In the context of 2017, where the centre of social and political success is the economy of a country, an issue that concerns many economists is the repetition of the 2008 global financial crisis. Due to key issues such as [IMPORTANT FINDINGS] one can conclude that a global recession such as the one of 2008 IS/ISNT likely to happen in the next decade.
The 2008 global financial crisis was broadly the result of USA’s banking collapse and the ramifications thereafter. The banking collapse affected markets worldwide, slowing global economic growth and contributing additionally towards the impending European sovereign-dept crisis. It is considered to be the one of the worst financial crises since the great depression.
The cause of the global financial …show more content…
This cheap credit was sought after via the US banks and low income citizens. This created a point of leverage for the banks as they knew that they could supply the credit that was so sought after by the low income citizens. This excess of cheap credit coupled with the rise in house prices, provided the opportunity for banks to invest and leverage current investments with subprime mortgages. The explosive level of growth experienced by the banks and hedge funds was soon halted. Interest rates began to rise and thus caused widespread defaulting on the subprime mortgages. Banks and hedge funds had more than $1 trillion in securities backed by subprime mortgages, thus banks and hedge funds took major strain with many of them declaring bankruptcy. This started the 2008 financial crisis.
After the shock of the 2008 global financial crisis, and its widespread ramifications, there were many proposed solutions, reforms and regulations to regain and ensure the continuity of the stability in the global financial market. This brought about the change and creation of many reform acts such as the Gramm-Rudman-Hollings Act, the Dodd-Frank Wall Street Reform Act and the Consumer Protection Act.
Of the many suggested reforms, changes and proposed solutions, the most contextually relevant are the change in Federal Reserve powers, the Housing and Economic Recovery Act of 2008 and Joseph Stiglitz’s proposed solution. These and other unmentioned reforms, changes and solutions all assist in preventing a repeat of the 2008 global financial
The 2008 global financial crisis was broadly the result of USA’s banking collapse and the ramifications thereafter. The banking collapse affected markets worldwide, slowing global economic growth and contributing additionally towards the impending European sovereign-dept crisis. It is considered to be the one of the worst financial crises since the great depression.
The cause of the global financial …show more content…
This cheap credit was sought after via the US banks and low income citizens. This created a point of leverage for the banks as they knew that they could supply the credit that was so sought after by the low income citizens. This excess of cheap credit coupled with the rise in house prices, provided the opportunity for banks to invest and leverage current investments with subprime mortgages. The explosive level of growth experienced by the banks and hedge funds was soon halted. Interest rates began to rise and thus caused widespread defaulting on the subprime mortgages. Banks and hedge funds had more than $1 trillion in securities backed by subprime mortgages, thus banks and hedge funds took major strain with many of them declaring bankruptcy. This started the 2008 financial crisis.
After the shock of the 2008 global financial crisis, and its widespread ramifications, there were many proposed solutions, reforms and regulations to regain and ensure the continuity of the stability in the global financial market. This brought about the change and creation of many reform acts such as the Gramm-Rudman-Hollings Act, the Dodd-Frank Wall Street Reform Act and the Consumer Protection Act.
Of the many suggested reforms, changes and proposed solutions, the most contextually relevant are the change in Federal Reserve powers, the Housing and Economic Recovery Act of 2008 and Joseph Stiglitz’s proposed solution. These and other unmentioned reforms, changes and solutions all assist in preventing a repeat of the 2008 global financial