Free

Financial Crisis In The Year 2008 - Essay Example

Comments (0) Cite this document
Summary
The essay "Financial Crisis In The Year 2008" finds that there were several factors that led to the financial crisis in the year 2008. Some of the reasons behind the crisis were related to the economic policies pursued over the years. The extra funds in Asian countries led ultimately to the crisis…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.3% of users find it useful
Financial Crisis In The Year 2008
Read TextPreview

Extract of sample "Financial Crisis In The Year 2008"

of the of the Roll: Three essays Essay Introduction The graph given in the figure shows the rise and fall of unionized workers from 1930 to the period of 2003. As is seen from the graph there was a gradual increase in the number of unionized workers in between 1930 and 1948 and a gradual decrease of unionized workers after the period. The following essay explores the probable reasons behind the same.
Discussion
As seen from the above diagram there has been a rise and fall in the union membership in between 1930 and 2003. In capital moves Cowie argues that system is not regionally segmented as production is shifted by the corporations from first world to third world countries. In his book a bold thesis is presented by Cowie in order to challenge the orthodoxy theory of the theorists of globalization. The author does this by dealing with the theory of globalization. The author does this by taking the example of Radio Corporation of America (Cowie 150). The author points to the fact that RCA shifted its locations to four different areas over the course of its history. He first takes to Camden, New Jersey which is the site of the largest factory complex in the whole world. Workers of RCA in Camden appeared to be uncomplaining and malleable. They were willing to work for long hours on production lines and received wages that were far below the normal level applicable for the male counterparts. It was believed by RCA that the division of labor on the basis of gender would result in the company having a greater control over its workforce. It was during the 1930s however, that Camden was turned into a major battle ground for the unionization of the electronics industry. In response to the strikes RCA moved its operations from Camden to Bloomington (Romero 175). The same argument can be used to argue for the reason behind the dramatic changes in the number of unionized workers over the period from 1930 to 2003. During the early period of the 1930s and 1940s most of the American companies set up their manufacturing hubs in different parts America. Initially the corporations paid less salary to the members and extracted greater output from them. However, with the formation of unions, the workers started demanding more wages and this resulted in the fact that the manufacturing bases were often shifted from one place to another. However, with the rise of pressure from the workers unions the management started getting cornered and were forced to comply with the demands of the workforce. However, with the start of globalization the companies realized that they could get the same level of output as they were presently getting if they shifted the manufacturing bases to countries like India and China. As the companies started to shift their manufacturing bases to third world countries the number of workers in America got reduced and this resulted in the fall of unionized workers in the USA.
Conclusion
The above essay tries to provide an explanation behind the rise and fall of the number of unionized workers in America over the period from 1930 to 2002. The probable explanation is the shift of the manufacturing bases to third world countries.
Essay: 2
Introduction
Two promising economists of the great depression era were John Maynard Keynes and Fredrick August Hayek. However, the views of these two economists sharply contrasted each other. In the wake of great depression these two economists argued with each other regarding the probable course of action to be taken. The following essay presents the differences in between the ideas of these two prominent economists.
Discussion
The revolutionary proposition by Keynes was that after a big shock like the collapse of investment there were no forces in the market for automatic recovery (NANCY). According to Keynes in this situation the economy would go on sinking until some sort of stability at lower level was reached. This lower level was referred by Keynes as underemployment equilibrium. The reason that was cited by Keynes for such a behavior of the economy was that the level of employment and output in an economy or in other words the level of activity in an economy was dependent upon the level of spending power or aggregate demand in the economy. Thus a shrink in the spending power would lead to a shrink in the output. In such a situation the job of the government was to increase its own spending so as to offset the decline the spending by the public. According to Keynes the wrong policy in a slump was to cut the spending of the government (BBC). As opposed to the belief of Keynes, Hayek had the belief that in order to recover from a boom crash the solution was not just adequate spending but also a return to the sustainable production at the same time. The production that had been purged by distortions in the boom era due to the availability of easy money needed to return to level of sustainable levels so as to recover financially. The theory of Hayek was dismissed as many held the belief that he tried to liquidate labor, stocks and the farmers. However, it seems that the Hayek was right due to the fact that after there has been unsustainable boom period it is really required to liquidate the thinks so that the distortions can be removed. For instance after the financial crisis of 2008 the recipe for straight forward revival would be to liquidate all the assets which led to the subprime bubble due to the easy monetary policy. In short Keynes gave a recovery that seems painless for the economy by giving the economy extra money. However, the believers of Hayek’s theory understand that there is no painless recovery option that is available for recovering from an unsustainable boom. The only way an economy can recover from such a period is to try and avoid the boom itself.
Conclusion
In light of the great depression the two economists Keynes and Hayek held different views and options that could be used by the economy to recover from the recession. The views of the two economists differ substantially and offer different explanations to the cause of the economic crisis.
Essay: 3
Introduction
The world suffered from the global financial crisis in the year 2008. The crisis which started in the subprime mortgage crisis in 2008 dragged different nations across the globe in the crisis and soon the crisis turned into global financial crisis. The following pages give a brief history of the crisis and provide a brief understanding of the change in economic policy since great depression.
Discussion
After the World War II, the architects of the post war economic order operated in the context of post war economic power and shadow which was emerging from the cold war period. At the same time economists of this era were eager to draw lessons from the past. They were sure that capitalism if unchecked will lead top ruins. Then after a period of 30 years the high cost of deflation which was responsible for burying the demons of inflation which seemed untamable at first had now created a new demon. The new challenge for the policy makers was that the policy makers needed to be extra vigilant for any hint of inflationary pressure. The economic policies that were undertaken in the subsequent years can be understood in the light of this policy and these early episodes or turning points. In the mid 1990s US embraced financial globalization as the touch stone for the grand strategy in the post cold war period. In those periods it was common to talk about the decline of the US economy. However, the unexpected collapse of the Soviet Union and the stool of the Japan as an economic super power brought American economy to the centre stage in the world order of business (Kirshner). The financial crisis of the year 2008 had multiple reasons behind its occurrence. The most important are perhaps the financers themselves. The financers claimed that they had found a way to banish the risks although in reality they had actually lost the track of the same. The central bankers and the regulators tolerated and let these things continue under their very noses for years. The macroeconomic environment too played an important role in the build up to the crisis (The economist). The great moderation which was characterized by years of low inflation and stable rate of growth had fuelled risk taking desires in individuals. People became complacent and this increased their risk taking ability and desires. The glut in savings in the Asia turned interest rates down. Even European banks which greedily borrowed from the American banks before the financial crisis used the funds so as to purchase dodgy securities.
Conclusion
The above essay finds that there were several factors that led to the financial crisis in the year 2008. Some of the reasons behind the crisis were related to the economic policies pursued over the years. The long periods of moderation and the extra funds in Asian countries led ultimately to the crisis.
Works cited
BBC. Keynes v Hayek: Two economic giants go head to head. 3 Aug. 2011. Web. 04 Dec. 2015. < http://www.bbc.com/news/business-14366054 > Cowie, Jefferson. "Capital moves: RCA’s 70-year quest for cheap labor." (1999). NY: Cornell University Press. Print.
Kirshner, Jonathan. The Global Financial Crisis: a turning point. 08 Nov. 2014. Web. 04 Dec. 2015. < http://www.forbes.com/sites/jonathankirshner/2014/11/08/the-global-financial-crisis-a-turning-point/ >.
NANCY KOEHN. The tale of the dueling economists. 22 Oct. 2011. Web. 04 Dec. 2015. < http://www.nytimes.com/2011/10/23/business/keynes-hayek-views-origins-of-an-economics-debate-review.html?_r=0 >.
Romero, Federico. "Capital Moves: RCAs Seventy-Year Quest for Cheap Labor. By Jefferson Cowie.(Ithaca: Cornell University Press, 1999. xii, 273 pp. $29.95, ISBN 0-8014-3525-0.)." The Journal of American History 87.1 (2000): 316-317. Print
The economist. The origins of the financial crisis. 7 Sept. 2013. Web. 04 Dec. 2015. < http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article >. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Financial Crisis In The Year 2008 Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Financial Crisis In The Year 2008 Essay Example | Topics and Well Written Essays - 1500 words. Retrieved from https://studentshare.org/finance-accounting/1702371-financial-crisis-in-the-year-2008
(Financial Crisis In The Year 2008 Essay Example | Topics and Well Written Essays - 1500 Words)
Financial Crisis In The Year 2008 Essay Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/finance-accounting/1702371-financial-crisis-in-the-year-2008.
“Financial Crisis In The Year 2008 Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/finance-accounting/1702371-financial-crisis-in-the-year-2008.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Financial Crisis In The Year 2008

2008 Financial Crisis

...2008 Financial Crisis Until the start of the financial crisis in August 2007, the world was experiencing strong economic growth (Obstfeld & Rogoff). Investors and consumers were optimistic in their expectations, which reflected itself in high consumption and investment rates. In 2007, the US entered a financial crisis, consequences of which are still suffered by the entire country. Until the crisis began and unraveled in 2008, most economists were optimistic. The US economy was growing, markets were considered to be liquid and employment levels were high. However, within one...
11 Pages(2750 words)Term Paper

Global Financial Crisis in 2008

...? Global Financial Crisis in 2008 Global Financial Crisis in 2008 According to Herkenrath and Christian, Global Financial Crisis entails several aspects.1 Thus, it can be described as constituting crisis such as international credit, trade, banking as well as currency crisis that hit the world in the late 2000s. This Global Financial Crisis indeed had a dreadful effect on the international economy. So, in many countries, key players within economies such as stock markets as well as large financial institutions did succumb to the effects of global financial crisis. Precisely, some of the great organizations that succumbed to this crisis include Lehman Brothers, Bear Stearns, AIG, Fannie Mae, Freddie Mac as well as Meryl Lynch. All... risks:...
8 Pages(2000 words)Essay

Ethics and Financial Crisis of 2008

...?Running Header: Financial Crises of 20082008 Financial Crises’ Module The 2008 Financial crisis were one of the toughest economic crises faced by the big economy of United States of America. These crises were not natural and were not part of the economic cycle, but many experts state that these crises were a result of some of the most unethical financial practices that were common in the United States of America’s economy. The banks used new instruments which were not only risky, but were unethical also. These instruments were created to double the debt level in the US economy which was already...
5 Pages(1250 words)Essay

The 2008 Financial Crisis: Causes and Consequences

...financial problems and hence were unable to accept loans at higher rates. Therefore, it can be identified that United States of America was the country which was found to be mostly affected by the crisis of 2008. The US Government even after applying various measures could not pull the economy out of the drastic effect of financial crisis (Halm-Addo, “The 2008 Financial Crisis: The Death of an Ideology”; Davis, “The Cause of the 2008 Financial Crisis”). 6 In another significant development, during the year 2005 and 2006, the prices of...
7 Pages(1750 words)Research Paper

2008:2012 Spanish financial crisis

...and the extent of the international crisis. The lack of confidence in the country’s banking sector and the generalization of the international financial crisis have considerably restricted banks’ access to financing in the international markets (Shiller 66). Recent years have witnessed the following internal factors greatly affecting the profits in the sector: increase in unemployment, economic downturn, and increased banks’ exposure to real estate. These factors have decisively led to the increase of the default rate and consequently affected the solvency levels of the sector (Miguez et al 464). The Main Impact of the Crisis The main effect of the...
13 Pages(3250 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

The US financial crisis of 2008

...The US financial crisis of 2008 The US financial crisis was a process and not an event. Signs of fragility in the financial sector were present from 2007. This continued and a tipping point reached in September 2008, when a number of large financial institutions based in the US collapsed. The most notable examples were the Lehman brothers and AIG (Marshall 1). As from 2007, maintaining financial stability, rather than taming inflation was the Federal Reserve's main goal (Jickling 1). Although the Federal Reserve tried to manage the emerging crisis, the issues present...
5 Pages(1250 words)Essay

The Financial Crisis of 2008

...The Financial Crisis of 2008 Recession or Depression Outline and assess the differing views as to why this crisis occurred Various reasons havebeen assigned by economists and market watchers for the financial crisis of 2008. The media has contributed to the opinion that the subprime lending and low government intervention as the triggers for the current recession, but new and slightly different ideas have been offered by various observers. Dramatic rising social inequality in the U.S in the past thirty five years is supposed to be the underlying cause of the current financial...
3 Pages(750 words)Essay

2008 financial crisis

...Research Paper – Financial Crisis of 2008 One of my major worries presently is the idea that I might not get a means to sustain myself after school. At the moment, I am preoccupied with my studies and also focus on staying healthy. However, these habits do not guarantee good work after college. Since my childhood, I have always been reminded that working hard in school will guarantee me a good future. However, at a time when the future seems to be drawing even closer, that realization seems to be fading and this worries me. In the face of these challenges, I am forced to gauge my own prospects and find my course of life. I realize that hard work and determination alone do not seemingly...
7 Pages(1750 words)Essay

Causes of 2008 Financial Crisis

...Causes of 2008 Financial Crisis The financial crisis experienced in 2007-2009 was a global economic crunch, and economists d it as the worst of its kind to happen after the Great Depression in 1930. According to Wallison (2009), key issues that led to the crisis included increment and sudden reduction in house prices as well as increases in default rates in 2006. Furthermore, the collapse of stock prices in 2008 speeded by Bear and Lehman’s failures fuelled the crisis (Wallison, 2009, p. 3). Additionally, Thomas, Hennessey and Holtz-Eaki (2011) suggest that the main causes of the recession comprised the...
4 Pages(1000 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 Financial Crisis In The Year 2008 for FREE!

Contact Us