Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

The Financial Crisis of 2008 - Essay Example

Comments (0) Cite this document
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 crisis [Wisman &Barker, 2008].According to this idea, to maintain a relatively higher standard of living, individuals from the lower and middle srata of society started consuming more, as a result of which savings declined, working hours increased and households resorted to higher debts…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.2% of users find it useful
The Financial Crisis of 2008
Read TextPreview

Extract of sample "The Financial Crisis of 2008"

Download file to see previous pages [Wisman &Barker, 2008].
An interesting and relatively new idea is put forth by James Livingston in his book "Their Great Depression and Ours," Challenge. He argues that the cause of the Great Depression in the 1930s was poor wage performance leading to large profits in search of few investment opportunities. In another article, Saving Private Savings, or, The God That Failed he discusses at length the plausible reasons reasons for the current economic crisis. While not blaming anyone in particular for the present economic crisis, he opines that economic growth is possible only through higher consumer demand and spending. This in turn requires higher savings. In his words, "economic growth has proceeded as a function of declining net investment for the last 90 years."As the sequence of events that should have been tax cuts, savings, investments by the government and higher job growth, higher wages and higher spending got mixed up, higher private savings from households and business firms were parked in the stock market, the speculative bubble had to burst, both in 1920s and now.
2) What are some of the similarities and differences between the current crisis and the one that launched the Great Depression
The Great Depression of the 1930s was brought on by the crash of the Wall Street in September and October 1929.Stock prices tumbled by almost 50% in a matter of two months. The market had probably been overbought and had reached a peak before it came crashing down. The unpredictable stock markets that had been steadily rising for some time shed the excess fat and trimmed down considerably. Investors who had made good gains in stock markets the preceding years had borrowed from banks to invest more on the stock markets. When the markets crashed, there was panic all round. Banks were unable to recover debts, news of banks closing down spread and people wanted to withdraw all their savings. Banks were weary and wanted to sit on cash and stopped lending. This led to closure of the manufacturing units dependent on credit which in turn led to large scale unemployment. Finally the government took drastic steps to check the recession and the economy stopped declining.
The similarities between the causes leading to the Great Depression and the economic situation seem to be the greed of human beings. Excess of anything is bad, especially greed. Rothschild is of the opinion that "herding" or the tendency to follow the crowd and "leveraging" or borrowing to make financial investments, were also common factors. In both the situations, greed fuelled people into higher borrowings and ultimately, they lost out on the capital too. In the 1930s, it was the greed of the common man that led to the Recession, while in 2008, it was the greed of the investment bankers and other financial wizards that led to the recession. Another similarity has been ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 words. Retrieved from
(The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 Words)
The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 Words.
“The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF The Financial Crisis of 2008

Service Management in Financial Services

 Measurement of quality is the result of the services provided to the customer with a prompt response based on the requirements and expectations. Quality of various processes must be managed so as to provide the customer with consistent, accurate and timely results. These results must be of high quality because various other factors pertaining to a business deal are dependent on them. Quality assures the customer of an appropriate service that includes an error-free transaction, access to accurate data pertaining to the specific schemes and services, transfer of credits, changes concerned with the membership and account details and an undoubted trust that helps in attaining the services time and again.

Financial se...
11 Pages(2750 words)Case Study

Corporate Financial Analysis: HBG UK Limited

Analyzing a company’s financial performance is crucial in determining the actual performance and investment potential of a business within the industry. The financial analysis not only gauges the internal but also the external aspects of a company.

Specifically, the use of financial ratios is considered as efficient indicators of a company’s financial situation and overall performance. Most of these financial ratios are calculated from the data provided within the financial statements of the company. Financial ratios are not used only in determining the performance of the company but also in comparison to other competitors’ financial status and the possibility of future bankruptcy.

HBG UK Li...
14 Pages(3500 words)Case Study

Marketing, Financial and Production Analysis of Vail Resorts

Finally, in 1966, the town of Vail was established. By 1985, George Gillett purchased Vail Associates and high-speed quad chairlifts were established to help the skiers get to higher elevations on the mountain. In 1992 Apollo Partners purchased Vail Associates, which in turn became Vail Resorts Inc., which was followed by the acquisition of ski resorts Keystone and Breckenridge. The acquisition of these ski resorts was a major change that helped Vail succeed in the long run by appealing to a broader market. Both Keystone and Breckenridge have lower prices than Vail Mountain and attract more single- and college-aged customers (Vail Resorts).

The company then added the Real Estate segment which comprised 6 percent of the...
9 Pages(2250 words)Case Study

Unmarried Parents: Financial Provisions

There was no evidence before the court to suggest otherwise. I would, therefore, suggest that the child be examined by an expert in child welfare to first determine whether or not the mother is ultimately right in her assessment that the disparity in the value of her parent’s home causes her some concern. It is also important to determine via a welfare expert whether or not relocating to one of the properties suggested by the father would adversely impact upon the child’s wellbeing. If an expert agrees that relocating and the disparity in the value of the parents’ homes are not matters of concern for the child then an appeal would be likely to succeed. I would go further to predict that the father’s origina...
6 Pages(1500 words)Case Study

Accounting & Financial Management

AWB’s operations can be categorized into areas ranging from ‘pool management services’ to ‘harvest financing’, and ‘International commodity management’. Only a company with such a big range of activities and financial outlays can become the benchmark for an equally big company like ‘Woolworth Limited’.

The performance of an entity can be better analyzed through its profitability analyses. The profitability ratios like Gross Profit ratio, Net Profit Margins, Return on assets (ROA), and Return on Equity (ROE). The calculations of such ratios are shown in the attached annexure. The Gross Profit ratio measures the percentage of each pound or dollar of sales remaining aft...
10 Pages(2500 words)Assignment

Financial Management Analysis of Rio Tinto Plc

Taking into consideration that Harmony is the sixth-largest in the world in the gold mining industry, the choice of Harmony God Mining Co. as a benchmark company is the most suitable and justifiable. Moreover, Harmony has also some investment stake in Rio Tinto, and this situation makes the company more suitable for the choice. At places, the benchmark company’s performances have been better than Rio Tinto, and thus Harmony has a competitive edge as well over Rio Tinto.

Profitability ratios like Operating Margin Ratio, Net Margin Ratio, Return on Assets (ROA), and Return on Equity (ROE) are the performance analyzer of any company. Profit Margin ratios show the relationship between profit and sales. Since profit ca...
8 Pages(2000 words)Case Study

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages(2500 words)Research Paper

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

Bernard Madoff : A Scapegoat of the Economic Crisis

Darwin was condemned and treated with contempt by the Church for proposing the theory of evolution that linked all living matter in the earth, including humans. In the case of Bertrand Russell, he was imprisoned as a conscientious objector, for expressing his opposition to British participation in the First World War. These are typical examples of people being wrongfully punished when they were guilty of no crime or fraud or misdoing. It would be highly improper to associate Bernard Madoff with the aforementioned luminaries, for he was truly guilty of carrying out the biggest financial fraud in modern history. At the same time, it would be simplistic to classify him as a victim of the contemporary judicial system. The truth, in fa...
6 Pages(1500 words)Assignment

Management of Financial Institutions

The first paper is about International Banking Regulation. For banks that may want to spread across borders, the study gives an explanation of how the various policies and laws may affect its operations. The second paper in the study gives the various restrictions on the development of Pan-European bank mergers. It shows how regional liquidity shocks limit cross-border bank mergers. Thirdly, the study shows the various methods banks use in risk assessment when lending to less developed countries’ sovereign governments. It gives a topology that can help banks efficiently assess risks. An explanation of the multi-nationalization that is given in this paper comes with a model showing how applicable the profit maximization hypot...
8 Pages(2000 words)Literature review
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 Financial Crisis of 2008 for FREE!

Contact Us