Essay About The Global Financial Crisis

Essay about The Global Financial Crisis
Financial crisis and resulting worldwide depression has at the present moved from containing the infection to precise actions designed at promote
improvement and altering policy to stop to reoccurrence of the trouble. There are many financial experts says that the improving economic and
financial position might reason rigid improvement of the monetary scheme to be unable to find some grip the crowded policy. "Financial market a place
or channel for buying or selling stocks, bonds, and other securities" (O'BRIEN, 2011). Financial market encourage the wide–ranging security of the
country at the same time as caring taxpayer interests and facilitate business operation with no creating a ethical risk. For example the New York stock
exchanges...show more content...
Investor pulled capital from countries, even those among small levels of supposed danger and cause standards of stock and domestic currencies to
thrust. In addition slumping exports and product price have additional to the woe and pressed economies international moreover hooked on recession
or into an era of slower economic development. The worldwide crisis at this time seems to be played out on two levels the first is along with the
industrialized nations of the globe wherever the majority of the sufferers from subprime mortgage debt, unnecessary leveraging of reserves, and
insufficient capital support credit default swap just like insurance against defaults and bankruptcy have occurred. The second stage of the crisis is
along with rising market and other economic who might be blameless bystander to the disaster but who also might contain less flexible economic
system that can frequently be whipsawed by act in worldwide markets. A lot of developed countries have talented to finance their personal save
packages by borrow nationally and intercontinental capital markets, but many rising market and developing economies have in short supply basis of
capital and have turned to assist on or after the international monetary fund, World Bank or from assets excess nations, such as Japan and the European
Union. A fall down of the US sub–prime mortgage market and the reversal of the housing boom in additional developed economies has had an
undulation result approximately the
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Global Financial Crisis Essay
Starting from problems of payment defaults on housing loans (subprime mortgage defaults) in the United States (U.S.), then ballooned damaging crisis
of the banking system not only in the United States but extends into Europe and into Asia. Successive cause a domino effect on the solvency and
liquidity of financial institutions in these countries, among others, led to the bankruptcy of hundreds of banks, securities firms, mutual funds, pension
funds and insurance. The crisis then spread to parts of Asia, especially countries such as Japan, Korea, China, Singapore, Hongkong, Malaysia,
Thailand, including Indonesia, which happens to have long had the letters beharga these companies.
From the various critiques by experts, that the problem is...show more content...
Lehman Brothers announced a gradual loss before finally bankrupt. On June 16, 2008, the company announced losses worth 2.8 billion dollars for
the second half of 2008. Followed by losses of 3.9 billion U.S. dollars in part–to–three in 2008 (10 September) and culminate in the announcement of
bankruptcy on September 15, 2008. Similar unrest was also experienced almost simultaneously by Merryl Linch, Citigroup, AIG and other large
financial institutions.
This affected the weakening of the real sector with the bankruptcy of major U.S. companies like General Motors, Ford, and Chrysler that threaten the
continuity of work thousands of employees. Sure enough, the U.S. unemployment rate rose to 6.7% in line with the increase in pessimism among
consumers and investors throughout the period from September to November 2008. That is the level of termination of employment (FLE), the
largest in the last 34 years. Carrying 533 000 employees laid off and reached a total of 1.91 million persons in 2008. (Source: U.S. department of
labor). Along with that, on 30 November 2008, the U.S. government also announced a decline in the value of real GDP for part III in 2008 amounted
to 0.3%.
Likewise, also in Europe, the banking crisis in Europe was marked by problems at a small bank in the UK, namely Northern Rock Bank, in mid–2007.
Northern Rock is a true small–scale private bank in the UK. However, when there broke down in

The Global Financial Crisis that occurred in 2008 and crippled every major economy was not an accident; it was caused by an unregulated and
uncontrolled financial industry. Decline of Real Estate Value The financial crisis is considered to have its roots in the United States where there was
an increase in loan losses for subprimes. Banks were lending money to people that did not have the capability to maintain a regular repayment schedule.
Homeowners only had the ability to pay the interest on their mortgage and never pay the actual principle amount. When the interest rate began to
increase, homeowners could no longer afford the interest payments required. Housing prices began to fall and debtors found that they could no longer
afford...show more content...
The biggest issue since the Great Depression was to continue regulating the financial sector to avoid the same crisis that the United State had just
suffered. However, for regulations to be implemented effectively, it was crucial that it was well designed; even then there was a possibility that it
might not work. Greed and vested interest are likely to hijack the politics of regulation design. In the 1980's the financial industry exploded. Investment
banks went public giving them the ability to get additional funds from stakeholders to spend. Investing companies began to become richer and more
powerful than ever before. When Ronald Reagan became President of the United States, a 30–year financial deregulation began with the support of
economists and financial lobbyists. The Regan administration began to deregulate savings and loan companies, allowing them to make riskier
investments with depositors' money . Hundreds of saving and loan companies failed in their investments and in the end of the decade declared
bankruptcy. The memories from the earlier great Depression began to diminish and the government stated that the marketplace must be set free. This
led to the precautionary rules to be scrapped. Together with looser lending standards for other kinds of consumer credit, this led to a radical change in
American behavior. A New Era After the major failure of many savings and loans

Economic growth
The impact of the Global Financial Crisis on economic growth
As a result of the global recession, Australia's GDP was forecasted to contract by 0.5% in 2009–10 in comparison to other advanced economies which
were expected to contract by 3.75% in the same year. However minor the reductions in GDP, it was evident that Australia was not exempt from the
global recession although is better placed and is expected to perform better than almost all other OECD economies. The global recession has also
triggered a fall in household wealth and a disruption in consumer confidence with consumption forecasted to contract by 0.25% in 2009–10. Economic
recovery package – use of macroeconomic policies
Fiscal policy
Fiscal policy, a...show more content...
Conversely, total expenditure for 2009–10 is forecasted to exceed revenue, increasing by 2% on estimated expenses since the February 2009 UEFO at
$338.2 billion. It is illustrated that the majority of revenue the government receives is from Individuals income taxation and on the other hand,
expenditure is expended most in the Social security and welfare sector.
In response to the advent of the global economic downturn in 2008, the Government utilised fiscal policy to provide an urgent stimulus to economic
activity as well as a sustainable medium term boost to aggregate demand. The Labour Government had carried out an expansionary macroeconomic
stance with a Budget recording $57.6 billion underlying fiscal deficit in 2009–10, which was equal to 4.9% of GDP (largest percentage of GDP on
record for the last 40 years) and will remain a deficit until 2015–16.
Further, the Government employed deliberate Government policy decisions subsequent to the crisis, adding to a major expansionary impact on the
Australian economy. Early and decisive spending initiatives have been put in place against the face of the global recession, ensuring the economy is
secured to make the most of the global recovery. Some of the key initiatives consist of:
The Government has spent $12.2 billion to assist households financially and support economic growth. The household stimulus package provides
extensive support from low to middle–income earners

Global Financial Crisis: Causes and Effect
Introduction
The financial crisis that began in 2007 spread and gathered intensity in 2008, despite the efforts of central banks and regulators to restore calm. By
early 2009, the financial system and the global economy appeared to be locked in a descending spiral, and the primary focus of policy became the
prevention of a prolonged downturn on the order of the Great Depression.
The volume and variety of negative financial news, and the seeming impotence of policy responses, has raised new questions about the origins of
financial crises and the market mechanisms by which they are contained or propagated. Just as the economic impact of financial market failures in the
1930s remains an active academic subject, it is likely that the...show more content...
Mark–to–market Accounting: FASB standards require institutions to report the fair (or current market) value of securities they hold. Critics of the
rule argue that these forces banks to recognize losses based on "fire sale" prices that prevail in distressed markets, prices believed to be below
long–term fundamental values. Those losses undermine market confidence and exacerbate banking system problems. Some propose suspending
mark–to–market; EESA requires a study of its impact.
Deregulatory Legislation: Laws such as the Gramm–Leach–Bliley Act (GLBA) and the Commodity Futures Modernization Act (CFMA) permitted
financial institutions to engage in unregulated risky transactions on a vast scale. The laws were driven by an excessive faith in the robustness of
market discipline, or self–regulation.
Shadow Banking System: Risky financial activities once confined to regulated banks (use of leverage, borrowing short–term to lend long, etc.)
migrated outside the explicit government safety net provided by deposit insurance and safety and soundness regulation. Mortgage lending, in particular,
moved out of banks into unregulated institutions.
This unsupervised risk–taking amounted to a financial house of cards.
Non–Bank Runs: As institutions outside the banking system built up financial positions built on borrowing short and lending long, they became
vulnerable to liquidity

Introduction At least for a while, the bear seems to have buried the bull. Wall Street doesn't seem as shiny as it used to. The global economy has just
recently come out of a deep recession. At a time like this, it is particularly relevant to examine the role of the State in overcoming economic crises.
Although government intervention in the matters of a fair free–market is not entirely consistent with the doctrine of economic liberalism which has
been today vindicated as a necessity in a free society, in practical terms, it is impossible for the government to be not involved in something so intrinsic
to the over–all well being of its subjects. But what can the government do to get the country out of an economic slump? What many...show more
content...
According to Jonung (2009), the bank support was of crucial importance because it guaranteed the durability of the banking system by restoring
confidence in the Swedish institutions. The Riksbank (Swedish central bank) ensured unlimited liquidity by effectively acting as a lender of last
resort. The Swedish ministry of finance attacked the crisis with a twofold approach. Firstly, 'Banks in trouble were asked to obtain capital from their
shareholders,' on failure of which, the banks would have been confiscated and brought under public control. This was a crucial part of the recovery
package which pushed banks to the edge in their efforts in the battle for survival, thus minimizing the moral hazard problems. This is in sharp contrast
to the towering moral hazard problems which the U.S. faces with the corporate bailouts in the automobile and financial industry. Secondly, the finance
ministry created the 'Bank Support Authority' which supervised the process of splitting the assets of the major Swedish banks into a bad bank and a
good bank and managed them according to their prospects. The initial investment that Sweden made on the policy response to the crisis was more than
4% of its GDP but with the recovery of profitability of banks the net spending by the government was less than 2%

Global Financial Crisis
The best evidence so far for the existence of an American empire, despite denials to the contrary, is the Global Financial Crisis (GFC). The persistent
removal of restrictions and oversights on the domestic financial system of the US, combined with the decisions of individual firms, other governments
and foreign financial organisations, culminated in the singe largest depreciation of assets and currency valuations in history, surpassing even the Great
Depression in its extents.
The United States created a position for itself of great power and overseer, but failed to effectively exercise these abilities; this lack of diligence has
caused much controversy. The root causes of the economic downfall were a chain of decisions, made by domestic...show more content...
But now that the situation is stabilising, more focus is being paid on their actions, and calls are mounting for a change to how the world's financial
systems are managed and overseen.
Much of the criticisms made are valid, but they tend to fall short of addressing the whole truth of the issue. Whilst it is true that the US could have
done much more to avert this crisis, it is also true that so too could the other states. It is only by their own hand that they are so entangled in this
system; if they protected their economies more then they wouldn't be so exposed to the effects of the actions of the American government and financial
system.
Specific criticisms levelled at the actions of firms are valid, but the generalisations that are usually made ignore the reality of the situation, that is that it
was a small segment of the American economy that was responsible, not the entire economic structure, nor even the entire financial services industry.
The issues raised by the GFC highlight the need for a more coordinated legal framework for managing the complex international financial system, and
also examinations of the real intent behind the USA's actions on the world stage. This crisis has given great cause for states to evaluate how integrated
into the world they want to be, with this being the first true backlash from integration with this system to affect such a wide cross section of the globe.
Crucially, it also highlights the current

The Global Financial Crisis And The Crisis Essay
Introduction
The Global Financial Crisis, also known as The Great Recession, broke out in the United States of America in the middle of 2007 and continued on
until 2008. There were many factors that contributed to the cause of The Global Financial Crisis and many effects that emerged, because the impact it
had on the financial system. The Global Financial Crisis started because of house market crash in 2007. There were many factors that contributed to the
housing market crash in 2007. These factors included: subprime mortgages, the housing bubble, and government policies and regulations. The factors
were a result of poor financial investments and high risk gambling, which slumped down interest rates and price of many assets. Government policies
and regulations were made in order to attempt to solve the crises that emerged; instead the government policies made backfired and escalated the
problem even further.
Subprime Mortgages
The housing market crash, which broke out in the United States in 2007, was caused by high risk subprime mortgages. The subprime mortgage crisis
resulted in a sudden reduction in money and credit availability from banks and other lending institutions, which was referred to as a "credit crunch."
The "credit crunch" and its effect spread across the United States and further on to other countries across the world. The "credit crunch" caused a
collapse in the housing markets, stock markets and major financial institutions across the globe.
Subprime

In 2008, the global financial industry experienced dramatic changes when the global financial crisis came furiously. In the United States, the historical
changes appeared in the structure of investment banking. These changes included the fifth–largest US investment bank, Bear Stearns and the
third–largest US investment bank, Merrill Lynch was acquired respectively, and the fourth–largest US investment bank, Lehman Brothers declared
bankruptcy. In addition, the Goldman Sachs and the Morgan Stanley had no choice but to transform separately into the bank holding company.
Moreover, the American government took over the Fannie Mae and the Freddie Mac and held a major share in the American International Group.
There were also various events about the bankruptcy and merger of the other financial institutions. In the wider world, some banks in Belgium, Britain,
Switzerland and Germany also got into the dilemmas and troubles, and these banks accepted the government aids without choices. However, under the
continuing instability in the global financial industry, the JP Morgan not only kept profits in every quarter, but also remained upwards in a falling
market from their investment banks businesses, and they showed the most outstanding performance in the global financial industry. At present, the
general assets of JP Morgan has already arrived $1.2 trillion. According to the latest performance reports which the JP Morgan recently released, that
showed the operating income of the JP

The Global Financial Crisis Essay
Introduction In 2008, the world experienced a tremendous financial crisis which is rooted from the U.S housing market. Moreover, it is considered by
many economists as one of the worst recessions since the Great Depression in 1930s. After bringing a huge effect on the U.S economy, the financial
crisis expanded to Europe and the rest of the world. It ruined economies, crumble financial corporations and impoverished individual lives. For example,
the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brothers and AIG. These
collapses not only influenced own countries but also international scale. Hence, the intervention of governments by changing and expanding the
monetary...show more content...
An increase in loan packaging, marketing and incentives encouraged borrowers to undertake difficult mortgages so they believed that they would
be able to refinance quickly at more favourable terms. People borrowed money to buy the house and then expected the price to rise and sold so that
they could pay off the debt which owed to the bank and demanded a new loan to buy another house. However, once the interest rate began to rise
and house's price dropped in 2007, refinancing became more difficult and banks could not collect their mortgages. Besides, low interest rates and
large inflows of foreign funds created easy credit conditions for years before the crisis and that simulated the boom in housing construction
(Steverman and Bogoslaw, 2008). Moreover, easy credit and money inflow greatly contributed to U.S housing bubble and the rise of house's price. In
relation to the increase in house's price, the rise of financial agreements such as mortgage–backed securities (MBS) and collateralized debt obligations
(CDO) encouraged investors to invest in the U.S housing market (Krugman, 2009). When housing price declined in the U.S, many financial institutions
that borrowed and invested in subprime mortgage reported losses. In addition, the fall of housing price resulted in default and foreclosure and that
began to exhaust consumer's wealth and

The Global Financial Crisis on India Essay
Why do you think India remained relatively insulated from the financial crises?
"The contagion is truly global in a globalized world. How can the high priests of globalization in India expect to insulate the country from this
all–pervasive crisis?" – By S. Shivaraman
It is not right to say that a country is insulated from financial crisis in today's globalized world. In some way or the other there will be an effect of
failed programme of one country on the other. The moment we say that we are global (global meaning when we do not have any restriction on
transactions with other geography's), we become non–insulated to the...show more content...
Indian economy has been affected by the financial crisis but the effect is less for which there exists various reasons. But it does not mean that it is not
affected at all, the individual areas show the effect of these financial crises in the economy. In this paper I will write about the reason for both why the
effect was less and the areas which were affected by the financial crisis and how.
"At the outset, it must be admitted that the abundant caution exercised by the former RBI Governor, Dr. Y. V. Reddy and going slow on opening up
new complex financial products helped to insulate the country's from a major financial crisis" .
There have been reflective discussions on the effects of the Global Financial Crisis on India. Facts tell us that while the world economy seemed to be
collapsing in 2008/09, India's GDP expanded by 6.7%. The Federal Bank and the Bank of England cut their policy rates to rock–bottom levels to 0.25%
and 0.50% respectively . This action was a means of adopting an expansionary monetary policy in pursuit of enhancing economic activity and
investment amongst consumers and firms. At every Central Bank meeting, during the past 2 years, we saw governors extremely concerned about the
recession. They did whatever they could to pick up the economy and boost consumer confidence. When interest rates reached their minimum levels,
their hands were tied and they needed to look for another tool. Over the

ACCG 399: Accounting in Context
Accounting's Positivistic Tendencies: Overlaying a Social Science with Pure Scientific RationaleвЂЁTutorial 5 – Week 6
Thought Activity
The film 'Inside Job' is explained the occurrence of the global financial crisis in 2008. It has shown that lots of companies have bankrupted and
millions of people lose their jobs and homes around the world. Such as United States, Iceland, England, France, Singapore and China. There is a
sentence in this film has make me impressed, which is " the poorest always pay the most."
The director has separated this film into five parts, which are How we get there, The Bubbles, The Crisis, Accountability and Where we are now. The
entire film has shown a harsh reality, which is...show more content...
In this film governments allow Banks to have home ownership program, its lend money to poor people to buy houses. It starts out great and home
ownership explodes. But when the crisis comes and the bubbles burst, the poor people would not repay their mortgage, they cannot afford, and then
they become homeless. The rich people got the profit. It can be seen that during the financial crisis, the poor people lose more, and the rich people get
more. Therefore, everytime the government intervenes in the free market, even on the grounds of virtue, bad things will happen. We need to be wary
when politicians try to do things on our behalf.
The initial causes of collapse of financial system in Iceland was deregulated banks within Iceland were able to amass a debts load almost ten times
their GDP, and eventually unable to carry this debts, it will lead to crisis.
Actually, the positive accounting theory tries to make good predictions of real world events and translate them to accounting transactions. To Achieved
Positive Accounting Theory, we can Change accounting policiesвЂЁ, Managing discretionary accruals, Timing of adoption of new accounting
standards, advertising, repairs & maintenance and capitalize operating expenses.
During the financial crisis, the market cannot correct itself, we need government regulations and I think only US government can control Wall Street
and the

Financial Crisis : A Global Crisis Essay
Overview: The 2008 financial crisis is notably one of the worst financial disasters in American history. It began with a large financial bubble, in which
many investment, real estate, and insurance companies made millions. When the bubble burst, stock markets fell, these companies collapsed, and
economies of supposedly strong nations were brought to their knees. Not only did the financial crisis severely affect the economy of the United States,
but the international markets as well. At the time of the burst, many international stock markets fell, making this US financial crisis become a global
financial crisis. A global recession took place, and the US nationaldebt doubled. Unemployment rose by ten percent. While the peak of the crisis was
during the years of 2007 and 2008, the drastic effect on the economy the crisis caused is still recovering.
Causes:
There are several factors that contributed to the initial beginning of the 2008 financial crisis. Before the crisis, there was a giant increase in real estate.
As buying real estate became increasingly popular in the marketplace, many real estate agencies and mortgage companies wanted to be sure they could
share in the profits. Mortgage loans became increasingly popular, so lenders began to hand out massive amounts of loans to keep the demand for real
estate strong and broaden home ownership in America. To better serve the demand for real estate (or so they thought), lenders began selling subprime
mortgage loans. Subprime

The Global Financial Crisis
The Global Financial Crisis has had a huge impact on the global economy. The American housing market collapses, the house price drops significantly
and the bank is losing lots of money, however, people are not pursued in court for money or declared bankruptcy. People tend to spend less on the due
to their houses worth less than the bank has loaned originally and some of them are still committed to clearing off their mortgages. This causes less
activity in housing market and sales market, hence more people lose their jobs which means the unemployment rate increases, and the American
economy recovers slowly.
As the unemployment rate increases, people's income decreases, therefore they don't have enough money to pay off the mortgage. Banks start to
close down due to lack of sufficient money to run the business, people cannot get back the money they put in deposit. As a result, people who have
owned a house are more likely to maintain the standard of life. Statistic has shown that top 5 per cent of United States households are wealthy from
1983 to 2007 (Rosenthal, 2012), rich people got wealthier in the decades; however the others go deeper into debt in order to maintain their lifestyle,
thus poor people can't pay off debt as the housing market collapses, poverty gets more serious which widen the gap between rich and poor. It also
affects the developing country, China. 34 per cent of China's economy is from manufacturing export to America, the production was reduced due to the

|GLOBAL FINANCIAL CRISIS |November 12 |
| |2008 |
| | |
PART 2
Introduction
The stock price plunge and the severe credit crunch we are watching today in the global financial markets are byproducts of the developments in the
US six years ago. In late 2001, fears of global terror attacks after 9/11 shook an already...show more content...
The resulting spiral underlay a developing financial crisis.
Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and Countrywide
Financial. Financial institutions which had engaged in the securitization of mortgages such as Bear Stearns, Indy Mac Bank, and Fannie Mae and
Freddie Mac, then fell prey.
It then began to affect the general availability of credit to non–housing related businesses and to larger financial institutions not directly connected with
mortgage lending. At the heart of many of these institution 's portfolios were investments whose assets had been derived from bundled home
mortgages. Exposure to these mortgage–backed securities, or to the credit derivatives used to insure them against failure, threatened an increasing
number of firms such as Lehman Brothers, AIG, Merrill Lynch, and HBOS.
Development of the global financial crisis
The development of the global financial crisis is a result of a number of complicated and interrelated factors. Starting with the downturn of the
housing bubble in the US economy, the fall in the financial stability in the US, and the rising commodity prices, all of the factors, in one way or other,
has initiated the crisis. As stated by the United Nation in its Conference on Trade and Development, and in its Trade and Development Report 2008,

the major factors for the crisis are:
1. The bursting of the housing

The Global Financial Crisis: The Great Depression
The great depression in 1929 had been called the worst economic failure till 2008 financial crises happened. Although Federal Reserve tried to prevent
US banks from collapsing down, it occurred and then housing price collapsed 31.8 percent. Recession finally ended after two years but unemployment
rate was still more than 9%.
Financial market environments before the crisis
The main root of crises was mortgage system of US. Before crises there was increasing number of offers for people who have willing to get mortgage
even though they were considered as a bad credit risk. The reason why they did it, the price of house was rising continuously and they thought that
would go on increasing. It was clear that if people cannot...show more content...
In US and Europe majority of banks acted like that. And then all different loans ware gathered into financial instruments that can be receivable, payable,
loans and so on. Those financial instruments created comfortable atmosphere generating variety types of hedging activities. As it is obvious financial
market is almost unlimited number of transactions including high risk financial instruments. And it seemed everything was going on well. But there
are limits that how far economies can be sustained by debt that is not based on any real economic values created. Economic growth slowed in the USA
that ignited a sharp increase in the number of mortgage holders who could not afford the interest rates, and in the end there were a growing number of
repossessions. Meanwhile, investors who bought these mortgages through a range of schemes, known as mortgage–backed securities, found out that
the value of what they own is sharply dropping. As a result, house prices fell sharply, and mortgage lenders discovered that they could not make
enough from selling off roughly one million repossessed homes to pay back for loan that borrowed from bank. So, the investment banks which had
been so willing to lend money to mortgage lenders, suddenly found out that they were facing losses of tens of billions of dollars. For some, the losses
represented by various toxic

Issue
Due to the effect, of the global financial crisis of 2008–2009, advanced economies have seen a significant increase in public debt. Canada risks a
repetition of this experience and prominent voices are calling for an additional round of fiscal austerity. Without enhancement, the problematic habits of
Canadian governments, such as deficit spending and growing government debt, bear short– and long–term consequences for the country and its
population. The biggest problem in Canada is primarily the mounting costs of an aging society and not so much to yield a balanced budget and
gradually reduce debt in the recovery.
Background
в™ЈIn the mid–1990s and late 2000s, Canada's federal and provincial governments made substantial advancements...show more content...
In the long run, productivity could be improved by increasing public investments, and backing private investment and innovation in further effective
ways than costly across–the–board corporate tax cuts.
в™ЈAdditional spending on debt servicing costs inevitably translates to fewer resources available for public priorities. (Lammam, MacIntyre, Ren, &
Hasan, 2017)
в™ЈEmpirical research has found that a negative relationship exists between government debt and economic growth (Reinhart and Rogoff, 2010;
Cecchetti et al., 2011; Checherita and Rother, 2010; Woo and Kumar, 2014; Chudik et al., 2015; Eberhardt and Presbitero, 2015; Г‰gert, 2015).
в™ЈAcross both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth
outcomes. Much lower levels of external debt/ GDP (60 percent) are associated with adverse outcomes for emerging market growth. (Reinhart &
Rogoff, 2010)
в™ЈThe expansion of government debt prompts long–term interest rates to rise. The outcome is a rise in the cost of private–sector borrowing. Private
capital investment can be discouraged as a result of higher borrowing costs. This is important since private capital investment is a vital element of long
term economic growth.

The Global Financial Crisis
In the following essay, I will briefly summarize some of the main events leading up to the global financial crisis. Following this, I will discuss the
effect this had on the banks and ergo the credit supply, then examine how this contributed to the corporate failure. I will also pay some attention to
how the market imperfection can affect firms real decisions. Finally, I will sum up the main points of the essay. The banking panic of the fall of 2008
set economies around the world into a severe recession. The spark of the panic was seen in mid–2007 the credit boom, followed by the demise of
subprime mortgages and securitized products. This, in turn, raises worries about the solvency and liquidity of financial institutions, evolving into a
full–blown banking panic. Resulting in the failure of the Lehman Brothers and Washington Mutual, and multiple governments run financial institutions.
(Ivashina & Scharfstein, 2009). As a result during 2008 the prices of most asset classes and commodities declined, although the cost of corporate and
bank borrowing rose significantly. In both the USA and the UK interest rates peaked at over 5% (See Appendix A). Consequently, Syndicated lending
started to fall mid–2007, then accelerated during the banking panic September 2008. The lending in the fourth quarter of 2008 2008: Q4 was 47%
lower than the previous and 79% lower than in 2007: Q2 (ibib).
A decline in the demand could explain the overall drop in lending, it might also explain

The Global Financial Crisis Of Australia Essay
Introduction The Global Financial Crisis (GFC) was the the deepest recession after the World War II economy recession. Australia emerged as the
least affected by GFC as compared to other developed economies of the world. After the quarter with negative growth, the march quarter 2009 (0.4%
GDP growth), suggested that Australia was able to escape from the world–wide recession. This article looks at each of these three different factors
responsible for relatively strong performance of the Australian economy over this period and will examine their role that each may have played.
Firstly, the fiscal stimulus policies adopted by Federal Government: secondly, timely policy responses to the effects of the global financial crisis by
Reserve Bank of Australia and thirdly, the Australian economy trades significantly with Asia and in particular, China, and how the economy was
beneficial from Chinese growth in the global slowdown. (the performance of our major trading partners, particularly China.) Australia emerged as the
least affected economy by GFC: Role played by each factor Australia was able to maintain continuously impressive GDP growth as compared to other
developed countries since the Global Financial Crisis (GFC) began in 2007. Australia survived from recession by attaining 1% positive growth in the
2008–2009 financial year where many countries of OECD were in recession. Federal Government During the crisis, Australia 's financial system was
properly structured and

Essay About The Global Financial Crisis

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Essay About The Global Financial Crisis