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Austria’s products are struggling to compete with the products China and India like Asian countries because of the higher prices of the Austrian products. India and China are the most heavily populated countries in the world and they don’t have the manpower shortage problems. On the other hand, Austria is facing severe manpower shortage and hence the labour cost is comparatively high in Austria. Subsequently the products of Austria are heavily priced in the global market.
“Lending rates are a key element in the transmission of monetary impulses to the real economy even more so in bank-based financial systems such as the Austrian one” (Jobst). Austrian banks were more particular in safeguarding the interests of their customers rather than the interests of the country. Austrian banks were not much particular in adjusting the interest rates even at a time when the Austrian economy fluctuated a lot. Banks miscalculated that the relationships with the customers are more important even at a time when the economy was in a unstable condition. Banks took a more relaxed approach to risk assessment and risk premiums decline even when the recession struck the economy hard.
The economic expansion of Austria suffered a major setback when the recession entered the world quiet unexpectedly in 2007. The slump in world trade has affected Austria also very much. Unemployment and inflation were reached all time high during the recession period in Austria. Many of the Austrian firms forced to cut down their labor force in order to escape from recession. However, Austria is currently showing signs of the great recovery. While most of their European counterparts struggling to repair the damage, Austria seems to be succeeded in finding solutions for the damages caused by recession.
Compared to other Euro zone counterparts, Austria was able to recover quickly even though the recession struck their economy severely. The current growth rates of Austria are more
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Italy is a rather homogenous country both linguistically and religiously. However, it is quite diverse politically, culturally, and economically (McDonald, 1998). Italy’s population density ranks fifth-highest in Europe, with the largest minority group being the German-speaking people of the Bolzano Province and the Slovenes around Trieste.
According to this discussion the banks and the financial institutions suffered from the crisis. The governments of almost all the nations had to come up with packages that are required to move out from such a situation. The financial crisis will shed its impacts around the globe due to globalization.
The financial crisis of 2007-08, not only led to the collapse of several banks and financial institutions, but turned down the stock markets in most of the countries. There are several specific reasons for the financial crisis which is discussed below in detail.
According to the report the crisis is traceable back from a flaw that occurred in the sub-prime part of the housing economy of the United States and spread over a considerable portion of the economy by the end of 2007. The US economy’s challenge had a wide range of implications on other countries’ economic situations, including Japan and others in the EU.
Many have assigned the year 2004 as the year of the great credit crisis that first had a toll on the United States’ financial sector before other parts of the globe had its impact. However, there are indications that the credit crisis of the year 2004 was just a climax of a historically influenced turbulence in the world’s financial market that began with the end of “the golden age of capitalism in 1970’s” (Kapadia and Jayadev 33).
One of the most significant causes of the financial crisis disclosed by the author is the market instability. This was related with the poor credit lines which had deteriorated the money supply while limiting the economic growth. Individuals and businesses were unable to pay back their loans which also affected the assets and cash reserves.
The global financial market is heading towards a collapse if necessary measures to resolve financial crisis is not taken by the authorities, not only in US but also in other countries facing the same situation. The present paper is