The Impact of the Word Cup

In the present time, the world is being engulfed by the global economic crisis, many companies went bankrupt, which resulted in the increasing number of unemployment.

The financial crisis is a crisis triggered by a liquidity shortfall in the United States banking system caused by the overvaluation of assets. It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010–2011 periods. Many causes have been suggested, with varying weight assigned by experts.

U.S. households and financial institutions became increasingly indebted or overleveraged during the years preceding the crisis. This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn. Key statistics include:

• Free cash used by consumers from home equity extraction doubled from $627 billion in 2001 to $1,428 billion in 2005 as the housing bubble built, a total of nearly $5 trillion dollars over the period, contributing to economic growth worldwide. U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching $10.5 trillion.

• USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990.

• In 1981, U.S. private debt was 123% of GDP; by the third quarter of 2008, it was 290%.

• From 2004-07, the top five U.S. investment banks each significantly increased their financial leverage (see diagram), which increased their vulnerability to a financial shock. These five institutions reported over $4.1 trillion in debt for fiscal year 2007, about 30% of USA nominal GDP for 2007. Lehman Brothers was liquidated, Bear Stearns and Merrill LynchGoldman Sachs and Morgan Stanley became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support.were sold at fire-sale prices, and

• Fannie Mae and Freddie Mac, two U.S. Government sponsored enterprises, owned or guaranteed nearly $5 trillion in mortgage obligations at the time they were placed into conservatorship by the U.S. government in September 2008.

These seven entities were highly leveraged and had $9 trillion in debt or guarantee obligations, an enormous concentration of risk; yet they were not subject to the same regulation as depository banks.

A number of commentators have suggested that if the liquidity crisis continues, there could be an extended recession or worse. The continuing development of the crisis has prompted in some quarters fears of a global economic collapse although there are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the "beginning of the end" of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms "the worst is still to come" UBS quantified their expected recession durations on October 16: the Eurozone's would last two quarters, the United States' would last three quarters, and the United Kingdom's would last four quarters. The economic crisis in Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history. At the end of October UBS revised its outlook downwards: the forthcoming recession would be the worst since the Reagan recession of 1981 and 1982 with negative 2009 growth for the U.S., Eurozone, UK; very limited recovery in 2010; but not as bad as the Great Depression

World cup game with a lot of positive impact to the community who are experiencing stress due to global crisis . Stephen Mitchell, Managing Director for Consumers of Nielsen Indonesia, an information and media company, said that the event will generate general excitement which in turn bring positive impact on politic, economy, social and culture.

"Things that generate general excitement will surely make people feel happy, not to mention that they will spend more (to complete the excitement)," said Mitchell.

This year's world cup will be the largest ever, with 36 countries sending teams instead of the usual 32. Events will be held over 12 cities and infrastructure building is heavy in preparation. Seven new stadiums will be built for a cost of $1 billion alone. Hotels, retail and general consumption will see huge increases. Marketing may be the economic highlight of the event, as the world-wide total sponsorship activity for the World Cup rose from $2 billion in 1984 to $16.6 billion in 1996. Secondary economic impacts are expected to be huge.

Though the World Cup may not be foremost in the minds of market watchers relative to the daily speculations regarding rate hikes and other policies - it's economic impact cannot be overestimated.

So the effects that occur because the world cup matches can be perceived from some aspects of life, from the economic sector, tourism, community and social psychology.