The aftermath of the global financial crisis 2007-2008 - Essay Example

Comments (0) Cite this document
The 2008 sub-prime crisis that emerged from the US mortgage market has eventually become a global financial crisis, severely hitting almost all industries worldwide and causing serious economic meltdown including growth of unemployment…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.9% of users find it useful
The aftermath of the global financial crisis 2007-2008
Read TextPreview

Extract of sample "The aftermath of the global financial crisis 2007-2008"

Download file to see previous pages Aftermath of 2008 financial crisis In a nutshell, the financial crisis has been the reflection of the imbalance between the growth of real markets and financial sectors. Some major US banks made easy availability of housing loans to its customers, which in turn had led to unprecedented debt-levels, as accounted to be three times the GDP in the US and Europe. Many of the banks’ customers defaulted in repayments of these loans and this bubble burst added liquidity and caused bankruptcy and closing down of these banks. The total economic impacts of this crisis has been accounted as one third of the total values of all companies worldwide. More significantly and obviously, millions of employees lost their jobs and many of them were pushed to poverty. When the recent financial turmoil has hit several economies worldwide, it was observed that due to the crisis, assets prices have been inflated, currents accounts reported larger deficits and slowed-down economic growth of most nations. Though these were quite commonly reported and widely discussed impacts of the crisis, changes in equity prices, employment and output were more dangerous impacts being studied and reviewed by some literatures. Reinhart and Rogoff (2009, p. 466) found that financial crisis in rich countries and emerging markets like Brazil, Russia, India and China have caused tremendous changes in economic variables in common. Broadly speaking, there have been major changing-patterns in housing and equity prices, unemployment rate, government revenues and debt. They detailed that major three impacts of the global credit crisis were a) collapse in assets market, b) profound declines in output and increase in unemployment and c) government’s debt explosions. The financial crisis has caused accumulation of stock of wealth with greater risks and losses in stock markets in almost all developed and emerging economies. The losses in stock market have been accounted as between 30 and 70 percent in 2008. The value of fund-assets have been declined by 25 or more percent by 2008 September and 2009 April. A number of companies found that their capitalization as already wiped out and as a result many of such companies became bankrupt. One very significant sign of this crisis has been falling housing prices in all those crisis-hit countries (Germain 2009, p. 672). Another major consequence of the recent financial crisis was decline in real per capita GDP. During the crisis, the decline in real GDP was smaller for advanced nations as compared with those of emerging countries. The financial crisis has been contaminating smooth functioning of the economy as it has generated a decline in the GDP during 2008 and 2009. According to IMF’s findings, the global activity would be contracted by 1.4 percent in 2009. GDP in real terms would be declining by 2.6% in the US, 4.8 % in the Euro-zone, 6.2 % in Germany and 4.2% in Spain (Pike and Tomaney 2010, p. 507). The 2008 financial crisis has increased the rate of unemployment worldwide. As a result, absolute poverty was more likely to rise in many countries. income disparities were found in most regions of the world due to severe financial crisis. It was projected that global unemployment would be increased by ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“The aftermath of the global financial crisis 2007-2008 Essay”, n.d.)
Retrieved de
(The Aftermath of the Global Financial Crisis 2007-2008 Essay)
“The Aftermath of the Global Financial Crisis 2007-2008 Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The aftermath of the global financial crisis 2007-2008

Global Financial Crisis in 2008

...risks: These are risks that occur within a certain market segment or within the entire market. According to financial analysts, the aftermath of systemic risks is that the value of the portfolio of an organization declines. Such risks arise due to political or even economical problems like the global financial crisis in 2008. Other factors that facilitate the occurrence of systemic risks include changes of interest rates, wars as well as calamities. Credit Risks: These are risks that arise out of uncertainty in credit worthiness of a borrower, that is, uncertainty on the ability of the borrower to meet his obligations. They usually take...
8 Pages(2000 words)Essay

The aftermath of the global financial crisis 2007-2009 many including the International Monetary Fund (IMF), Joseph Stiglitz and George Soros (Jaffee, 2008; Tong and Wei, 2008). And, the crisis was so severe that it hit at the core of the global financial system (IMF, 2008). And the global financial markets were no exception; they were severely hit by the recent wave of global financial crisis. Alone in the United States of America, since the start of 25 July, 2007 to the end of 2008, a total of 40.50 percent decline was recorded in the S&P500 index; the FTSE100 index of...
11 Pages(2750 words)Essay

Financial Crisis of 2008

...The financial crisis of 2008 The world economy is currently at its worst with most countries hit by the pinching global recession. Economists define financial crisis as a significant downturn in activity that affects all the economic segment, the decline in activity normally last for a certain period, which could be more than months or years. Effects of economic recession or financial crisis are usually witnessed in employment, industrial production and in real estate income (Magdoff and Bellamy 41). The technical economic indicator associated with recession is economic growth which is negative which in...
8 Pages(2000 words)Research Paper

2007 financial crisis

... of financial regulation, Hart: Oxford. Mishkin, FS, 2004, ‘Asymmetric information and financial crises: A historical perspective,’ NBER Working Paper, no. 3400. Mishkin, FS, and Eakins, SG, 2012, Financial Markets and Institutions, 7th Global Edition, Pearson Education: Essex. Reinhart, CM, and Rogoff, KS, 2008, ‘Is the 2007 US sub-prime financial crisis so different? An international historical comparison,’ American Economic Review, vol. 98, no. 2, pp. 339-44. The Guardian, 2012, Financial Crisis Timeline. Available from to a disruption of the financial market and a general collapse of the economy due to the decline in lending which leads to...
5 Pages(1250 words)Essay

Financial crisis 2007-2012

...the financial crisis in United States. Before the real estate bubble, the leading investments banks were trying to make investment in the real estate sector. Lehman Brothers was one of the leading investment banks. Due to huge market loan, the investment bank collapsed in the year 2008. The Random Walk Hypothesis states that the stock market prices may not have any value in the future forecasting prices comparing to the past, present and future prices. It can only reflect the market responses to the available information that usually comes in the market randomly. References Allen, R. E. 1999. Financial Crises and Recession in the Global Economy. UK:...
4 Pages(1000 words)Essay

Aftermath of the 2007 financial crisis in UK

... government in the aftermath of the 2007 financial crisis to deal with the effects of the external forces on business organizations. In modern times, has been identified that global financial system is an interdependent system between all the countries (Shiller, 2008, p.xi). The current global financial crisis has created instability of economic systems in most countries including UK to such an extent that the UK government has been compelled to intrude into the financial markets in an unprecedented manner. The financial crisis although has not created problems in the UK constitutional system, nevertheless has proved that the constitution lacks flexibility to cope with financial crisis of such mammoth proportions (Black, 2010, p.1... ? Is the...
6 Pages(1500 words)Essay

Financial Crisis of 2007

...standards of lending, the security issue of Northern Rock failed in 2007. And it led to their financial failure. (Financial crisis: northern rock's balance sheet 2008). Conclusion: The uncontrolled actions of the banking and other financial institutions are the major cause of the crucial financial crisis faced by global economy presently. In order to reduce the impact of financial crisis, as per the monetarist theory, the governments have to ensure adequate flow of money in the economy which will generate confidence among the public to invest in the...
7 Pages(1750 words)Essay

2007-2009 Financial Crisis

..., financial institutions like New Century Financial and Ameriquest faced insolvency. MacEwan and Miller(2011) stated that, “On September 15, Legman Brothers, in existence since 1850, declared bankruptcy” (p. 110). In short, most of the financial institutions were forced to undergo crisis and suffered trillions of dollars in losses. Summing up, the financial crisis has affected the economic growth in the U.S. and damaged world economies. Many financial institutions (companies) lost trillions of dollars and many declared bankruptcy. The global economic growth has decreased. In short, the ...
1 Pages(250 words)Essay

Financial Crisis 2007-09

...The Financial Meltdown What were the substantive causes of the 2007-2009 cataclysmic financial meltdown? The substantive cause ofthe 2007-2009 cataclysmic financial meltdown resulted from the boom in real estate prices. The crisis began with fall of subprime residential market in the U.S. Other causes include global financial imbalances, creation of riskier financial instruments and fall in interest rates. 2. Any other factors exacerbating the financial collapse? The financial collapse was worsened by the financial institutions ability to...
1 Pages(250 words)Case Study

2008 financial crisis

...a job in the event that a vacancy is available somewhere. However, the major challenge is the availability of those vacancies. It therefore seems that while hard work is critical in getting a job, other factors beyond my control also comes into play. Back in the days, finding jobs was much easier that it is today. Like today, the conditions were still strict but the opportunities were abundant since many employers were available. The 2008 global financial crisis changed all that. The crisis was partly a result of poor investment plans and the resulting consequences were felt across the globe. There was a general weakening of the global...
7 Pages(1750 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic The aftermath of the global financial crisis 2007-2008 for FREE!

Contact Us