2008 Financial Crisis Essay

2981 words - 12 pages

Burak Çetin
MSc International Business
IBS, Budapest
8 November , 2014
2008 Financial Crisis
Bank failures, billions of dollars soared, global growth lowered, impotent governments. Financial
capitalism is in crisis.Media loop line numbers of the crisis, the stock market falls, the huge losses
of some banks without necessarily really explain What is happening in simple terms. But what are
the reasons of the global financial crisis? . And could it prevent ? The main cause of the crisis is the
collapse of the US mortgage market. About four years ago the banks and the US government began
to give a lot of loans for the purchase of property, financial liberalization occurred.
In its report on the world economy, the International Monetary Fund does not mince words and
defines the economic crisis of recent months (in 2008) as "the worst since the 1930s." The Fund
describes a global economy slowing down, at a pace that many experts consider the edge of
recession because of the most dangerous financial shock in advanced economies from the thirties.
For many years, central banks have proposed rates' extremely low interest pushing many people
into debt for the 'purchase of the house of' car, etc ( Ouarda ,2010).
Suddenly, in a few months, the bankers have begun to raise interest rates to put into serious
difficulties that many families, especially in the US, have not been able to pay the installments of
their mortgage and so they lost the property purchased . Many people have found themselves
suddenly poor, the salary was suddenly insufficient for their needs, even basic ones, and so the
'economy began to "turn" less. Less money and fewer purchases in a short time they sent in crisis
many companies have been forced to close or lay off workers due to lack of orders.
In general it is argued that the crisis started because of collapse of the subprime mortgages in the
US. But what is a subprime mortgage and how it can create a financial crisis ?
The current crisis is often compared to that of 1929-32 in the United States or to the Japanese
crisis in the 1990s, however, many aspects differentiate. Between 1929-32 the crisis began with a
stock market crash, which led to the bankruptcy of banks lent heavily to stock market speculators,
leading to a significant decline in credit and a severe economic depression. The absence of deposit
insurance and the lack of unemployment insurance were probably reinforced the negative

cumulative process by destroying the purchasing power of households. Little concern to the central
bank for liquidity in the banking system contributed to the bankruptcy chain of commercial banks.
Similarly, inappropriate economic policy measures such as protectionist policies and competitive
devaluations had disrupted the functioning of the global economic system, thus spreading the crisis
in the world. The Japanese crisis has against a national character.The collapse of real estate prices
and stock prices greatly inflated had led many...

Find Another Essay On 2008 financial crisis

Awareness of Risk during the 2008 Financial Crisis

2210 words - 9 pages will try to illustrate the hidden effects of human behaviours on awareness of risk during 2008 financial crisis. Admittedly, however, plausibility still exists in partial improvements beforehand. 2008 Financial Crisis seemed to come out of blue and shocked the whole world in the first place but was soon concluded by experts as a consequence of systemic risk. (Federal Reserve Bank of Atlanta, 2009) Characterizing such a risk are three consequences

Overview of the Recent Financial Crisis in the US

1705 words - 7 pages Standard & Poor’s, Moody’s or Fitch in an exercise of irresponsibility encouraged risks instead of managing them. Executive incentives also took part in boosting risk, which illustrates as well the irresponsibility of the companies. However, the causes of the global financial crisis are rather complicated. On 15 November 2008, (Leaders of G20, 2008) declared that the financial crisis was caused by: • Market participants seeking higher yields

Fair Value and Historical Costing

612 words - 2 pages Laux and Leuz’s view that lack of transparency under Historical Cost Accounting could make matters worse during financial crises, and could be evaluated using accounting theories focusing on the Global Financial Crisis (GFC). The discussion below looks at the measurement issues faced in a crisis and in particular, the Fair Value (FV) and the Historical Costing (HC) while focusing on the 2008 financial crisis. In the discussion, there will be

banking risk

978 words - 4 pages Submitted to :Farzana AkterLecturerDept. of business administrationEast west universitySubmitted by:Md. Shafayat Ullah BhuiyaId # 2010-2-10-151Date of submission: September 23rd, 2013Global financial crisis -2008 and onward:In 2008, the United States of America experienced a huge financial crisis which led to the most serious recession since the Second World War. Both the financial crisis and the downturn in the U.S. economy spread to many

Financial Crisis: Theoretical and Historical Perspective an Article by Güven Delice

1943 words - 8 pages level. There is a sample article by Güven Delice. Title of article is Financial Crisis: Theoretical and historical perspective. In this article Delice mentioned definition of the financial crisis, types of financial crisis, financial crisis models and historical process but all of them are theoretical. There is no experienced example about types of crisis. If we look at another article by Ahmet Turgut we can see almost same things. Again there is

The IMF’s Role in Financial Crisis

2606 words - 10 pages the financial crisis, and many locals thought the financial crisis were in a much worse position than before with their helps (Bello, 1999). Latvia’s financial crisis in 2008 Latvia is a typical financial crisis example that with the IMF’s help and international supports then goes back to international capital markets in 2011 (IMF, 2012). Latvia was one of the first countries to experience the serious destruction from the global economic

GM: Better Off Bankrupt?

967 words - 4 pages condition, in evaluating potential going–concern uncertainties. Since late 2008, the collapse of the U.S. housing bubble triggered the disaster in the banking system. Because of the financial crisis, the ability of bank credit greatly reduced which directly limited the car mortgages. Moreover people held pessimistic attitude to the job market and surely decrease the consumption of cars. So since September of 2008, the car sales in North America

Financial Crisis of the 1980s

1094 words - 4 pages The financial crisis of 2008 and 2009 is considered by others as the worst financial crisis since the Great depression of 1930. However there were other financial crisis which had happened after the Great depression which were equally disastrous. The one that comes in mind was the financial crisis of the 1980s and early 1990s. It is always overlook by others because of the 2008 credit crunch which happens to be the recent one. It became known

The Effect of Recent Financial Crisis and Regulatory Implications in Asia

1914 words - 8 pages . (2009), Code, Crash, and Open Source: the Outsourcing of Financial Regulation to Risk Models and the Global Financial Crisis. Washington Law Review, Vol.84, pp.67-81. Gurria, A. (2008), The Global Crisis: Angel Gurria Discusses the Prognosis for the World Financial System and the Likely Impact of the Crisis on OECD Countries. New Zealand International Review, Vol.33, pp.190-200. Heng Swee Keat (2009): “The Impact of the Global Financial Crisis

Banking and the Acquisition of Toxic Assets by the US Government

1461 words - 6 pages Out Wall Street Now, Change Terms Later, Democracy Now!, October 2, 2008 Deregulation In September Merrill Lynch had just been taken over and The Federal Reserve Instructed Morgan Stanley and Goldman Sachs to convert themselves o bank holding companies subject to its supervision and gain access to the discount window.pg. 69 Howard the financial crisis) Since the 1960s attempts were made to get around Glass -Stiegel act

The global financial crisis has provided opportunities for BRIC countries .Discuss with reference to two BRIC countries.

1154 words - 5 pages Introduction In 2007 to 2008, many developed countries entrapped an enormous critical state of global financial crisis and forced numerous countries into recession because the economic imbalances resulting from inefficient and unequal income distribution have not been properly addressed(IILS, 2008; Rajan, 2010)Nevertheless, the BRIC countries were feasible to withstand. The aim of this paper is to analyze China and Russia, which were able to

Similar Essays

The 2008 Financial Crisis Essay

1529 words - 6 pages introduction The 2008 financial crisis led to a sharp increase in mortgage foreclosures primarily subprime leading to a collapse in several mortgage lenders. Recurrent foreclosures and the harms of subprime mortgages were caused by loose lending practices, housing bubble, low interest rates and extreme risk taking (Zandi, 2008). Additionally, expert analysis on the 2008 financial crisis assert that the cause was also due to erroneous monetary

Financial Crisis Of 2008 Essay

2303 words - 9 pages The Financial Crisis of 2008 was the worst financial crisis since the Great Depression, however a lot of American’s want tougher law of be enforced against executives and companies they think started the mess (Jost/Misconduct). Civil charges have been brought up against major banks for misleading investors, but a federal judge rejected a proposed settlement saying it was too lenient (Jost/Misconduct). The flood of subprime mortgages roiling the

Chinese Administration Response To 2008 Financial Crisis

975 words - 4 pages Commodity boom, housing bubble, global imbalances, a subprime mortgage crisis and inflation led to the 2008 macroeconomic crisis and China's economy suffered, especially its exports industry (Yu, 2009; Zhang, 2009; Zhang, Li & Shi, 2009) . Its pre-crisis stable fiscal policy and tight monetary policy were substituted with expansionary policies. (Yang, 2011; Yu, 2009; Zhang, Tang & Lin; Zhang, Li & Shi, 2009). A fiscal package of 4

2008 Financial Crisis: Iceland’s Then & Now

2556 words - 11 pages I) Causes of the Crisis On September 15, 2008, the American bank Lehman Brothers, with holdings over 600 billion USD, filed bankruptcy. This was by far the biggest bankruptcy in U.S history and it marked the beginning and the largest financial crisis ever. How can one of the biggest banks in the world fail? How can a bankruptcy in US make someone on the other side of the world unemployed? The answer is Collateralized Debt Obligations (CDOs