Global Financial Crisis and its Impact

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
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The Greek Financial Crisis Essay examples
The Greek Financial Crisis
Ever since the end of 2009, Greece has been involved in a financial and economic crisis that has
been record breaking and shattered world records in terms of its severity and worldwide effects. The
Greek government, since the beginning of the crisis, has attempted to take several governmental
measures to try and "stop the bleeding," including economy policy changes, dramatic government
spending and budget cuts and the implementation of new taxes for citizens. In addition to this, the
government has tried to alter the perceptions of Greek government and economy by the rest of the
world in an effort to appear both more liberal and more democratic. Greece has also been working
to privatize many previous...show more content...
As far as Greece's role in creating this crisis in the first place, it can be said that Greece is at fault
for a variety of reasons. The media has been focusing on the corrupt political system and
infrastructure, the lack of competition in the private sector, the wastefulness and inefficiency of the
public sector and a flawed tax system as causation for this mess. When the public sector was
expanded in the 1980's, Andreas Papandreou was given various agricultural subsidies and grants to
do with what he pleased. This enabled the funding of certain post–World War II groups to heal
political wounds and fund unions and other special interest groups to aid his political capital and
strength. The policies enacted in this decade allowed for the increase in power and funding of the
middle class by creating a vast amount of inefficient public sector government jobs for citizens. This
resulted in an increase in the levels of inefficiency, bureaucracy, corruption and wasteful spending
coupled with the increase in wages, pensions and benefits. This proceeded to drain through
government money and resources, and did not breed a culture of highly motivated, efficient and
effective government employees. A high amount of debts accumulated as the nation continued to
proceed in this way, using state money to subsidize failing businesses

Essay about The 2008 Financial Crisis
Have banks responded to the public accusation that the 2008 financial crisis was caused by a "crisis
of character" in their industry by actively seeking candidates of integrity and character?
There are two components to this research question: The first draws on strategic management
research and the notion of organizational legitimacy and to what degree organizations operationally
respond to public opinion; the second is the concept of "character," what it means, how it is
conceptualized, measured and operationalised through the selection of new employees. I hypothesize
that, since September 2008, banks:
1.have changed the qualities they seek in employee candidates;
2.and are now actively seeking candidates with higher levels of...show more content...
National Public Radio (NPR) in the US has suggested there is "moral rot" on Wall Street. In all, an
acute level of pressure has befallen the global banking industry, shining a bright spotlight on the role
of ethics, integrity and character in organizations.
And rightly so. The benefits of hiring and training employees with "character" and "ethics" have
been shown to relate at an individual level to well being (Park, Peterson & Seligman 2004), and at
an organizational level to performance and leadership success (Sarros & Cooper 2006). Ethics also
aids in retaining employees (McDaniel, Organizational Ethics: Research and Ethical Environments,
2004), which is increasingly business–critical as the "war for talent" intensifies (Michaels,
Handfield–Jones, Axelrod, War for Talent, Harvard Business School Press, McKinzie & Co, 2001).
McDaniel suggests leaders have two ways to instil ethics in their firms –– the selection method and
the training method. However, Beer (1998) asserts that selection is really the only reliable method
for finding employees with desired characteristics, as unlike skills and knowledge, personal

2007-2008 Financial Crisis Essay
The financial crisis of 2007–2008 was one of the worst economic downturns the United States has
faced since the Great Depression of the 1930s. It affected the banking industry by causing banks to
squander money on mortgage defaults, bringing interbank lending to halt, as well as affecting credit
being provided to consumers. Another effect was that it caused certain businesses to essentially run
out or come to an end. Many companies had to take advantage of bailouts, but the economic was
still in disarray. The financial crisis also affected the country in the long–term by bringing about new
regulatory programs such as Dodd–Frank Wall Street Reform and Consumer Protection Act (Singh,
2015).
Before the beginning of the financial crisis in 2007, rules and policies passed in the United States
had required the banking sector to allow more consumers to be able buy homes (Nielsen, 2008).
Starting in the year 2004, the bursting of the housing bubble took place, when Freddie Mac and
Fannie Mae, two of the largest and most well–known mortgage lenders in the United States, obtained
a large quantity of mortgage assets, including some chancy mortgages. They charged substantial fees
and accepted lofty margins from these subprime mortgages. The mortgages were used as safety or
security for getting private label mortgage–based...show more content...
TARP stands for Troubled Assets Relief Program. It is a safety net put in place by the United
States Congress and was originally worth approximately $700 billion. It was signed into law in
October of 2008 by then–President, George Bush. TARP basically allows the United States
government to purchase assets and equity from financial institutions to strengthen its financial
sector. The Dodd–Frank Wall Street Reform and Consumer Protection Act reduced the amount from
$700 billion to $475 billion. Then, on October 11, 2012, the Congressional Budget Office stated that
total disbursements would be $431

The Financial Crisis Of 2008 Essay
The 2008 financial meltdown resulted in the most treacherous investment landscape observed since
the great depression. The most notorious issue was the subprime mortgage crisis, which had a ripple
effect felt through every market in the world. The banks, whose leverage rate should never have
been higher than two times capitalization, surged as high as thirty to forty times market cap. With
this level of exposure, any unforeseen market fluctuations could mean disaster. Lehman Brothers, the
oldest investment bank on Wall Street, went bankrupt and thousands lost their jobs. Outside of
finance, thousands of companies in the United States and abroad had to fire significant portions of
their workforce, thus furthering the economic decline and plunging the US into an economic
recession. In the late 1990s, Congress repealed the legislation separating commercial and investment
banks, which resulted in investment banks overreaching their bounds. The Emergency Economic
Stabilization Act of 2008 was enacted due to the effects of the subprime mortgage crisis, which
allowed the US Treasury to spend billions of dollars to bail out the investment banks by purchasing
distressed assets. However, the bailout plan has created a debate over whether it was a good idea for
the government to bailout the investment banks. Also, if the government fared better or worse in the
years following the bailout.
The financial crash of 2008 created two paradigms, bailout and bankruptcy and to this day it is

The International Financial Crisis in 1929 Essay
The International Financial Crisis in 1929
Throughout the 1920's in Britain there were economic problems. Unemployment was increasing;
therefore there was low domestic demand and large amounts of poverty. Markets were also being
lost abroad, leading to a decrease in trade. However in 1929–31 these problems reached crisis point,
when in 1929 The Wall Street Crash called for an end of American Loans to Britain, and the re–call
of all Britain's debt. This had impact worldwide, as prices for goods slumped due to lack of
demand and business confidence disappeared. In Britain it became clear that the 'Laissez–faire'
policy was not going to work, but there was a divide in thoughts over which policy to adopt...show
more content...
He was, however convinced by King George V to remain as Prime Minister but as leader of a
national coalition government. In order to prove that Labour was a national, responsible party,
Macdonald was prepared to do this, as was Philip Snowden, Chancellor of the Exchequor. Snowden
believed that the budget should remain balanced and Britain should remain on the gold standard. He
therefore supported the May Committee's proposal despite Labour's working class stance. However
Arthur Henderson the foreign secretary did not agree. Henderson was heavily influenced by the
Trade Unions, and felt strongly that Labour should represent the working class, therefore he felt
that if the budget had to be balanced by cutting unemployment pay and raising taxes it was better
for Labour to leave office and leave such policies to the Conservatives or Liberals. This difference
in opinion within the party led to its break up and the formation of a national government due largely
to the proposals if the May Committee.
(c) 'Ramsey MacDonald had no alternative but to form a National Government in 1931.' Do you
agree or disagree with this statement? Explain your answer. (15) After the First World War, Britain
was thrust into a depression. Unemployment rocketed and wages fell dramatically. The most

Essay On The 2008 Financial Crisis 2008
The 2008 financial crisis is considered the worst period of economic stagnancy since the Great
Depression. This economic upheaval brought once impervious multi–national corporations, like GM
and Goldman Sachs, to their knees. One would think that such a calamity would have been easily
predicted; however, crises of this magnitude go unnoticed due to their multifarious and seemingly
innocuous triggers. The financial crisis of 2008 was caused by the proliferation of subprime
mortgages, increased leverage ratios, and the growth of the United States housing bubble. Subprime
mortgages are given to under qualified individuals who have demonstrated a prior inability to repay
loans. They usually incorporate high interest rates, low quality collateral, and less than...show more
content...
MBS are purchased from banks by financial institutions. Financial giants like Morgan Stanley,
Lehman Brothers, and Bear Stearns derive a portion of their wealth from the acquisition of
MBS. The advent of MBS caused a significant increase in corporations' leverage ratios. A leverage
ratio is a company's total debt divided by its total equity. A high leverage ratio means that a
company has more debt than equity, which is normally acceptable during times of economic
prosperity. However, during recessions, a corporation who has a high leverage ratio will
experience serious asset depletion. In 2008, it was common for companies to have high leverage
ratios; this was caused by their substantial subprime MBS holdings. The value of MBS is secured
by the actual value of the mortgaged homes; which can be sold to recoup the investor's principal if a
debtor cannot pay their loan. This safeguard was circumvented by the rapid fall in home prices when
the United States' housing bubble burst. Financial institutions, whose wealth depended on the
soundness of their subprime securities, became

Essay On The 2008 Financial Crisis
The 2008 financial crisis can be traced back to two factor, sub–prime mortgages and debt.
Traditionally, it was considered difficult to get a mortgage if you had bad credit or did not have a
steady form of income. Lenders did not want to take the risk that you might default on the loan. In
the 2000s, investors in the U.S. and abroad looking for a low risk, high return investment started
putting their money at the U.S. housing market. The thinking behind this was they could get a better
return from the interest rates home owners paid on mortgages, than they could by investing in things
like treasury bonds, which were paying extremely low interest. The global investors did not want to
buy just individual mortgages. Instead, they bought...show more content...
The new lackadaisical lending requirements and low interest rates drove housing prices higher,
which only made the mortgage backed securities and CDOs seem like an even better investment.
Now consider the housing market which had become a housing bubble, which had now burst, and
now people could not pay for their incredibly expensive houses or keep up with their ballooning
mortgage payments. Borrowers started defaulting, which put more houses back on the market for
sale. But there were not any buyers. Supply was up, demand was down, and home prices started
collapsing. As prices fell, some borrowers suddenly had a mortgage for way more than their home
was currently worth and some stopped paying. That led to more defaults, pushing prices down
further. As this was happening, the big financial institutions stopped buying sub–prime mortgages
and sub–prime lenders were getting stuck with bad loans. By 2007, some big lenders had declared
bankruptcy. The problems spread to the big investors, who had poured money into the mortgage
backed securities and CDOs. They started losing money on their investments. All these of these
financial instruments resulted in an incredibly complicated web of assets, liabilities, and risks. So
that when things went bad, they went bad for the entire financial system. Some major financial
players declared bankruptcy and others were forced into mergers, or needed

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%

Financial Crisis Essay
The United States has the biggest financial crisis ever since WWII. Which lasted from September 1,
1939, through September 2, 1945. It was a six–year and one–day battle. Whether or not the
seventy–eight trend is strictly reminding us that revanchism (the political manifestation of the will
to reverse territorial losses incurred by a country) hasn't changed. I recall my economics
professor warning his class at the time that, another crisis will happen soon. So he asked the class,
what do we fear more, inflation or recession? Many answered recession, because if the number of
jobs decreases we will be in trouble and health insurance will be taken away. Most employers are
now seeking for more qualities, and it is just getting harder to get...show more content...
There are at least six different countries in the United States that have universal healthcare coverage
for their citizens. Just as Africa, Asia, Europe, the North America, South America, Oceania and I'm
sure several ahead of us. In the first place, Jacob Zuma, Africa's president accomplished their
healthcare systematic by the poor automatically being enabled to health services and treatments
while the wealthy pay for the hospitalization according to a sliding scale. In Africa, there's a chain of
hospitals, clinics, and dispensaries that provide treatment to the community, with the Social Security
system financing their health services. Even if many people must still cover and pay for part of their
costs due to the amount paid by the Social Security Africa's healthcare system has been unchanged
since 1987.
Secondly, Asia is another country that accommodates for their population with universal healthcare
coverage. Many countries in Asia that provide free public medical insurance include Bangladesh,
Bhutan, Bahrain, China, Hong Kong, India, Iran, Israel), Jordan, Kazakhstan, Macau, Malaysia,
Mongolia, Oman, Singapore, Sri Lanka, Syria, Taiwan, Tajikistan, and Turkmenistan. All the
countries in Asia working as a team. If one country can't provide treatment for a patient, such as
cancer than they refer them out to India, and India being one of the biggest subcontinents in Asia. The

The Financial Crisis Of 2008 Essay
When you think of the 2008 financial crisis that affected not just the US economy, but the world as a
whole, most average middle–class Americans won't really know what triggered this economic
disaster. Most will probably blame, and rightfully so, those large corporations on Wall Street.
These corporations, which deal with insanely large amounts of money, will always be wary of
their stocks decreasing. But they also know that 99% of the time, everything will go back to
normal in the future. What they are not prepared for is economical collapses like we say in the
year 2008. The financial crisis of 2008 can be compared to the stock market crash of 1929, the event
responsible for the Great Depression. The financial crisis of 2008 can mainly be attributed to what
would be the mortgage market collapse. The exposures for these large Wall Street corporations were
too high, and when the bubble finally burst, trillions of dollars were lost. The company that lost the
most: Lehman Brothers.
For a company as large as Lehman Brothers was, one has to wonder how this could have possible
occurred. Surely there were red flags along the way that could have prevented this, right? The
answer is yes. The media reported on events that would have lead you to believe that trouble was
coming for Lehman Brothers, but truth be told, no one really knew that it would result in the
company ending up bankrupt. Everything from having a front row seat to watching another giant
like Bear Stearns fail, to

Introduction
The worldwide impact of the recent financial crisis outlines the importance of having a decent
understanding of crises. Latest episode has definitely showed that status of economic as well as the
financial performance is greatly affected by financial turmoil. During the crisis, world stock
markets have been collapsed, largest financial institutions have been bought out or fallen, and the
wealthiest nations like UAE, UK of USA had to stand up and aid their financial systems as well as
the economic ones. World economic activity was a common topic in the newspapers for many years
after it has occurred. "The present financial crisis is a culmination of many systematic factors. The
economic crisis has made us to believe that world...show more content...
It was a global bank which massively effected world financial status. It was the worst world
recession in all economies in last 80 years. Even today in many wealthy countries GDP is below its
pre–crisis positions, especially in EU (Europe) where it has evolved in the famous "Euro–crisis"
(Economist, 2013). Not only EU and USA but the whole world was affected. Inflation started to be
the serious problem, due to the high volume of printed money which had to help to bail the banks.
This leaded to devaluated US dollar which has created inflation as such. People who have suffered
the most are taxpayers in the USA. This made the distance between social classes larger and larger.
According to (Malpass, 2010) one the main reasons that caused the crisis is a Housing Market in
US. Between 1997 and 2006, average house price has increased by 122%. In the end of 2001,
national home price average median was ranged from 2.6 to 3.2 times median income per
household. Proportional ration has grown to 4.0 in the beginning of 2004 and 4.6 in 2006. This has
resulted to housing bubble "A run–up in housing prices fueled by demand, speculation and the belief
that recent history is an infallible forecast of the future." (Investopedia, 2014). Many householders
started to refinance their estates at lower interest rate, or even taking second mortgages. In the
middle of 2008, housing prices had been declined by 20% comparing to their 2006 peak. Easy loans
and trend of house

Essay on Financial Crisis of 2008 Analysis
In 2008, the US experienced the traumatic chaos of a financial downturn, whose effects rippled
throughout Europe and Asia. Many economists consider it the worst crisis since the Great
Depression, and its alarming results are still seen today, a long six years later. Truly, the recession's
daunting size and formidable wake have left no one untouched and can only beg the question:
could it have been prevented? The causes are manifold, but can be found substantially rooted in
illogical investments and greedy schemes. Before any of the risky moneymaking endeavors,
investors traditionally would have gone to the US Federal Reserve to buy treasury bills, a safe and
profitable investment. Later, when interest rates were lowered to only 1% in...show more content...
The banks then created a new idea–linking investors to homeowners through mortgages. Ordinarily,
a mortgage broker would connect a house–buying family to a mortgage lender, who would then
supply them with a mortgage. In this system, everyone is happy–the mortgage broker earns a
handsome commission, the mortgage lender earns a new mortgage, and the family is now a
homeowner in a market of increasing housing prices.
In the new system, an investment banker buys the mortgage from the lender, borrowing millions of
dollars to buy thousands of mortgages, and every month he gets payments from homeowners for
each of the mortgages. The banker then consolidates all the mortgages and splits the final product
into three sections: safe, okay, and risky mortgages, which make up a collateralized debt obligation
(CDO). As homeowners pay their mortgages, money flows into each of the sections, with the safe
filling first and the risky filling last, contributing to their respective names. Credit agencies stamp
the top two safer mortgages with a triple A or triple B rating, which are then be sold to investors
who want a safe mortgage, while the risky slice is sold to hedge funds who want a risky investment.
The bankers make millions, pay back their loans, and investors also make a worthwhile investment.
So pleased are the investors, however, that they want more. Unfortunately, back at the beginning of
the cycle, the mortgage broker can no longer find qualified mortgagers

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...
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

Financial Crisis 2008 Essay
Just after ten years of Asian financial crisis, another major financial crisis now concern for all
developed and some developing countries is "Global Financial Crisis 2008." It is beginning with
the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first
U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets
have fallen, large financial institutions have collapsed or been bought out, and governments in even
the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
(Global issue)
According to the specialists, there are many reasons for this global financial crisis. We try to focus
some prime reasons behind this...show more content...
Declining price attract people with the easy loan facilities of their banks. And banks are ready with
very high risk loans. This excess supply of home inventory placed significant downward pressure
on prices. As prices declined, more homeowners were at risk of default and foreclosure. According
to the S&P/Case–Shiller price index, by November 2007, average U.S. housing prices had fallen
approximately 8% from their Q2 2006 peak and by May 2008 they had fallen 18.4%. The price
decline in December 2007 versus the year–ago period was 10.4% and for May 2008 it was 15.8%.
Housing prices are expected to continue declining until this inventory of surplus homes (excess
supply) is reduced to more typical levels.
Speculation – Speculation in real estate was a contributing factor. During 2006, 22% of homes
purchased (1.65 million units) were for investment purposes, with an additional 14% (1.07 million
units) purchased as vacation homes. During 2005, these figures were 28% and 12%, respectively. In
other words, nearly 40% of home purchases (record levels) were not primary residences. NAR's
chief economist at the time, David Lereah, stated that the fall in investment buying was expected in
2006. "Speculators left the market in 2006, which caused investment sales to fall much faster than
the primary market
Mortgage fraud – Misrepresentation of loan application data and mortgage fraud are other
contributing factors. US Department

The United States of America experienced one of its biggest financial crisis in history and it all
started in 2007 when the real estate market crashed. Real Estate prices began to collapse and early
delinquencies in underwritten subprime mortgages began to spike. The financial crisis continued up
to October 2008. The Federal Reserve and other organs of the United States government responded
by flooding the markets with money and other liquidity, reducing interest rates, providing
unprecedented assistance to major financial institutions, increasing government spending and taking
other steps to provide financial assistance to the markets in an attempt to revive it.
In 2007, when real estate prices began to collapse, investors started...show more content...
After the rescue of Fannie and Freddie, it seemed like it was more fuel being added to the
worldwide financial panic because other companies and institutions were still in crises. The Lehman
Brothers and AIG collapsed and Bank of America bought Merrill Lynch. (ibid.)
The Federal Reserved rescued AIG by exercising its emergency powers under section 13(3) for the
Federal Reserve Act, but Lehman was left with no one to rescue them. The terms of the rescue
were similar to that of Fannie and Freddie, "the government received senior preferred stock and
warrants, resulting in an immediate dilution of 80 per cent of common shareholder value and a
sharp drop in the value of junior preferred stock." The downside to this rescue was that AIG's senior
and subordinated debt soared and the counterparties on its credit default swaps, but other financial
contracts made out great. (ibid.)
After the collapse of AIG, the Treasury went back to congress again as they did with Fannie Mae
and Freddie Mac, but instead of asking for a blank check, this time around they asked Congress for
immediate authority to invest up to $700 billion US dollars in toxic mortgage and other assets in
order to clean up the balance sheets of the United States financial sector. This request was later
known as the 'Troubled Asset Relief Program' (TARP), while it was pending before Congress,
Washington Mutual, the largest

The Federal Reserve acted in reaction to the financial crisis in many ways. First, the Federal
reserve decreased the federal funds rate to near zero to encourage inter bank lending. The Federal
reserve then performed perhaps one of its most important functions. It acted as the lender of last
resort to banks, including numerous innovative lending facilities. Through 2010 into 2014, the
federal reserve did something it hadn't done before. It enacted a quantitative easing program, in
which they made additional purchases into mortgage backed securities (since there were fewer
private buyers) and into government bonds (long term) in order to lower long term rates. That was
because at the time the economy was caught in a liquidity trap. Money...show more content...
While the monetary base did increase a lot due to the federal reserve's recession fighting monetary
policy, it was met with a much lower money multiplier because excess reserves ad depository
institutions increased drastically during the period(Mishkin). The American Recovery and
Reinvestment Act (ARRA) was passed in February of 2009. The Bill itself totaled in about $787
billion dollars. This piece of legislation entailed tax cuts, stat and local government aid, and an
increase in government spending. The pieces of fiscal policy such as ARRA can be given credit to
preventing a more severe financial crisis. Under an IS–LM framework, the increase in government
spending and the tax cuts (which lead to an increase in consumption) helped push the economy out
of the recession. The resulting policy helped prevent even worse declines in GDP and higher
unemployment rates had the government not acted otherwise. Blinder and Zandi highlight in "How
the Great Recession was Brought to an End" the unemployment rates with and without policy
response. They noted that, in 2010 the unemployment rate with policy response was 9.8%, whereas
without policy response it was forecasted to be 15.2%. One of the major aspect of the ARRA that
was distinct from TARP is that it was a stimulus bill aimed more at the American public rather than
Wall Street relief. The ARRA had seven components to it that were all intended to increase output,
and decrease unemployment (Amadeo). The first component

Marconi (2010) believes that the role played by the institutional investors propagated the financial
crises. Institutional investors, which is both, individual or companies do enjoy the benefits of
reduced commission preferential regulations. This is due to their large and professional investments.
Institutional investors like the mutual funds, pension funds, hedge funds like Magnetar Capital, and
Life insurance companies like the AIG and investments trusts contributed to the global financial
crises of 2007–2008. This financial crisis also referred to as the great recession was triggered by
liquidity problems in the United States economy. Many large financial institutions collapsed
according to Geczy (2010). The government had to bail out...show more content...
There were breaches in accounting practices and general breach of business ethics. The bank
directors and the chairman are accused of having certified false financial statements and not
disclosing key financial practices in the bank. Among the undisclosed practices was the Repo 105.
The Lehman had been using it from 2001, it involved using the Repos to finance assets and
treating them as sold Repos while accounting. This according to the report was abuse of ordinary
repurchase agreements, it was done to lower the banks leverage as was asked of investment banks
toward the end of 2007. The bank at times even involved its subsidiaries. Financial leverage should
have been attained by borrowing and investing the same at higher interest rates. The auditors Ernst
&Young have been accused of professional negligence for failing to disclose these practices thus
misled the investors on the financial status of the bank. Some critics cite the complex financial
systems and financial investment products to have been the trigger of the 2007–2008 financial
crises. According to Laurence (2010), other factors include: failure of effective regulations in the
investment markets, inappropriate credit interests, and self interest practices among the institutional
investors. According to Hughes (2011), some critics also argue that the institutional investors were
behaving in irrational manner

Asian Financial Crisis Essay
In the summer of 1997, an economic and currency crisis rocked the Asian markets. One by one,
Southeast Asian countries such as Thailand, Indonesia, Korea and Japan saw their economies crash
in the wake of heavy foreign investment. An economic boom had made the region an attractive
investment opportunity for much of the 1990s. By 1997, however, domestic production and
development had stalled, and foreign investors grew nervous. A divestment run on the Thai baht
triggered the crash. Large corporations, extremely dependent upon the confidence of foreign
investors failed to meet debt obligations and began to fail throughout Southeast Asia. Currencies
throughout the region faltered and nosedived from their mid–1990s positions of stability. The...show
more content...
at the time, the largest finance company in the country ? alone. (Pesenti et al.,1998). This support of
the highly leveraged private sector by the Thai government lent the appearance of stability to an
unstable system and attracted more foreign loans (to shore up the Thai economy) to Thai financial
institutions.
In February of 1997, the Thai company Somprasong was unable to make maintenance payments on
its high level of foreign debt. This was the first large default in Southeast Asia?s economic crash.
By mid–May of 1997, investor confidence in Thailand was so shaky that Singapore and Thailand
had to step in to prop up the baht in the face of ?speculators who decided Thailand?s slowing
economy and political instability meant it was time to sell.? (Chronology?). In the face of such
instability, Finance One (the largest finance company in Thailand) failed at the end of May. Most of
the company?s lending was made up of risky loans for real estate and stock market margin
investments. Political instability resulted from the resignation of the Thai finance minister, which
further shook foreign investor confidence. ?The strong speculative attack on the baht that followed
forced Thailand to let the currency float on July 2, a key date in the chronology of the Asiancrisis.?
(Pesenti et al., 1998). Once the government was no longer

The 2008 Financial Crisis Essay
Introduction
In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing
market; moreover, it is considered by many economists as one of the worst recession since the Great
Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to
Europe and the rest of the world. It brought governments down, ruined economies, crumble financial
corporations and impoverish individual lives. For example, the financial crisis has resulted in the
collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and
AIG. These collapses not only influence own countries but also international area. Hence, the
intervention of governments by changing and...show more content...
The economy is known as a new emerging economy especially after entering WTO in 2007. The
Foreign Direct Investment (FDI) has increase considerably and the GDP is over 8% in the period of
three years (2005–2007). Nonetheless, it is clear that the economic instability occurs after WTO
accession of Vietnam 1 year. Consequently, the economy has suffered surginginflation as well as
trade and fiscal deficit. (Figure 1) GDPCPI
20058.48.3
20068.27.5
20078.58.3
20086.223
20095.36.9
Figure 1 : GDP and CPI 2005–2009 (% change per year)
Source: Asian Development Bank and Vietnam
B. Inflation
Inflation doubled in 2007 and reached a peak at 28% in 2008.The fiscal make up 4–5% GDP and the
trade deficit accounted for 20% GDP in which approximately $US17.5 billion dollars. The influence
of high fuel combine with food prices and high domestic demand lead to high inflation. The high
price of fuel in Vietnam illustrates global fuel prices and the high domestic demand of country
importing fuel. Furthermore, the increase in global food prices affect detrimental to the high
inflation in Vietnam.(Figure 2) Figure 2 : Fiscal Deficit and Trade Deficit (2003–2008)
Source : IMF, General Statistics Office of Vietnam
C.Impact on Trade
The global financial crisis has affected severely on Vietnamese exports. After joining the WTO,
Vietnam's trade has become depend on global

Global Financial Crisis and its Impact

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