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It started when the US sub-prime mortgage market collapsed due to the default on payments. A sub-Prime mortgage is a loan made for homes to borrowers who are not eligible for prime home loans because they either do not have sound credit history or have non at all. For example, people with low incomes, low bank transactions, history of defaults or unemployment, can use these mortgage loans to purchase homes. These loans are generally given out by lenders on higher interest rates, additional fees, penalties for early satisfaction of the loan and other additional costs such as adjustable interest rates (ARM). With such instruments where the borrowers do not have a credit history for the borrowers to base heir decisions on, there is a high risk of default. What was once known as the leader and a strong entity of the economy in 2007, the real estate business took a complete nosedive, which was not expected as the values of houses had not declined since World War 2 and were on a continuous rise after the great depression, and thus, lead to the liquidity crunch in the US market. The mortgage taken by investors had real estate as collateral which eventually lost all its value and hence defaults on payments occurred.
The demand for houses increased also during 2001 because the federal government reduced the interest rates, it was the lowest in 2001. This allowed people to invest in more houses and people started buying vacation houses and second homes. The builders continued building more and more houses even after the demand for property started to decrease after a while. The property market became so overvalued that finally the market collapsed, resulting in a rapid decrease in the rates properties and property demands. (University of Iowa, 2008)
Many Credit Rating agencies also played a major role in the event. The Mortgage backed securities which were in great demand in the early 2002, continued with the increasing demand and although
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In the paper, the regulatory failures that especially the western industrialised countries faced and which led to the universal economic crisis in the year 2008-09, is examined along with the findings about the causes or roots of the arising financial crisis along with certain immediate tasks that should be followed in order to cope up with the financial crisis has also been discussed.
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.
Global Financial Crisis of 2007 had its beginning in United States of America with the crash of the home loan or credit market during July 2007. This credit crunch which happened in United States during 2007 rapidly spread to other global economies thus jeopardizing the global financial system.
According to the paper there is a stress on uncomplicated, understandable marketing communication. During a crisis, people go back to brands they identify and trust - and trust will be a most important topic in addition to value for money. There is less indirect marketing.
The global financial crisis began proving its adversities by mid 2007. By the end of 2008, a great percentage of the financial institutions had collapsed leaving the government to devise means of alleviating the situation. This essay shall highlight the causes of the crisis, in relation to Peters (2010) as well as the measures undertaken by the government to change its monetary and fiscal polices so as to cope with the adversity.
The primary cause of the global recession could be addressed to the collapse that occurred in the sub-prime mortgage market in the United States (US) accompanied by turnaround of housing as reported by several other economies. The impact of the global economic crisis not only affected the financial institutions but the livelihood of almost everyone to some levels or the other (Shah, 2010).
The global financial crisis have affected and will continue affecting the livelihoods of nearly everyone in the increasingly inter connected globe. As a case study, I will view the economic situation the United States, its progress, and downfall caused by the global financial crisis.
Record numbers of people have lost their jobs in the past year and a half.
I have taken up the global financial crisis as my focus of discussion. The essay has been structured into three parts. The first part explains what recession is. The second part analyses the causes for this economic downturn and the third portion is where I have tried to provide some solutions that might help preventing the situation in the future.
It is expected that 2010 shall witness a global growth of 4 percent up from 0.8 percent witnessed last year with the private sector largely taking over. This is bound to encourage stronger economic growth within the emerging markets and economies.
This was also followed by a succession of collapses. Later months in the same year witnessed Lehman’s bankruptcy. The investment bank at the Wall Street also experienced the crisis (Lee, 4). The infusions of billion of US
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