The Cause Of Global Financial Crisis

The Cause of Global Financial Crisis
Ⅰ the causes of global financial crisis
1、Boom and burst in the housing market
Low interest rates and large inflows of foreign funds created easy credit conditions. Subprime
lending contribute to increase the housing demand.This fueled rising house prices.This housing
bubble resulted in quite a few homeowners refinancing their homes at lower interest rates. This led
to a building boom. Easy credit encouraged borrowers to obtain ARM. If borrowers could not make
the payments ,they would try to refinance. Refinancing became more difficult, when house prices
began to decline in USA. Borrowers found themselves unable to afford higher monthly payments
,then default. This places downward pressure on housing prices.
2、Speculation ... Show more content on Helpwriting.net ...
Ⅱ Explain how the subprime crisis of the US spreads to the whole world?
The subprime mortgage crisis is an ongoing financial crisis triggered by a dramatic rise in mortgage
delinquencies and foreclosures in the United States, with major adverse consequences for banks and
financial markets around the globe. Apart from the fact that banks based in other parts of the world
also suffered losses from the subprime market, there are two major ways in which the effect is felt
across the globe.
First, the US is the biggest borrower in the world since most countries hold their foreign exchange
reserves in dollars and invest them in US securities. Thus, any crisis in the US has a direct bearing
on other countries, particularly those with large reserves like Japan, China and so on.
Also, since global equity markets are closely interlinked through institutional investors, financial
crisis affecting these investors sees a contagion effect throughout the world. The panic psychology
takes over and a large number of people cash in their chips. This disturbs global financial market
further.
For emerging market countries, in the first place, the crisis derived from the setback in exports of
goods and services to the European and American countries, but not the collapse of the banking
system. People claims that the model of crisis transmission in USA is from virtual economy to real
economy, however, the harsh

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Causes of the financial crisis
THE FINANCIAL CRISIS
Preparing the grounds: The role of global macro policies and the poor US regulatory framework
Introduction
The financial crisis from 2007–2009 is beeing caused at two levels: global macro policies affecting
liquidity and a poor regulatory framework
1
The policies affecting liquidity created a situation like a dam overfilled with flooding water
2
The regulatory system have been the faults in the dam, directing the liquidity into the real estate
market
Source: „The Current Financial Crisis: Causes and Policy Issues" by Adrian Blundell–Wignall, Paul
Atkinson and Se Hoon Lee
Introduction
Global macro policies affecting liquidity played a major role in the built up to the finacial and ...
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enneth Rogoff
Global imbalances
In the US low interest rates fed into powerful multiplier mechanism
1
Description
2
Comment
Expectations of future housing price appreciation

1
1% increase of current account deficit à10% increase in real estate prices
US home prices rose at double digit rates in 04/05
US mortgage quality declined
"American Dream Housing bubble policy"
3
Financial innovations 2
Source: „Global Imbalances and the Financial Crisis: Products of Common Causes" by Maurice
Obstfeld and Kenneth Rogoff
1
2
Global macro policies affecting liquidity
The increasing global imbalances
Loose monetary policy by Fed
Source: „The Current Financial Crisis: Causes and Policy Issues" by Adrian Blundell–Wignall, Paul
Atkinson and Se Hoon Lee
Fed policy
The FED overflowed the US economy with cheap money in order to support the economy 1
2
May 2000: 6.5%
June 2003: 1%
Until 2006
Dot–com crash
9/11
Fear of deflation Unchanged rates for one year
Interest rates remained too low (Taylor rule)
Expansion of housing market
Too low interest rates over a too long period was a major cause for the genisis of the housing bubble

Source: „Global Imbalances and the Financial Crisis: Products of Common Causes" by Maurice
Obstfeld and Kenneth Rogoff
Fed policy
The interest rates set by the fed were far below what the Taylor rule would suggest 1
2

Kindleberger's Crisis : Financial Crisis
Kindleberger's Crisis
Financial crises seem foreign to our thinking, something faraway, irrelevant in the context of
modern society. But in truth, it is a very real phenomenon that had impeded the progress of nations
and, many times, driven their victims toward bankruptcy and financial dependence. For this, its
significance calls for analysis, as a means to understanding and, more powerfully, prevention and
alleviation. Hence, the subject of this paper is to (1) describe a model, particularly, Minsky's model
of financial crisis as delineated in the second chapter of Kindleberger's Panic, Manias, and Crashes,
(2) qualify it from the lenses of Reinhart–Rogoff's criteria for financial crisis, as well as find causes
as to why, in the bubble, economic actors should think that a bubble phenomenon should not lead to
crisis, like past other bubble phenomenon in history had, and (3) apply the model to the most recent
crisis of 2007–2008 and evaluate it from that viewpoint. First, we begin with the model.
Minsky's model seed of a hypothetical crisis is a growth–inducing shock, called displacement, to a
sector of the economy, perhaps the invention of the internet, a financial derivative, or some
technological advancements that lead people and firms to expect economic growth in that particular
sector, anticipate profit opportunities, adjust their financial prospects, and finally, demand more
credit in hopes that the return on their capital exceeds cost. Lending institutions, whose

The Asian Financial Crisis and Thailand: Catalyst for...
During the second half of the 20th century Thailand underwent a rapid transformation from an
agrarian to export–driven industrialized economy while sustaining rapid economic growth. What
took Europe almost a century, the East Asian tigers (Hong Kong, Singapore, South Korea, and
Taiwan) and the newly industrializing economies (Indonesia, Malaysia, and Thailand) accomplished
in a matter of decades, which led many to believe in an East Asian miracle. However, in 1997
Thailand became the first country swept into an economic crisis that spread throughout the region
within months. Why did Thailand unexpectedly fall into a rapid economic crisis and how has the
crisis shaped the current political economy of the country? Although Thailand ... Show more content
on Helpwriting.net ...
By the end of August, the crisis spread to the Philippines, Malaysia, and Indonesia, which after
floating their currencies, experienced sharp depreciations ensuing an economic collapse. Despite the
International Monetary Fund's (IMF) attempts to restore confidence with currency standby
agreements, the crisis spread to Singapore, Taiwan, and Hong Kong. These countries all managed to
escape a financial meltdown, but not without significant currency depreciation. When the crisis
forced South Korea, the eleventh largest economy in the world, to devalue the won, the IMF
responded by creating substantial rescue programs for Thailand, Indonesia, and South Korea.
However, the programs were unable to prevent the crisis from deepening. In a matter of months the
Asian tigers were reduced to "whimpering kittens."
Early responses to the crisis, fueled by Washington and even the IMF, were that the "dark underside
to 'Asian values'" or Asian capitalism, which promoted a paternalistic authoritarian or single party
rule to guide the economy, had failed and was being reprimanded by the free market. However, both
authoritarian and democratic governments fell to the rapid contagion due to institutional weaknesses
that created vulnerabilities to international capital flight. Many of these countries

Financial Crisis Essay
In 2016 it was estimated that the US wealth gap had reached a width previously seen in the 1920s.
Since the 1970s America's middle class has been shrinking, whilst the lower and upper classes have
been growing, the former at a much faster rate to than the latter. It's negative effects are best stated
up John Taylor in the Hover Digest: "On the Fraser index, the United States ranked 2 in the year
2000 and it ranks 14 today. On the Heritage index it ranked 5 in 2008 and it ranks 12 today. On the
World Bank's Doing Business indicator it ranked 3 in 2008 and it ranks 7 today." (Hover Digest 9).
Much of this shrinkage has been attributed to various periods of economic turmoil in the past several
decades; the 1979 energy crisis, the Savings and ... Show more content on Helpwriting.net ...
Post–Great Depression deregulation began in 1980 when then President Jimmy Carter signed the
Depository Institutions Deregulation and Monetary Control Act into law. This was the first piece of
bank–reform legislation since the Great Depression. Among other things, the bill included
provisions lowering the Federal Reserve's mandatory reserve requirements for banks, preempted
state usury laws that limited interest rates lenders could charge for residential mortgages and
allowed depository institutions to access the Federal Reserve Discount Window for credit advances.
In other words, banks could borrow more of the taxpayers money, gamble with said money and
states' attempts to protect their citizens by regulating interest rates Banks charged for mortgages on
homes. This charity to large Banks was the first to come in a long line of endowments to corporate
America caused by the mushrooming of free market fundamentalism during the Reagan
Administration that has persisted to modern day. It is no coincidence that immediately following the
birth semi–capitalist largess was full of economic issues; deregulation led to irresponsible practices
by During the 90s deregulation continued to sowing the seeds of future downturn for the US
economy as both major parties shifted economically right. The paramount of deregulation from this

The Crisis And Financial Crisis
Since 1970s, with the continuously deepened process of financial liberalisation and financial
deregulation, the increasing improvement of financial innovation and the intensified fierce
competition, diversified operational strategy has shown an increasingly apparent trend among
financial institutions. A wave of business diversification swept global financial firms from the later
1980s until the recent financial crisis happened. From the microeconomics perspective, comparing
with specialised business structure, a diversified operation may provide financial holding groups
more benefits that generated from information advantage, the economy of scale and effect of
coordination. Also, diversification is considered to disperse risks that exposed to financial holding
groups. Many people believe that the development of global financial institutions shows a
continuous trend in business diversification and cross–industry business operation and such trend
will keep going on in the future. However, the subprime crisis and subsequent downturn again drew
people's attention to the pros and cons of universal banking. Around 2008, the global financial
system was suffered a destructive crisis which especially destroyed the western financial world
heavily. To prevent such crisis in the future, discussions and debates were being heated. Solutions
and measures were proposed by many countries' regulators. Factors that several reasons underlie the
financial crisis have been widely blamed, for

The Cause of the Asian Financial Crisis
This is a review of the political reasons that caused the Asian Financial Crisis in 1997. The review is
made on 5 papers by 5 authors on the subject.
Introduction
The Asian Crisis of 1997 and 1998 affected many of the East Asian and South East Asian countries
surprised many. This was due to the fact that in the early and mid–1990s these same countries were
lauded as model economies with high Gross Domestic Product (GDP). Yet within a space of a few
months in mid–1997, the currency crisis become a financial/economic crisis as many of these
countries currencies were greatly devalued resulting in the contraction of their economies. However,
the severity of the Asian Crisis was not uniformly felt.
Many books, research papers and ... Show more content on Helpwriting.net ...
Due to this, "their states were 'strong' for their struggle to industrialize but 'weak' because of the web
of enmeshment; they are semi–sovereign states" (Cummings, 1999).
The end of the cold war meant that America no longer had to rely so much on Japan and Korea to
safe guard against the advancement of communist in South East Asia. Therefore from early 1990s,
America has pushed for these countries to adopt multilateral economies (i.e. be more open to accept
American goods and investment). However, Japan and Korea were resistant to this new form of
economic policy.
Though no actual action by American was provided in the paper that resulted in the Asian Crisis, the
author does state that the crisis allowed America, through the International Monetary Fund (IMF) to
implement their economic model to Korea. This was done to maintain American's hegemony in
Asia, which before the crisis may have shifted to Japan. That is one of the reasons provided by the
author on why America was firm in its refusal to allow the 'Asian Fund' proposed by Japan to
materialise.
C. Jeffrey A Winters. 1999. The Determinant of Financial Crisis in Asia. In The Politics of the Asian
Economic Crisis. Cornel University Press.
Winter's paper seeks to explain the source of the crisis and the reason why certain countries were
more affected by the crisis than others. The author "posit that the source of

Financial Crisis Rebirth
Rebirth of the U.S. Economy during the Financial Crisis
Liberty University
July 8, 2016
Rebirth of the U.S. Economy during the Financial Crisis
Introduction A financial crisis is a condition, for various reasons, an organization or organizations
lose a vast part of their worth. In many segments of the economy, a financial crisis happens all the
time. The terms financial crisis and economic crisis are not interchangeable. The total economy is
affected by an economic crisis. A financial crisis may only affect one part of the economy and not
have any effect on the other parts of the segments. The financial crisis which began in 2007 was the
beginning of a downward spiral for the United State economy ... Show more content on
Helpwriting.net ...
The unemployment rate increased from four and a half percent to nearly ten percent in the United
States. The Big 3 automakers, especially GM were hit hard by layoffs and production globally.
Dealerships, worldwide, had to lay off workers as well. From the later part of 2008 to mid–2009,
approximately 38.5 percent of homeowners were not employed. The financial crisis saw the worst
unemployment rate since the Great Depression of 1929–1939. More than 15 million workers were
unemployed. Approximately 9.5 percent of Americans were employed part time in order to provide
for their families. The highest unemployment rate was recorded in the state of Michigan at more
than 15 percent. Unemployment among African Americans was almost 16 percent; while
unemployment among Latinos reached more than 13 percent. The American Recovery and
Reinvestment Act created nearly two million jobs in 2009. This Act was a part of the stimulus
packet signed by President Obama in 2009 to boost the economy. Without government intervention,
the economic recovery could have been more devastating and lasted for many

1997 Asian Financial Crisis
1997
Asian Financial Crisis
Angelica M. Montefalcon
4FM2
I. Introduction
For about twenty years, East–Asian countries were held up as economic idols. They were hailed as
the ideal models for strong economic growth of developing countries because of their high savings
and investment rates, autocratic political systems, export–oriented business, restricted domestic
markets, government capital allocation, and controlled financial systems.
They were even stories about "The East Asian Miracle" because of the extraordinary growth rates
they achieved and the speed with which they have transformed themselves from poor countries into
industrial powerhouses. Western leaders were impressed by their ability to continue to achieve ...
Thais' real estate business boomed, owning property and selling or leasing it for development
became one of the most popular businesses in their country. Rich Thai players entered into collusion
with local and foreign banks, mostly Japanese banks, to loan more money just to keep on building.
Because of overbuilding, they were no longer able to rent out most of their new office and condo
space. Prices dropped due to oversupply, so they couldn't get nearly as much money on what they
used to built those. When the bank loans became due, they couldn't pay. This also became a
contributing factor in the problem faced by Thailand during the Asian currency crisis. They wern't
able to weigh whether investments in buildings are worthwhile, they were reckless and the only
thing they though was the funds they were able to get for building those infrastructures. Their
foreign borrowing went to prestigious projects with no solid economic returns.
Another reason behind the 1997 Asian financial crisis was the large current account deficits. Asian
leaders agreed that large current account deficits could not be good, but they made the logical
economic argument that if a current account deficit mostly reflects higher investment, it would
eventually increase an economy's competitiveness and therefore its ability to repay the debt, and
would certainly be more sustainable than a deficit driven by

Financial Crises And The Economic Crisis
Introduction
Financial crises are fundamentally, periods of economic turmoil. This essay is an analysis of the
underlying economic scenario in three specific financial crises that have occurred, since the Wall
Street crash of 1929. It goes on to explain its impact on global trade and the lessons that G20
governments can learn from them.
Synopsis of the problem
The focus of this essay is the Global financial recession of 2008 (also termed as the Great Crash),
Mexican crises of 1994 ( famously called the Tequila crises) and the Asian crises of 1997. It's an
attempt to understand and analyse the different impacts that the financial crises have had on
international trade.
The Great Crash of 2008 was caused by a bubble burst of sub–prime mortgages in America, which
resulted in a crash of the US housing market. This domestic economic crisis quickly transformed
into a global recession and spread economic devastation worldwide. During this period world trade
and foreign manufacturing bore the steepest fall since the Great Depression.
During the Mexican crises (1994) despite increases in interest rates and fall in foreign investments
the government tried to support the peso with dollar reserves. However, due to excessive depletion
of the dollar reserve, the peso was devalued which caused a major bank run resulting in a financial
crises.
The Asian crises of 1997 were triggered by Thailand as they gave up the fixed exchange rate regime,
leading to a major currency crisis. The

Effects of the Asian Financial Crisis on 1997
The financial crisis in many countries in Asia in 1997–1998 was an unexpected event. It was mainly
because most of the Asian countries had been enjoying economic growth prior to the crisis. The
crisis itself started with the devaluation of Thailand's Baht in July 1997. The Thailand government
decided to float its currency in order to defend the Baht against speculative attack, despite its fixed
exchange rate system. This decision was apparently the beginning of the economic downturn of
many Asian countries, such as Malaysia, Philippines, Hong Kong, South Korea, and Indonesia.
Before the crisis, Indonesia's economy was growing rapidly; having a low inflation and a well–
maintained current account deficit. However, Indonesia surprisingly became the country that was
affected the most by the crisis. This paper aims to examine the effects of the Asian financial crisis in
1997–1998 to Indonesian economy and how it could happen.
After Thailand floated the baht in 1997, Indonesia's monetary widened its currency–trading band. It
changed the exchange rate regime from floating exchange rate to free–floating exchange rate,
causing the Rupiah and the stock market to decline. Before the crisis, the exchange rate between the
rupiah and the US dollar was approximately 2,600 Rupiah/USD. The rupiah started to depreciate to
4,000 Rupiah/USD, and dropped dramatically to over 11,000 Rupiah/USD on January 1998. The
spot rates were over 14,000 in January 1998 and trading again over 14,000 during

Personal Narrative: The 2008 Financial Crisis
At the time of the financial crisis in 2008 I was about 10 years old. So, I was old enough to know
what was going on, but not why it was happening. My dad is self–employed, so we really
experienced the repercussions of this event. My dad is in construction and is a snowplower, so the
number of clients he had needed projects to be completed or driveways to be plowed severely
decreased. Also at the time my mom was a stay at home mom for both of my sisters, but after the
crisis occurred this would no longer be able to continue. My dad had also just bought a brand–new
plow truck so now in addition to having less clients they now had a car loan they had to worry
about. Another aspect that I remember hearing about is how high the price of houses was as well.
They were being priced way higher than they we worth. So, at the time my uncle and his family
purchased a house out in Genoa for about $300,000 and within a few years they had lost so much
money from the sale because the market crashed and their house was worth so much less. But the
thing is the lenders were doing this to most people. They would offer them a loan for more than
what they can afford. ... Show more content on Helpwriting.net ...
Sadly, I know this wasn't the case for much of the country. Not only did families have issues not
being effected but also the companies. While I watched the video "Inside the Meltdown" most of the
information I had heard before in my other classes that I have taken at ECC. But I thought it was
most beneficial to see each company that was responsible. But really, I think people are still trying
to figure out who's responsible for the meltdown. But in my eyes, it's time to move past that and
focus on what is happening

Financial Crisis
1 Introduction
The latest global financial crisis was exploded in 2008. This was the most serious financial crisis
since the economic depression which occurred in 1930s and it severely impacted the global financial
market. Lots of corporations collapsed during the 2008 financial recession which was caused by
breakage of capital chain. Although some companies did not bankrupt during that period, they also
had suffered huge loss.
The 2008 global financial crisis began from America. American financial crisis came from the
prosperity of real estate. Before the 2008 global financial crisis, a large number of financial
derivatives were generated and financial bubble became more and more serious. Finally, American
sub–prime crisis occurred ... Show more content on Helpwriting.net ...
Nevertheless, Ghoshal disagrees this view and approves of the stewardship theory, because it can
effectively give consideration to the profit of 'customers, employees, shareholders ' and their
'communities ' (Davis, Schoorman and Donaldson, 1997, citied in Ghoshal, 2005: 81).
2.3 Background of financial crisis
The 2008 global financial recession has been described a 'once in a century credit tsunami ' (Earle,
2009: 785). This is a disastrous blow to global financial community. Bullard (et al, 2009, citied in
Hu et at, 2012) points out that many economists regarded the global financial crisis as the most
serious global finance disaster since 1930s. Compared with only 11 banks was bankruptcy during
2003 to 2007, at least 160 American banks went broke in 2008 and 2009 (Fdic, 2011, citied in Hu et
al, 2012). From this statistics, it is not difficult to know how strong influence brought by this
financial crisis.
There is a close link between the 2008 global financial crisis and sub–prime crisis. Bernake (2007,
citied in Hlenzerjr and Zhao, 2012) asserts that 'sub–prime mortgages are loans made to borrowers
who are perceived to have a high credit risk, often because they lack a strong credit history or have
other characteristics that are associated with high probabilities of default '. Furthermore, during 1990
to 2000, because of the IT

1930s Financial Crisis
The world economy has faced two major financial crises in its time and their effects are still rippling
through the world economy till now. The Great Depression of 1930s had a worldwide economic
crisis effect that led to a widespread unemployment, a halt in industrial production and construction
and a decline in stock prices. The world economy barely came out of the effects of the Great
Depression and was performing fairly well when it again faced another financial crisis of the 2000s.
To classify root causes as to why financial crisis occur, one needs to go follow a systematic
approach to this problematic situation. Be it human related failures or bank regulators failures, the
financial crisis was unavoidable considering the ongoing circumstances.

Shareholder Value and Current Financial Crisis: An...
Shareholder Value and Current Financial Crisis: An analysis of the Relationship INTRODUCTION
Corporate governance in a particular firm is inevitable for its administration, policy making and
overall health. In other words, 'Corporate governance affects the development and functioning of
capital markets and exerts a strong influence on resource allocation[1].' Not only does it conduct the
present running of a firm but it also has a futuristic outlook and a good corporate governance system
encourages innovations in the firm[2]. There may be counter arguments that the existing cut–throat
competition in the market can be left for taking care of good governance in a corporate because one
lacking good governance will definitely be ... Show more content on Helpwriting.net ...
In other words, maximizing shareholder value is enriching the shareholders through either issuing
dividends by the company or increasing the stock price of shares of the company in the market. 1.2
Shareholder model of Corporate Governance. As already discussed, each Company has to be run on
a certain model of Corporate Governance. Amongst the many forms and models of Corporate
Governance, shareholder model is a prevalent one. Now what is this shareholder model of Corporate
Governance? The so–called 'shareholder value' norm is not simply or even principally a legal rule or
principle. It is above all a practice which came to shape managerial behaviour in large, listed
American and British firms, and increasingly those in other jurisdictions, in the last decades of the
twentieth century[10]. In the words of Hansmann and Kraakman, who offer the most lucid and
fundamental explanation of shareholder model, 'The principal elements of this consensus
(shareholder value model) are that ultimate control over the corporation should be in the hands of
the shareholder class; that the managers of the corporation should be charged with the obligation to
manage the corporation in the interests of its shareholders; that other corporate constituencies,

The Financial Crisis Of 2007
The most recent financial crisis of 2007 was felt throughout the world, and brought about huge
economic consequences that are still being felt to this day. Within the United States, the crisis
undoubtedly resulted in a surge in poverty and unemployment, a significant drop in consumption,
and the loss of trust in the capitalist economic system. Because of globalization, this crisis was felt
through the intertwined global markets, affecting underdeveloped countries even more. Historical
events from the past have taught us that financial crises such as the one we suffered during 2007
have occurred a vast number of times. From Mexico to Thailand, these financial crises have resulted
in contagion worldwide, and have caused governments to ... Show more content on Helpwriting.net
...
Banks would lend money to these prospective home buyers without checking the amount of
incoming and concurrent assets that they owned in order to see if they would be able to repay the
loan. These loans were then pooled and sold off to government financial institutions such as Fannie
Mae and Freddy Mac. Slowly, the homeowners were unable to repay their loans, which forced them
to either sell their homes at a lower price or foreclose, between September 2008 and September
2012 alone, 3.8 million U.S. property owners lost their homes (Balaam, 196). This severely
increased the mortgage loss rates for both lenders and investors; it became known as the subprime
mortgage crisis. Eventually, government financial institutions whom had bought these pooled
mortgages filed for bankruptcy soon after, which had a chain–effect reaction throughout the entire
economic system both in the U.S. and around the world. Thus, it created what is now known as the
most recent financial crisis. The U.S. government immediately issued emergency loans and tried to
increase the money supply, they extended these emergency loans to over 700 banks in order to
incentivize home, student, auto, and small business loans (Balaam, 194). By the end of 2008 the
stock market in the United States and Europe had suffered loses of over 40%; losses that until
recently have recovered (Balaam, 194). The economic crisis resurged feelings of loss and
insecurities that were to some

Similarities and Differences of the Great Depression as...
SIMILARITIES AND DIFFERENCES OF THE GREAT DEPRESSION AS COMPARED TO
TODAY'S FINANCIAL CRISIS
ABSTRACT The financial crisis which the United States is combating today, in many aspects
resembles the characteristics and consequences which were the outcome of the Great Depression
lasting from the time period 1929 till 1933 (Great Depression). The Great Depression of earlier
times and the financial crisis of the current times from 2003–2008 will be studied in depth in the
following research work in order to bring out the similarities and differences the United States faced
during these two times of financial turmoil. Particular highlighted areas would comprise of
government bond rates, Gross Domestic Product rates, Interest rates, money ... Show more content
on Helpwriting.net ...
13 and did not revive back until 1954. On the other hand in 2008 Dow fell a record high of 14,280
on Oct. 5, 2007 to a low of 10,267 on Monday, before gaining a little to Friday's close of 10,325.
The stagnant incomes in 1929 observed a 4 percent drop in inflation–adjusted disposable income of
agricultural workers whereas the top bracket class observed a steady gain whereas in 2008
(Waggoner J, 2008), inflation–adjusted income for middle–class workers dripped by 1 percent. The
concentration of wealth in 1929 was mainly in the hands of stock speculators (Tomkins L M, 2008)
whereby the richest 1 percent of Americans owned approximately 40 percent of the country's
wealth. However the current figures reveal that in 2008 the richest 0.1 percent of Americans
constitutes only 11.6 percent of the total nation's income (Calbreath D, 2008). As per the
information given by Amity Shale's in her "The Forgotten Man: A New History of the Great
Depression", November 1933, figures reveal that unemployment rate had increased to over 23%
whereas in the current times it's just 5%.
GOVERNMENT BOND RATES Stocks performed very badly during the Great Depression but on
the contrary government bonds did fairly well. During depression Bond prices did rise tremendously
as bond yields came down sharply. For example, the prime corporate bond output level fell from
4.59% in September 1929 to 3.99% in May of 1931. By June of 1938

Were Business School to Blame for the Financial Crisis?...
Were business school to blame for the financial crisis?
What should business school do to help prevent similar crisis in the future?
All over the world, global financial crisis is considered as one of the worst economic recessions,
which has affected other countries in several parts of the world. Many people claim that business
school is nurturing their students with less regard for the social responsibility and sustainability of a
business success than there should be.
The argument concerning the academies of the apocalypse has been widely discussed in terms of the
effect on financial predicament due to an inadequate preparation of business education. This essay
will presents a various points of view about whether business school ... Show more content on
Helpwriting.net ...
Similar to Gempesaw (2009, p.333) citing Curtis's views on the economic recession that greed and
the lack of ethical behavior can bring about mismanagement and lead to the current economic
slowdown. He complains about business education that it only focuses on maximizing shareholder
value rather than the importance of social responsibility, which should be considered as essential as
profit margin and growth. Hence, this profit maximization should not be considered as the only one
aspect to succeed in the business organisation.
In contrast, there has been a plenty of opponent presenting an opposite side on the view of business
school curriculum. Some critics argue that a number of business programmes consist of social
discipline including an understanding of ethics and corporate social responsibility (CSR), which are
essential to business leadership. David Crowther, professor of CSR at Leicester school, states that
the study of CSR has been instilled in the course before the problem of financial collapse (James,
2009) Although some of the current dilemmas may have stemmed from an underemphasis on CSR
and business ethic, Willmott (cited in James, 2009) argues "The financial crisis was not solely due to
our graduates from 15 to 20 years ago". Moreover, Warnes (2012) points out on the structure of
business education in many schools, which tend to compress and change their programmes to be
flexible in order to cope with this severe economic situation. Regarding the growth

Financial Crisis And Its Effects On Financial Institutions
The recent financial crisis has a huge impact on systemic Important Financial Institutions; it's
distressing effect can be felt in almost every business area and process of a bank. A fairly large
literature investigates the impact of financial crisis on large, complex and interconnected banks. The
great recession did affect banks in different ways, depending on the funding capability of each bank.
Kapan and Minoiu (2013) find that banks that were ex ante more dependent on market funding and
had lower structural liquidity reduced supply of credit more than other banks during crisis. The
ability of banks to generate interest income during the financial crisis was hampered because there
was a vast reduction in bank lending to individuals and ... Show more content on Helpwriting.net ...
Recent studies have investigated the impact of the 2007–2009 financial crises on banks' capital.
Berger and Bouwman (2011) emphasised the importance of capital during financial crisis. Their
empirical study concludes that banks with solid capital base have some benefits during the crisis
than those that are poorly capitalised. Well capitalised banks are more able to withstand the shocks
due to liquidity squeeze, and therefore had higher chances of surviving the crisis period. Other
benefits accrued to well capitalised banks include increase in their market share and profitability, as
customers withdrew their funds from less capitalised to a well–capitalised banks. This conclusion
was also reinforced by a recent empirical study conducted Olivier de Bandt et al (2014) on a sample
of large French banks over a period of 1993 – 2012. Similarly, Gambacorta and Marques–Ibanez
(2011) demonstrate the existence of structural changes during the period of financial crisis. They
conclude that banks with weaker core capital positions, greater dependence on market funding and
on non–interest sources of income restricted the loan supply more strongly during the crisis period.
Using a multi–country panel of banks, Demirgüç–Kunt, Detragiache and Merrouche (2010) find
among others results, that during

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

The Financial Crisis And 2008 Is A Big International Crisis
In every country, they always have a chance to have a financial crisis, it depends on the government
and banks, which means Australia might go to have a financial crisis in the further year. Banks can
reduce the likelihood of having a financial crisis in countries. Many possible ways to have a
financial crisis and 2008 is a big international crisis. Australia financial system helped the
government to reduce the damage from the 2008 international crisis, many countries except
Australia have a serious problem and impact after the crisis. Australia financial crisis can cause by
banking and houses, it can avoid one crisis, but may not evade the second, so they should find a
solution to avoid the crisis come.
The financial crisis, the value of ... Show more content on Helpwriting.net ...
Therefore, every bank trying to avoid this situation (Ellis, 2015). A speculative bubble is also called
stock exchange, people generate income from buying stocks. Many people who guess the price of a
stock and hoping to have a higher price after. When all people keep buying the same stock, the price
is getting higher and higher, if they all want to sell at the same time, the price will fall. Therefore,
the price of a stock is more than the current price including dividends and interest, that means the
stock are having exhibited a bubble. Finally the international crisis, a speculative attack or cannot
pay the country debts, they will force to devalue its currency and either, these countries will affect
other countries with their trading, therefore, create financial crises in their country and might affect
the whole world. (Sociable, 2014) In 2007 to 2008, there a huge international crisis and its affect so
many countries at one time.
In 2008, there is an international crisis started in USA. It affects almost the whole world. The
American enterprise institute, Peter Wallison had found in a research that said in United States
government, they still believe in the idea of the 2008 financial crisis was caused by insufficient
regulation of the private sector (Opinion Journal: What Caused the Financial Crisis?, 2015). There
are some countries in Europe have not been in crisis because they were not have held by the United

Spanish Financial Crisis
Spanish financial crisis
Introduction
(source: Wikipedia)
The 2008–2010 Spanish financial crisis is part of the world economic crisis of 2008. In Spain, the
crisis was generated by long term loans (commonly issued for 40 years), the building market crash
which included the bankruptcy of major companies, and a particularly severe increase in
unemployment, which rose to 13.9% in February 2009.
Spain continued the path of economic growth when the ruling party changed in 2004, keeping robust
GDP growth during the first term of prime minister José Luis Rodríguez Zapatero, even though
some fundamental problems in the Spanish economy were already self–evident. Among these,
according to the Financial Times, there was Spain's huge trade deficit ... Show more content on
Helpwriting.net ...
Spain accounts for 11.5 percent of eurozone GDP while Greece only accounts for approximately 2.5
percent. Spain is the 4th largest economy in the 16 nation eurozone and it is the 10th largest
economy in the world. If the economy of Spain fails it will cause a shockwave that will be felt in
every corner of the globe. In fact, there are quite a few analysts that believe if Spain defaults it
would ultimately lead to the breakup of the eurozone.
So will the EU step up and bail out Spain? Well, there are rumors that EU officials have begun work
on a bailout package for Spain which is likely to run into the hundreds of billions of dollars, but on
Monday the European Commission, the Spanish government and the German government all denied
that the European Union was preparing a bailout for the Spanish economy.
9 reasons why Spain is a dead economy walking
(source http://www.businessinsider.com)
#1) Even before this most recent crisis, unemployment in Spain was approaching Great Depression
levels. Spain now has the highest unemployment rate in the entire European Union. More than 20
percent of working age Spaniards were unemployed during the first quarter of 2010. If people aren't
working they can't pay taxes and they can't provide for their families.
#2) In an effort to stimulate the economy, Spain's socialist government has been spending
unprecedented amounts of money and that

Financial Crisis And Its Effects On Economic Growth
The late half of 1997 and the early parts of 1998 presented the world with one of the world's most
famous financial crises. This financial crisis proved to be detrimental mainly to the south–eastern
Asian area, including South Korea, Thailand, Malaysia, Singapore, Hong Kong and Indonesia. The
aforementioned south–eastern states recorded astounding economic growth in the preceding decade.
The downfall of the economy caused a domino effect in the local markets and currency markets of
each country. The nations' leaders, as a result, had to request assistance from the IMF. Politics were
important in creating the financial boom, but they were also guilty of the subsequent consequences.
Similar to a number of financial crises in the past, the Asian financial crisis came to be as a result of
unexpected economic growth. The countries were all under the influence of a number of different
economic criteria, such as cheap yet fairly well educated labour, lowered barriers to trade, and
economies based heavily on exports. Even Malaysia enjoyed bountiful foreign direct investment. All
of these elements came together to make Asia dominant force in exports. This was proven by the
fact that none of the countries affected by the crisis experienced of export growth lower than 12%
between 1990 and 1996. Not only did these countries experience rapid growth in exports, the nature
of the exports where product types are concerned also changed. The products evolved from simple
products like

2008 Financial Crisis Report
The economic turmoil of 2008 is arguably the worst financial crisis since the great depression of the
1930s. Although financial crisis is not entirely new, each one is characterized by unique challenges
that make it difficult to make a prediction on when and how the next financial crisis might occur.
The financial crisis of 2008 to 2009 was marked by a failure in the efficiency of the financial
markets, inability of regulatory bodies to regulate the financial product and was catalyzed by weak
macroeconomic fundamentals prevailing at the time. In the aftermath of the turmoil financial crisis,
there has been a debate in the financial community on whether there are specific indicators that
precipitate a financial crisis and whether the global economy is at a risk of experiencing the a repeat
of a financial crisis of a similar nature to the crisis of 2008. The ... Show more content on
Helpwriting.net ...
In the aftermath, it became essential for regulators to review policy approaches to prevent recurrent
the earlier crises going into the future. The lesson that informed regulators in reviewing the policies
is that markets cannot be self–correcting, and regulators must intervene from time to time to prevent
financial bubbles from forming or to prevent the effects of the financial crises when they occur
(Tropeano, 2011).
Between 2008 and 2009 global finance institutions such as the World Bank and the International
Monetary Fund started to advocate for monetary measures that were anti–cyclical. The objective
was to avoid a depression through combing fiscal and monetary policies as economic stimulus
programs but aimed at ensuring social inclusive (Petkovski & Hristova, 2011). It is, therefore,
arguable that the adoption of the measures proposed by the World Bank and IMF prevented the
occurrence of depression which would have had catastrophic effects on the global

2008 Financial Crisis Analysis
The financial crisis of 2008/2009 was the most serious economic decline since 1929. This paper will
discuss a few of the causes of the crisis, the role the Federal Reserve played in connection with the
three main economic goals, and will then describe traditional and non–traditional measures taken to
stimulate the economy. Finally, this essay will relate the government to our present day economic
environment and explain why some economists say that the United States is experiencing a "new
normal."
The economic and financial crisis of 2008/2009 can be attributed to many things. The main reason
for the crisis can be attributed to the housing industry and the mortgages associated. When
individuals borrow hundreds of thousands of dollars from the ... Show more content on
Helpwriting.net ...
This caused lenders to reduce their standards, giving loans to those who had poor credit and low
income. Predatory lending practices were also used, giving out loans without verifying income.
Additionally, adjustable rate mortgages were offered, which offered payment homeowners could
manage to pay for at first, but expanded beyond what they could continue to pay for. Since these
practices were new, historical data showed that mortgage debt was a safe investment. Investors
continued to dump money into these investments while realistically, these investments were
becoming more risky. (Wallison)
Due to all the investments being made, careless lending requirements, and low interest rates within
the real estate market, housing prices continued to increase. Finally, borrowers started defaulting on
these loans, putting more houses on the market. However, there were not many buyers. Housing
prices began to fall since supply was up and demand was down. Often, mortgages became worth
more than their house was worth. By 2007, large lenders were declaring bankruptcy. They had
invested large amounts of money into the Mortgage Backed Securities and were losing money on
these investments.

Global Financial Crisis By The Wall Street Crisis
The purpose of this report is to study Global Financial Crisis 2008.This study is inspired by the Wall
street crisis and it covers why's and after effects of the crisis. After this crisis many of the roots
causes were observed like speculation, fragility of the system, greed of the managers which
adversely affected the market. The global financial crisis of 2008 is a major ongoing financial crisis,
the worst of its kind since the Great Depression (The Great Depression originated in the United
States occurred on October 29, 1929, known as Black Tuesday.). It became prominently visible in
September, 2008 with the failure of several large United States–based financial firms. The
underlying causes leading to the crisis had been reported in ... Show more content on
Helpwriting.net ...
As demand for the CDOs started growing across the global investment community, the investment
bankers (like Lehman) who were meant to sell these instruments also started investing a significant
portion of their own capital in these.
As Wall Street firms like Lehman were churning more and more home loans into CDOs and selling
them or investing their own money, there was a pressure on the banks to issue more loans so that
they can be sold to the Wall Street firms in return for a commission. Slowly banks started lowering
the credit quality for availing a home loan and aggressively used agents to source new loans. This
slippery slope went to such an extent that in 2005, almost anyone in the U.S could buy a home
worth $100,000 (45 lakhs INR) or more without income proof, without other assets, without credit
history, sometimes even without a proper job.
The U.S. housing market went into a classic speculative bubble. Home loans were easy to get, so
more and more people were buying houses. The increased demand for houses caused the price to
increase. The rising prices created even more demand, as people started to look at homes as
investments – investments that never went down in value.
In late 2006, Mortgage lenders noticed that people would choose a house, sign all the mortgage
papers, and then default on their very first payment. Although no one could really hear it, that was
probably the moment when one

Global Financial Crisis And Its Effect On Australian...
The Report gives the insight of Global Financial crisis and its effect on Australian Retails Markets
and
Supermarkets. Particular the Impact of GFC on the one of the second largest leading independent
supermarket, FOODWORKS during the period of 2007–2009 and examines the impact of the
Global
Financial crisis on the performance of the company. The global financial crisis brought with it very
many challenges. Some were controllable while others were uncontrollable. Foodworks being the
second largest Independent supermarket in Australia faced many difficulties during this period.
Financial aid from the government made recover all the industries, in the span of three years these
companies survived and came into profits, and government took appropriate steps to stimulate and
come over the crisis.
BACKGROUND
FoodWorks is one of the most leading retailer market, groups of Australian United Retailers Limited
which was started in November 2004 and later formed as a Food Works Supermarket group Ltd and
the member Australian National Group which is the main competitors for Woolworth, Iga, Coles,
and
Aldi. FoodWorks is the second largest leading Independent supermarket in Australia. The Annual
Turnover is excess of $2 billion in retail level. Its Operation more than 650 stores and having
franchise
nearly 400.The main Headquarters is in the state of Victoria. The only one supermarket in Australia

which is different from every store to store and have strong

Summary: The 2008 Financial Crisis
hroughout History, our great Nation, the United States of America, went through many era's of
financial crises that resulted in depressions. This also happened in 2008, when we experienced an
immense financial crisis known as the Great Depression of 2008–2009. In an effort to end the
financial crises, the government established three major bailouts: the Emergency Economic
Stabilization Act of 2008 (EESA), the Troubled Asset Relief Program (TARP), and the American
Recovery and Reinvestment Act (ARRA). Overall, the financial crises of the Great Recession of
2008–2009 caused the government to implement various bail–outs in an attempt to stabilize the
economy. These programs have their own advantages and disadvantages that affect individuals and
... Show more content on Helpwriting.net ...
The Treasury is now gradually drawing to an end of its remaining TARP investments and continues
to implement TARP initiatives to help struggling homeowners avoid foreclosure (Tarp Programs).
The American Recovery and Reinvestment Act (AARA), which is also known as the Recovery Act
or the Stimulus, is a legislation that was enacted by the United States Congress and signed into law
by Pres. Barrack Obama on February 17, 2009. It was designed to stimulate the U.S. economy by
saving jobs that were put at risk by the Great Recession of 2008–2009 and to create new jobs
(American Recovery and Reinvestment Act). In addition, it created measures to update our nation's
infrastructure, enhance energy independence, expand educational opportunities, improve affordable
health care, provide tax relief, and protect those in greatest need. The Department of the Treasury
initiated nine programs, including tax changes and the delivery of an estimated $150 billion, which
were designed to directly relief Americans and their families (Recovery Act). Indeed, these
programs were relevant in my

Analysis Of The Current Financial Crisis
Analysis Of The Current Financial Crisis
YourFirstName YourLastName
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Financial crisis is a situation where the financial value of assets or an economy drops by a
significant margin that can cripple the normal functioning of an economy of the affected country.
Different economists came forward to explain theories that lead to the different financial crisis
especially in the history. These economists include Krugman, Taylor and Blinder. Causes of the
crisis include recessions, banking shocks, currency crisis, stock shock, and financial bubbles
amongst others. There is evidence of financial crisis I the past. Most of the time, the crisis was
brought ... Show more content on Helpwriting.net ...
The model has three parts; the aggregate demand equation. The equation relates the domestic
spending to real income alongside the interest rate, with the net export. y = D(y, i) + NX (eP*/P, y).
The second part is the money–demand equation: M/P = L(y, i) and the third part of the model is the
interest arbitrage equation. This part explains that investors should shield themselves against risks
and expect the exchange rates to be stable; i = i*
The model has its limitations as no exchange rate is expected not to change with time (Bernanke and
Gertler, 1989). The third part is therefore unrealistic.
The figure shows output y and exchange rate e. The line AA shows points at which the domestic
rates equals the foreign rates. The line GG outlines the amount of output given a particular exchange
rate. When a strong open economy effect is added to the model, a crisis occurs. For example, if
foreign currency controls most debts of many firms in a country, the balance sheets will constrain
their investment. This will lead to domestic demand having a direct dependence on the real
exchange rate; y = D(y, i, eP*/P) + NX(eP*/P, y) . Under these circumstances, when the real
exchange rates becomes unfavorable, the firms holding foreign current will not be able to invest.
This will lead to triviality at the margin of the direct exchange rate effect. The corporate sector runs
bankrupt but the small businesses benefit from weak currency. The effects can be so significant

The Financial Crisis Of The Fiscal Crisis
The 2007–2008 financial crisis is seen as one of the biggest failure of risk management. This is the
reason why it has been described it as a credit tsunami.
The aim here is to look at the state in which the financial market is at the moment after being hit by
the 2007–2008 financial Crisis. The first part of this report introduces some key issues that have
affected the confidence in the banking sector and its importance in the banking sector. The second
part will provide explanations on how to restore confidence.
Confidence is very vital in the banking sector.
The 07–08 financial crisis known as credit crunch as led the confidence in the banking sector to a
dramatic fall. Evidences have been proved for example with customers redrawing their deposit form
banks like northern rock.
As mentioned by Gerard Caprio (2005), a crisis always lives citizens cautious with their savings in
the banking sector. Mistrust or lack of trust has led to the failure of banks like Northern Rock and
Lehman Brothers.
Why has confidence been dented?
Finding the way to promote confidence is very important because it will be the key to prevent or
avoid another financial crisis. A recent study has shown that bankers were making decision without
knowing the securities of treasuries they were buying. Instead of basing everything on credit
worthiness, banks were more focus on interpersonal and individual relations (Ingves, 2014).
The first problem was with the customer behaviour. Banks are

Global Financial Crisis
ACCG 399: Accounting in Context
Accounting's Positivistic Tendencies: Overlaying a Social Science with Pure Scientific Rationale
Tutorial 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 ...
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 policies , 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

Cyprus Financial Crisis
I. Introduction
With a population of only 1 million and no more than half a percent of Euro zone economy, it is
surprising to find out that the financial crisis in a tiny country called "Cyprus" has enormous global
implications (Long 2013). It cannot be also denied that the "Subprime Mortgage Crisis" of the US in
2008 has its downbeat domino effect to the world including European Union and Cyprus. In this
report, not only the most critical reasons but also the aftermath of Cyprus financial crisis and
possible alternatives which could have been done to ease such economic downturn will be carefully
examined.
II. Body
1. Main Reasons
The root of the crisis lies when Cyprus experienced a terrible recession in 2009 when the ... Show
more content on Helpwriting.net ...
That decision let Cypriots themselves furious and they have responded by trying to clear out their
accounts and that will negatively impact on the deposit security or stability. Apart from any possible
instability in deposit base, Eurozone banks may see their ability to rise unsecured funding
deteriorate.
Cyprus became the first ever Eurozone country to apply capital controls with limits on credit card
transactions, daily cash withdrawals, foreign money transfers and cashing cheques. This is a clear
indication of the severity of the situation and, effectively, at least temporarily devalues Euros located
in Cyprus as they are now less easy to transfer.
More than a thousand bank employees marched in the capital Nicosia on Saturday, angry that their
jobs could be lost in the forced restructure of the island 's economy –– and that the government had
proposed to nationalise pensions in order to fund the bailout. That option was later rejected.
Some protests to express Cypriots' indignation happened on the street, while parliament voted
overwhelmingly to reject the tax on bank accounts. Furthermore, Banks have been closed for more
than a week, to prevent depositors moving their money off the island, which would have caused the
banks to collapse and made the entire situation worse. However, ATMs were still opened, and they
were quickly ran out of money as everyone tried to withdraw as much

Financial Crisis 2008
Banking Academy | City University of Seattle |
CORPORATE FINANCE
THE GLOBAL FINANCIAL CRISIS 2008 Group's member:Nguyễn Như Nam (C)Phan Thu
AnNguyễn Thùy DungHoàng Bá SơnNgô Thị Ánh TuyếtDate: 28/11/2014 |
AbstractIn 2008 the world was fell into the worst financial crisis since the Great Depression of
1929–1933. Although this crisis has gone, however, its consequences for the economy of many
countries is very serious, even now many nations are still struggling to escape difficulty. Just in a
short period, the crisis originating from America has spread to all continents. It led to a series of
serious consequences such as the falling in stock markets, increasing in unemployment rates, large
financial institutions had been ... Show more content on Helpwriting.net ...
Prior to formally entering the financial crisis, a range of signs forecasting this event had happened
around the world. Problems with short–term debt funding and mortgaged assets were not limited to
the United States, which is also the underlying cause of the financial crisis (Stoeckel, 2009). In
2001, the U.S economy fell into recession after the dotcom crisis and the terrorist event on
September 11. To encourage the consumption, the central bank had lowered interest rates. The result
was that with interest rates so low, investment and consumption became too easy, the U.S financial
markets rapidly back and created "real estate bubble". Started from the housing market, the crisis
quickly spread to the entire U.S financial system bank. In 2007, the 4th biggest bank in the U.S,
name Lehman Brothers was under pressure. Lehman tried many different ways to save itself such as
raise capital, sign a deal with Morgan Stanley and Bank of America, merger with Barclays but none
of it worked ("Financial Crisis 2007/2008 Overview," 2011). From here, everything was ready for
the crisis explosion in September 2008.
2. Reasons
There are so many reasons lead to global financial crisis in 2008. In this case, I want to mention to
seven main causes which directly promoted financial collapse. 2.1 The housing bubble
From 1890 to 1997, the real price of housing in the U.S. remained relatively stable. When prices
peaked in 2006, the average price

The Financial Crisis Of The Foreclosure Crisis
Introduction
During the real estate boom of the early 2000's Wall Street began offering a product called mortgage
backed securities that were essentially multiple home loans bundled together. They then started
selling off pieces of those loans to investors who wanted exposure to the booming real estate market
in the form of a tradeable security. As the popularity of mortgage backed securities increased the
banks needed more product which were more mortgages. The pool of borrowers with a good credit
history diminished the lenders lowered their qualification standards to satisfy the growing mortage
demand. To entice more borrowers and speculators lenders began to offer loans to people with bad
credit and even no down payment. The term liar ... Show more content on Helpwriting.net ...
The crises showed just how interconnected the banking system is throughout the world. The Lehman
Brothers bank closure in 2008 created a major financial crisis around the world due to its influence
(The Economist, 2013). It took the government's massive bail outs to prevent total collapse of the
financial system and to some extent economic collapse of the country. This government action set a
precedent and to some sent a message that the reckless action by the banks in the name of profit is
fine because they now have a safety net. It is a good example of how the collapse of a big financial
institution that has national and global influence can affect several interrelated firms to the detriment
of the country's economic interests. This paper therefore, examines the notion "too big to fail" in
relation to banking.
The Concept Too Big to Fail Kaufman (2014) explains that the concept "too big to fail" is one that is
complex to warrant regulation to prevent it from failing. Due to its influence, the government must
intervene to prevent it from becoming insolvent. The special regulation to prevent failure includes a
requirement for higher capital, putting in place measures such as increased liquidity. Besides,
frequent supervision by regulatory bodies like the Basel Committee, the Federal Reserve, or the
Federal Deposit Insurance Corporation (FDIC) are necessary to prevent the collapse of "too big to

The Structure of a Financial Crisis Essay
The Structure of a Financial Crisis
INTRODUCTION
The year 2001 had been unlucky for Turkey. Apart from the crisis in 1994 and November 2000, the
country had to face another financial crisis, causing problems in the management of its economy.
Why does a country delve deep into financial crisis? What are the possible immediate triggers for
both the current and potential new crises? What precautions should be taken for the key issues like
the fragility of the financial and banking system, belated reforms and privatisation, rampant
corruption, exchange rate policy? And how can the governments satisfy the markets and people to
undertake these reforms?
The current crisis has not hit the country overnight. This article ... Show more content on
Helpwriting.net ...
However, unlike the Transition Economies, Turkey embarked on a prospective plan to privatise a
major part of the public sector in the mid 80's and laws enacting and enabling the privatisation of the
State Owned Enterprises (SOE) in late 1985, was an important breakthrough. In the 1990's
privatisation went ahead but caused disappointment in many sectors. Most privatised firms could not
improve their performance and some that succeeded, had been profitable already as SOEs. But that
was not the only problem the country had to face. Turkey had already begun to face significant
problems regarding the Privatisation Policy in the 1990's. These mentioned problems not only
aroused from the aggregate demand concerning the SOE, and the negative effect of investment but
the ongoing debate carried by the opposing political parties in the Parliament.
The governments have overcome several difficulties and successfully resumed privatisation in the
beginning of the second decade. Though the outcome was promising, the program proceeded more
slowly than the original plan. In 1993 for example, a net revenue of US$ 543 millions was raised
through several privatised firms including two electric companies, two communications equipment
manufacturers, a supermarket chain and four cement factories. In 1994 a total of approximately US$
412 million was

What Is A Financial Crisis?
What is a financial crisis? According to Mishkin and Eakins (2015), "a financial crisis occurs when
information flows in financial markets experience a particularly large disruption, with the result that
financial frictions and credit spreads increase sharply and financial markets stop functioning. Then
economic activity will collapse" (p.165). Throughout history the United States of America has
experienced six significant financial crises. Each crisis left the United States of America's economy
is disarray.
Furthermore, many economists believe that a major economic crisis occurs about every seven years.
Consequently, this raises the question, should the United States Government bailout financial
institutions during an economic crisis? ... Show more content on Helpwriting.net ...
According to the Department of State Office of Historian, "During the 1973 Arab–Israeli War, Arab
members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo
against the United States... The embargo both banned petroleum exports to the targeted nations and
introduced cuts in oil production". The embargo lead to a shortage of oil, increased oil prices per
barrel, lead to the devaluation of the U.S. dollar and caused a global recession.
The third financial crisis faced by the United Sates was the recession of the 1980's. Sablik (2013),
states that the main reason for the recession of the 1980's and the leading factor for this financial
crisis was caused by the chairman of the Fed, Paul Volcker. "(Volcker) felt strongly that mounting
inflation should be the primary concern for the Fed: "In terms of economic stability in the future,
[inflation] is what is likely to give us the most problems and create the biggest recession" (Sablik,
2013). Volcker's aggressive tactics back fired and lead to high unemployment rates and high interest
rates.
The fourth crisis was Black Monday, the stock market crash of 1987. According to Colombo (2012),
During this time the Federal Reserve raised interest rates to try and control inflation. This did not sit
well with individuals who were invested in the stock market. So, in order to secure their funds, they
invest in portfolio insurance to counter

Impact of Financial Crisis on Gulf Area Essay
Background The global financial crisis that was experienced in 2007/2008 affected many nations of
the world. Some countries such as America and most European countries were hard hit since they
were directly affected by the crisis. Other countries especially those in Asia and Africa were not
adversely affected as they were not directly hit by the crisis. This crisis started in the United States
after the housing bubble busted. Although the bursting of the housing bubble was the main cause of
the crisis, there were a series of events that preceded it. One event that indirectly contributed to this
crisis was the Russian debt crisis as well as the Asian financial crisis that took place in 1997/1998.
These two events made many investors to ... Show more content on Helpwriting.net ...
This foreclosure negatively affected both the financial institutions as well as individual borrowers.
For the borrowers, their wealth was drained and their purchasing power eroded (Martin, 2009). For
the financial institutions, their strength as banking institutions was greatly affected. Their liquidity
had greatly reduced and most of the banks were struggling to carry out their daily monetary
activities. The total losses that were recorded during this crisis were estimated to be trillions of
dollars globally. The Federal Reserve as well contributed to this crisis through some of the policies
that it instituted. Between the year 2003 and 2004, this institution lowered the rate of the federal
funds from the initial 6.5 per cent to just 1.0 per cent (Jane, 2011). This move was aimed at
addressing the effects that were associated with the terrorist attacks that took place in September of
2001. These measures were also meant to soften the negative effects that were occasioned by the
collapsed dot com bubble. At this time also, there was a perceived risk that the United States could
suffer from deflation. These measures were therefore aimed to combat this risk of deflation. These
measures increased credit uptake but the expected results were not realized. To address the said
problems, it was expected that the money borrowed would be invested in business.

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 Cause Of Global Financial Crisis

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The Cause Of Global Financial Crisis