The financial meltdown has practical implications for ordinary families as well as for financial institutions and the big end of town. The effects are manifold and include loss of value in superannuation by 20% or more, mortgage stress, an increase in mortgage defaults, increased unemployment as businesses shrink, and as retrenchments take effect.
Businesses of all sorts are affected. All the big car makers are in difficulty both in the US and Japan. In the UK household name businesses such as Woolworths and Waterford Wedgewood have gone into administration. Large employers like Rio Tinto are shedding thousands of employees worldwide. Smaller businesses are also affected, some of which will fail, with business owners facing the stress and anxiety of bankruptcy. Financial institutions such as the ANZ bank are laying off staff. The failure of ABC Learning Centres is affecting many families with children. The economic climate for sound businesses is more difficult, and those businesses already on the edge are likely to fold or be taken over.
Individuals and families are also affected. As unemployment increases, former wage earners find themselves on a vastly reduced income. For those with high mortgages and tight budgets this leads to increasing debt, maxed out credit cards, and the possibility of mortgage foreclosure. Pensioners and those approaching retirement have seen the value of superannuation fall by as much as 20% in one year.
Unemployment will increase across the world. “The global economic crisis will push up unemployment by up to 25 million by 2010, the OECD chief has forecast, saying there has been a "truly scandalous failure" of regulatory supervision.”