Academic Master

Business and Finance

Global Financial Crisis

The Financial Crisis Of 2007 to 2008 was also called the Global Financial Crisis. It had its roots In the United States of America’s Mortgaging Market. It, however, had a much more profound impact on almost all the countries around the globe. It has been labelled as the worst economic crisis since the Great Depression of the 1930s.

The focal point in its initial stage was subprime in the USA mortgage market. It eventually became an international calamity when Investment Bank Lehman Brothers had to fold and cease its operations. The extent of risky activities banks, such as The Lehman Brothers, were involved in helped to magnify the economic woes to a global level with ease. Thousands of people lost millions and billions of money as the global recession was in full swing.

These Malpractices ensured that there were massive bailouts to guarantee that the whole economic system did not fall on its head, and it can also be called a catalyst for the impending European Euro and Debt crisis (Bandyopadhyay). A whole set of legislative reforms was introduced to prevent and safeguard against them, such as the Frank-Dodd Wall Street Reform in 2010.

Despite being the trillions paid out of the US federal government, for instance, eighty-five billion to AIG, borrowing money had become much harder. Stock markets all over the world followed a sharp drop on a regular basis, and some even crashed.

Other causes included weak and fraudulent underwriting practices and easy availability of credit on housing matters. At the same time, in Capitalist economies, practices like Predatory lending were encouraged and became common, which are both unethical and violate the fiduciary and due diligence duties owned to the consumer (Necati 8697-8706). In layman’s terms, it was a classic bait-and-switch glossed over by false advertising.

The global financial crises of 2007 and 2008 demonstrated that banks were not able to regulate themselves, and without the oversight of government like Doss-Frank, they could have recreated another such crisis.

References

Bandyopadhyay, Sankhanath. “Revisiting 2008 Financial Crisis.” SSRN Electronic Journal (2013): n. pag. Web.

Necati, Aydın. “The 2008 Financial Crisis: A Moral Crisis Of Capitalism.” African Journal of Business Management 5.22 (2011): 8697-8706. Web.

SEARCH

Top-right-side-AD-min
WHY US?

Calculate Your Order




Standard price

$310

SAVE ON YOUR FIRST ORDER!

$263.5

YOU MAY ALSO LIKE

Pop-up Message