In 2008, the global housing market crashed. Thanks to subprime lending schemes enacted by major banks all over the world, there was so much capital invested in what was quickly becoming a dying market that the banks quickly began to lose massive amounts of money. The resulting financial shockwave sent the world’s economies into near free fall. That was over ten years ago, and the worldwide economic situation has largely improved. Growth is back on track and with some minor exceptions, many countries’ GDP is back on track and looking healthy. However, there are still many lingering effects from the economic downturn that are making things difficult on many levels, from the personal to the global.
Middle class families trying to find ways to make ends meet have attracted an entire industry based on providing advice and tips for managing personal financial obligations to avoid falling too far into debt and maximizing savings. As with any burgeoning industry, some of the advice is good; some less so, and there will always be vultures in the wings trying to capitalize on any opportunity to make a quick buck. Anywhere you might look, there is a litany of advice articles for every possible demographic: The newly married, the newly employed, the newly unemployed, women in their 30s, and so on. Books about financial responsibility routinely appear on the New York Times bestseller list, with increasingly profanity-laden or otherwise brash titles. The advice itself is usually fairly anodyne and general enough to be predictably unhelpful to families who are willing enough to take control of their own financial situation to go out and look for advice about what to do.
The reason for this is that, in general, what people really need is more money: wages have largely stagnated while costs of living, rent in particular, have skyrocketed, and in countries like the United States where the cost of medical emergencies can be enough to bankrupt even the most well-prepared lower income families, there’s simply not enough financial advice in the world to supplement the lack of meaningful income opportunities. Some ideas will always be good: avoid frivolous spending, try to keep several months of income saved for emergencies, use social trading networks for investing, pay down principal balances on loans when possible, and so on. But more often than not, it’s simply not enough. Generic advice columns tell couples to do things like talk about their finances or even to sign a “cohabitation agreement” that delineates household responsibilities, although it remains unclear how this is supposed to help a family that is barely treading water to gain true financial independence. There are people who have been struck by hardship who simply are not in a position to fight for themselves. Whether as a result of disability, accidents, or medical emergencies, sometimes personal responsibility simply isn’t the main reason for many people’s financial struggles. There is also something of a politically motivated public shaming that encroaches itself into a lot of personal financial advice: stop buying lattes, don’t get iPhones, or limit yourself to only the cheapest groceries. Even politicians are repeating lines like these. It works to their benefit because the fiction that people are solely responsible for their own financial troubles, rather than struggling in an unfair economic system or grappling with an unprecedented amount of wealth redistribution that favors those who are already wealthy. The economic climate may change, and possibly soon, but until then, people are looking toward more novel solutions, like virtual wallets powered by artificial intelligence.
On a larger scale, the slow but steady journey back to health for the world’s major economies has come with an environmental cost. However, there is a silver lining. In Asia, sustainable finance is beginning to grow in popularity as market leaders begin to realize that profit at the cost of environmental damage is looking increasingly volatile given the expense incurred as a result of those very damages. Photos of Chinese metropolitan skylines choked by smog compete for attention with stories of days-long southeast asian traffic jams or environmental damage caused by slash and burn palm oil cultivation. But these Asian governments are increasingly looking toward more sustainable investments, especially as climate change worsens. Environmental damage from pre-existing climate conditions are already casting dark shadows over earnings forecasts and countries with high population densities are paying close attention to how to make sustainable investments that avoid exacerbating existing issues while staying profitable – which, it turns out, is totally possible.
The last great recession was caused mostly by people making bad business decisions, but the most forward-thinking investors have realized long before today that climate change represents a kind of existential economic threat, and investment numbers in some of the world’s biggest markets show that this is clearly a trend that will grow stronger over time.