.9% pre-crisis the year prior (Pereznieto, 15). In the formal sector, over a million people lost their job, real wages decreased by 13.5%, and overall household incomes plummeted by 30% (Pereznieto, 15). Extreme poverty in Mexico grew to 37% in 1996 from 21% in 1994 (Pereznieto, 16). The growing poverty in Mexico also impacted urban areas more than rural areas (Pereznieto, 15). Urbanites relied on a healthy labor market, good access to credit, andShow MoreRelatedA Review of Is Monetary Policy Overburdened? 1584 Words   |  7 Pagesafter the crisis and abused monetary policy as it was understood to be ‘the only game in town’. However, Orphanides pointed out that, factors behind â€Å"the lack of satisfactory growth in the aftermath of the GFC† are often outside the control of CBs. One of them is the low employment growth post GFC, which is a major concern in Greece and Spain and has its roots in historical high unemployment rates among young adults. But because this unemployment problem hasn’t been corrected before the crisis in economiesRead MorePsychology : A Human s Mind1399 Words   |  6 Pageswell-being, alleviate distress and maladjustment, resolve crisis, and increase their ability to function better in their daily lives. I speak not only to my professional life as a counselor for the past 4 years, but through my own experiences and journey figuring out my own stance in this world. When my family first embarked on their path for a better future, I was only 7 years old. 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