Financial Crisis The Great Depression - Coursework Example

Add to wishlist

Summary

The Great Depression 2" This is how the current economic status of this country has been described (Captain Hook, 2008). How have we got to a point where people are saying that our country's economy is falling below and beyond even that of the 1930's depression The Banks in the United States and the UK in the past few years appeared to have adopted "High Risk Appetite" as the way of doing business as they perceived to have high competencies and track record of Risk Management to launch riskier products to achieve high returns…

Download full paper File format: .doc, available for editing

GRAB THE BEST PAPER93.2% of users find it useful

Read Text Preview

Subject: Miscellaneous
Type: Coursework
Level: Undergraduate
Pages: 35 (8750 words)
Downloads: 4
Author: lcole

Extract of sample "Financial Crisis The Great Depression"

Download file to see previous pages

They perceived to have transferred the risks by practising dependency on unregulated investors through mechanisms like Special Purpose Vehicles and Special Investment Vehicles (SPVs & SIVs). The current economic crisis thus occurred as the result of exposure to Market Risks due to such risk transfer mechanisms that caused many loopholes in the Credit & Liquidity Risk Management. The entire disaster happened in the lending to Sub-Prime customers in home mortgage markets, which are individuals or companies not having clean credit history or regular source of income.

The banks lend loans to Sub-Prime customers to avail the benefits of higher interest rates and used the mechanism of "Securitization" to secure themselves that essentially is the mechanism of distributing the risk of the lending to the investors outside the Banking system through a process called "Conduiting". The process of "Securitization" gave confidence to banks in this risky business and hence resulted in the boom of Credit Derivative Market. The money was believed to be flowing through these "conduits" directly from "investors to the borrowers" through the SPV and SIV system.

The risk assessors never imagined that the underlying collaterals (houses) will face a crash in prices to a global level that would be uncontrollable by even the governments. Even the external rating agencies couldn't predict the Sub-Prime crisis because the Securitization Process was extremely complex and the dependency of valuations was upon scattered and unreliable data inside as well as outside the core banking system. This system expanded uncontrollably and the market competitiveness increasing exponentially resulting in banks sanctioning loans bypassing essential procedures as if there was "no time for risk management".

The actual risks got covered under hyped data and fair valuation became a matter of joke to be cracked. [Schmitz, Michael. C and Forray, Susan J. pp28-30; Clerc, Laurent. 2008. pp1-7]Objective of the ResearchThe following are the main objectives of my research:1. Find out what the cause/s of the current financial crisis is/are;2. Find out what effect the crisis is having on the United Kingdom, for example in terms of monetary power, and;3. How individuals and businesses are affected;4. Conclude what is being done, and what can be done about our current

...Download file to see next pages Read More

Cite this document

APA
MLA
CHICAGO

(“Financial Crisis The Great Depression Coursework”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1507426-financial-crisis-the-great-depression

(Financial Crisis The Great Depression Coursework)
https://studentshare.org/miscellaneous/1507426-financial-crisis-the-great-depression.

“Financial Crisis The Great Depression Coursework”, n.d. https://studentshare.org/miscellaneous/1507426-financial-crisis-the-great-depression.

Cited: 0 times

CHECK THESE SAMPLES OF Financial Crisis The Great Depression

The Return of Depression Economics and The Crisis of 2008

The book draws parallel between the great depression and 2008 financial crisis and it explores depression economics through lenses of the Japan's Lost Decade and 1997 Asian financial crisis (Krugman, 45).... These include: the 1907 panic, the great depression, the Latin American Crisis of mid 1990s.... In The Return of Depression Economics and the Crisis of 2008; Krugman warns that, just like a disease can become resistant to a vaccine, the economic difficulties that lead to great depression have made a comeback in the global economy....

4 Pages (1000 words) Essay

Debt-Deflation Theory of Irving Fisher

Factors Led to the great depression i.... Fisher also proposed appropriate solutions to the great depression that crippled the U.... Fisher formulated a debt-deflation theory and named the financial crisis, the great depression, which is currently used to relate to the economic recession in the U.... Significance of Irving Fisher's Debt-deflation Theory Irving Fisher's debt-deflation theory was essential in the great depression era and in current U....

7 Pages (1750 words) Essay

GREAT RECESSION/GREAT DEPRESSION

the great depression was a global economic collapse that took place in around 1929 and lasted for nearly a decade, coming to an end in 1939 (Duignan 1).... It was the abandonment of this gold standard and the resulting monetary growth that stimulated the great depression.... Duigan says that “the economic impact of the great depression was enormous, including extreme human suffering and profound changes in economic policy” (2).... Many have given a comparison between the current global crisis and the great depression that occurred in the 1930s....

5 Pages (1250 words) Essay

Comparison of The Great Depression and The Great Recession

On the other hand, the great depression was a severe economic depression globally in the period before the World War II.... In the 20th century, the great depression was the longest and most widespread.... The collapse of the stock market prices catastrophically on the New York stock exchange marked the beginning of the great depression in 1929.... It is notable that the devastating effects of the great depression affected both rich and poor countries....

5 Pages (1250 words) Essay

The Great Depression vs The Great Recession

the great depression that began 1929 and led to the stock market crash and, on the other hand, the great recession that lead to the global crisis of that began in 2007 were the… The breadth and depth of the both crises and in particular the suffering that resulted from the great depression is legendary.... The exact cause of the market crash that lead to the great depression in the 1930s has been a subject of great debate, in as much as most economists contend that the 1929 New York market crash was just the smokescreen of the great depression; however, the crises are more complicated and multifaceted (Eichengreen et al....

16 Pages (4000 words) Essay

The Great Depression

This essay talks about the great depression occurred from 1929-1939 after the New Stock Exchange Market Crash.... The major causes of the great depression included an over-speculation on the stock market, a decline in foreign trade.... the great depression the great depression occurred from 1929-1939 after the New Stock Exchange Market Crash.... The major causes of the great depression included an over-speculation on the stock market, a decline in foreign trade, poor policies that did not enforce any regulations of the economy and over production (McElvaine p....

2 Pages (500 words) Essay

Market Crash

has not only plunged the country's financial markets into their most volatile trading and deepest plunge since the crash of 1929 but also promises to usher in what others are now calling the Second great depression.... The subprime mortgage crisis in the U.... From the paper "Market Crash" it is clear that crashes apparently occur despite the knowledge that has been gathered about economic and financial cycles and activity, the most recent of which occurred in 2008 and is still unfolding....

6 Pages (1500 words) Research Paper

Comparison between the Great Depression and the Great Recession

"Comparison between the great depression and the Great Recession" paper discusses the causes of the great depression and the Great Recession, how political-economic leaders solved the two crises, what political leaders learned from the great depression crisis, and the causes of the subprime crisis.... nbsp; … In conclusion, there are similarities and differences between the great depression and the Great Recession....

11 Pages (2750 words) Coursework