Global Financial Crisis Essay

The Global Financial Crisis Essay
1.Introduction
1.1.Background
The Financial crisis was triggered in 2006 when US housing market began to crumble as the housing
price reached their highest point after years of speculative price increase; many house owners
defaulted on their loans, particularly subprime mortgagers (Archarya et al., 2009). Starting in
mid–2007, the outburst of US housing bubble in the subprime mortgage leads to the global financial
crisis that has been often so called 'Great Recession' (Verick and Islam, 2010).
Archarya et al. (2009) states that it is widely agreed that the fundamental cause of this global
financial crisis was the credit boom and the housing bubble. While Poole (2010) argued that it is a
mistake to only take subprime mortgage issue...show more content...
2.Impact of Recession on Customer Behaviour
The financial crisis and economic recession of 2008 unevenly affected economic aspect of countries,
industries and extended into social aspects, which include how the public responded to the
recessionary circumstances surrounding it (Gangl et al., 2012). This chapter focus to understand
how the current economic depression shapes the customers behaviour.
Earlier research by Desvaux et al. (2009) found that the recession had led to lower consumer
confidence, lower income due to high unemployment rate, higher living cost because of inflation,
lower wealth due to shrinking in household wealth and restricted consumer credit as bank cut
lending to consumer. The above five factors have shaped consumer behaviour in responding to the
recession as follows (Desvaux et al., 2009):
Control spending: this is the most common reaction during recession; people would have their own
budgets to reduce their overall spending such as eating out and travel plans.
Replace only when needed: consumers were willing to delay their new purchases of cars or
electronics and extend the lifetime of the current assets.
Shop smarter: people have begun to look out for promotions and special bargains, or use internet to
find better or lower price.
In addition to the above behaviours in responding to the
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Essay about The Global Financial Crisis
Financial crisis and resulting worldwide depression has at the present moved from containing the
infection to precise actions designed at promote improvement and altering policy to stop to
reoccurrence of the trouble. There are many financial experts says that the improving economic and
financial position might reason rigid improvement of the monetary scheme to be unable to find some
grip the crowded policy. "Financial market a place or channel for buying or selling stocks, bonds,
and other securities" (O'BRIEN, 2011). Financial market encourage the wide–ranging security of the
country at the same time as caring taxpayer interests and facilitate business operation with no
creating a ethical risk. For example the New York stock exchanges...show more content...
Investor pulled capital from countries, even those among small levels of supposed danger and
cause standards of stock and domestic currencies to thrust. In addition slumping exports and
product price have additional to the woe and pressed economies international moreover hooked on
recession or into an era of slower economic development. The worldwide crisis at this time seems
to be played out on two levels the first is along with the industrialized nations of the globe wherever
the majority of the sufferers from subprime mortgage debt, unnecessary leveraging of reserves, and
insufficient capital support credit default swap just like insurance against defaults and bankruptcy
have occurred. The second stage of the crisis is along with rising market and other economic who
might be blameless bystander to the disaster but who also might contain less flexible economic
system that can frequently be whipsawed by act in worldwide markets. A lot of developed countries
have talented to finance their personal save packages by borrow nationally and intercontinental
capital markets, but many rising market and developing economies have in short supply basis of
capital and have turned to assist on or after the international monetary fund, World Bank or from
assets excess nations, such as Japan and the European Union. A fall down of the US sub–prime
mortgage market and the reversal of the housing boom in additional developed economies has had an
undulation result approximately the

The Global Financial Crisis Essay
Introduction In 2008, the world experienced a tremendous financial crisis which is rooted from the
U.S housing market. Moreover, it is considered by many economists as one of the worst recessions
since the Great Depression in 1930s. After bringing a huge effect on the U.S economy, the financial
crisis expanded to Europe and the rest of the world. It ruined economies, crumble financial
corporations and impoverished individual lives. For example, the financial crisis has resulted in the
collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brothers and
AIG. These collapses not only influenced own countries but also international scale. Hence, the
intervention of governments by changing and expanding the monetary...show more content...
An increase in loan packaging, marketing and incentives encouraged borrowers to undertake
difficult mortgages so they believed that they would be able to refinance quickly at more
favourable terms. People borrowed money to buy the house and then expected the price to rise
and sold so that they could pay off the debt which owed to the bank and demanded a new loan to
buy another house. However, once the interest rate began to rise and house's price dropped in
2007, refinancing became more difficult and banks could not collect their mortgages. Besides, low
interest rates and large inflows of foreign funds created easy credit conditions for years before the
crisis and that simulated the boom in housing construction (Steverman and Bogoslaw, 2008).
Moreover, easy credit and money inflow greatly contributed to U.S housing bubble and the rise of
house's price. In relation to the increase in house's price, the rise of financial agreements such as
mortgage–backed securities (MBS) and collateralized debt obligations (CDO) encouraged investors
to invest in the U.S housing market (Krugman, 2009). When housing price declined in the U.S,
many financial institutions that borrowed and invested in subprime mortgage reported losses. In
addition, the fall of housing price resulted in default and foreclosure and that began to exhaust
consumer's wealth and

The Global Financial Crisis
The Global Financial Crisis has had a huge impact on the global economy. The American housing
market collapses, the house price drops significantly and the bank is losing lots of money, however,
people are not pursued in court for money or declared bankruptcy. People tend to spend less on the
due to their houses worth less than the bank has loaned originally and some of them are still
committed to clearing off their mortgages. This causes less activity in housing market and sales
market, hence more people lose their jobs which means the unemployment rate increases, and the
American economy recovers slowly.
As the unemployment rate increases, people's income decreases, therefore they don't have enough
money to pay off the mortgage. Banks start to close down due to lack of sufficient money to run
the business, people cannot get back the money they put in deposit. As a result, people who have
owned a house are more likely to maintain the standard of life. Statistic has shown that top 5 per
cent of United States households are wealthy from 1983 to 2007 (Rosenthal, 2012), rich people got
wealthier in the decades; however the others go deeper into debt in order to maintain their lifestyle,
thus poor people can't pay off debt as the housing market collapses, poverty gets more serious which
widen the gap between rich and poor. It also affects the developing country, China. 34 per cent of
China's economy is from manufacturing export to America, the production was reduced due to the

Global Financial Crisis Essay
The Global Financial Crisis that occurred in 2008 and crippled every major economy was not an
accident; it was caused by an unregulated and uncontrolled financial industry. Decline of Real Estate
Value The financial crisis is considered to have its roots in the United States where there was an
increase in loan losses for subprimes. Banks were lending money to people that did not have the
capability to maintain a regular repayment schedule. Homeowners only had the ability to pay the
interest on their mortgage and never pay the actual principle amount. When the interest rate began to
increase, homeowners could no longer afford the interest payments required. Housing prices began
to fall and debtors found that they could no longer afford...show more content...
The biggest issue since the Great Depression was to continue regulating the financial sector to
avoid the same crisis that the United State had just suffered. However, for regulations to be
implemented effectively, it was crucial that it was well designed; even then there was a possibility
that it might not work. Greed and vested interest are likely to hijack the politics of regulation design.
In the 1980's the financial industry exploded. Investment banks went public giving them the ability
to get additional funds from stakeholders to spend. Investing companies began to become richer and
more powerful than ever before. When Ronald Reagan became President of the United States, a
30–year financial deregulation began with the support of economists and financial lobbyists. The
Regan administration began to deregulate savings and loan companies, allowing them to make
riskier investments with depositors' money . Hundreds of saving and loan companies failed in their
investments and in the end of the decade declared bankruptcy. The memories from the earlier great
Depression began to diminish and the government stated that the marketplace must be set free. This
led to the precautionary rules to be scrapped. Together with looser lending standards for other kinds
of consumer credit, this led to a radical change in American behavior. A New Era After the major
failure of many savings and loans

The Global Financial Crisis: The Great Depression
Global Financial Crisis
The great depression in 1929 had been called the worst economic failure till 2008 financial crises
happened. Although Federal Reserve tried to prevent US banks from collapsing down, it occurred
and then housing price collapsed 31.8 percent. Recession finally ended after two years but
unemployment rate was still more than 9%.
Financial market environments before the crisis
The main root of crises was mortgage system of US. Before crises there was increasing number of
offers for people who have willing to get mortgage even though they were considered as a bad
credit risk. The reason why they did it, the price of house was rising continuously and they thought
that would go on increasing. It was clear that if people cannot...show more content...
In US and Europe majority of banks acted like that. And then all different loans ware gathered into
financial instruments that can be receivable, payable, loans and so on. Those financial instruments
created comfortable atmosphere generating variety types of hedging activities. As it is obvious
financial market is almost unlimited number of transactions including high risk financial
instruments. And it seemed everything was going on well. But there are limits that how far
economies can be sustained by debt that is not based on any real economic values created. Economic
growth slowed in the USA that ignited a sharp increase in the number of mortgage holders who
could not afford the interest rates, and in the end there were a growing number of repossessions.
Meanwhile, investors who bought these mortgages through a range of schemes, known as
mortgage–backed securities, found out that the value of what they own is sharply dropping. As a
result, house prices fell sharply, and mortgage lenders discovered that they could not make enough
from selling off roughly one million repossessed homes to pay back for loan that borrowed from
bank. So, the investment banks which had been so willing to lend money to mortgage lenders,
suddenly found out that they were facing losses of tens of billions of dollars. For some, the losses
represented by various toxic

The Global Financial Crisis
In the following essay, I will briefly summarize some of the main events leading up to the global
financial crisis. Following this, I will discuss the effect this had on the banks and ergo the credit
supply, then examine how this contributed to the corporate failure. I will also pay some attention
to how the market imperfection can affect firms real decisions. Finally, I will sum up the main
points of the essay. The banking panic of the fall of 2008 set economies around the world into a
severe recession. The spark of the panic was seen in mid–2007 the credit boom, followed by the
demise of subprime mortgages and securitized products. This, in turn, raises worries about the
solvency and liquidity of financial institutions, evolving into a full–blown banking panic. Resulting
in the failure of the Lehman Brothers and Washington Mutual, and multiple governments run
financial institutions. (Ivashina & Scharfstein, 2009). As a result during 2008 the prices of most
asset classes and commodities declined, although the cost of corporate and bank borrowing rose
significantly. In both the USA and the UK interest rates peaked at over 5% (See Appendix A).
Consequently, Syndicated lending started to fall mid–2007, then accelerated during the banking
panic September 2008. The lending in the fourth quarter of 2008 2008: Q4 was 47% lower than the
previous and 79% lower than in 2007: Q2 (ibib).
A decline in the demand could explain the overall drop in lending, it might also explain

In 2008, the global financial industry experienced dramatic changes when the global financial crisis
came furiously. In the United States, the historical changes appeared in the structure of investment
banking. These changes included the fifth–largest US investment bank, Bear Stearns and the
third–largest US investment bank, Merrill Lynch was acquired respectively, and the fourth–largest
US investment bank, Lehman Brothers declared bankruptcy. In addition, the Goldman Sachs and the
Morgan Stanley had no choice but to transform separately into the bank holding company. Moreover,
the American government took over the Fannie Mae and the Freddie Mac and held a major share in
the American International Group. There were also various events about the bankruptcy and merger
of the other financial institutions. In the wider world, some banks in Belgium, Britain, Switzerland
and Germany also got into the dilemmas and troubles, and these banks accepted the government aids
without choices. However, under the continuing instability in the global financial industry, the JP
Morgan not only kept profits in every quarter, but also remained upwards in a falling market from
their investment banks businesses, and they showed the most outstanding performance in the global
financial industry. At present, the general assets of JP Morgan has already arrived $1.2 trillion.
According to the latest performance reports which the JP Morgan recently released, that showed the
operating income of the JP

The best evidence so far for the existence of an American empire, despite denials to the contrary, is
the Global Financial Crisis (GFC). The persistent removal of restrictions and oversights on the
domestic financial system of the US, combined with the decisions of individual firms, other
governments and foreign financial organisations, culminated in the singe largest depreciation of
assets and currency valuations in history, surpassing even the Great Depression in its extents.
The United States created a position for itself of great power and overseer, but failed to effectively
exercise these abilities; this lack of diligence has caused much controversy. The root causes of the
economic downfall were a chain of decisions, made by domestic...show more content...
But now that the situation is stabilising, more focus is being paid on their actions, and calls are
mounting for a change to how the world's financial systems are managed and overseen.
Much of the criticisms made are valid, but they tend to fall short of addressing the whole truth of
the issue. Whilst it is true that the US could have done much more to avert this crisis, it is also true
that so too could the other states. It is only by their own hand that they are so entangled in this
system; if they protected their economies more then they wouldn't be so exposed to the effects of the
actions of the American government and financial system.
Specific criticisms levelled at the actions of firms are valid, but the generalisations that are usually
made ignore the reality of the situation, that is that it was a small segment of the American economy
that was responsible, not the entire economic structure, nor even the entire financial services industry.
The issues raised by the GFC highlight the need for a more coordinated legal framework for
managing the complex international financial system, and also examinations of the real intent
behind the USA's actions on the world stage. This crisis has given great cause for states to evaluate
how integrated into the world they want to be, with this being the first true backlash from integration
with this system to affect such a wide cross section of the globe.
Crucially, it also highlights the current

Starting from problems of payment defaults on housing loans (subprime mortgage defaults) in the
United States (U.S.), then ballooned damaging crisis of the banking system not only in the United
States but extends into Europe and into Asia. Successive cause a domino effect on the solvency and
liquidity of financial institutions in these countries, among others, led to the bankruptcy of hundreds
of banks, securities firms, mutual funds, pension funds and insurance. The crisis then spread to parts
of Asia, especially countries such as Japan, Korea, China, Singapore, Hongkong, Malaysia, Thailand,
including Indonesia, which happens to have long had the letters beharga these companies.
From the various critiques by experts, that the problem is...show more content...
Lehman Brothers announced a gradual loss before finally bankrupt. On June 16, 2008, the
company announced losses worth 2.8 billion dollars for the second half of 2008. Followed by losses
of 3.9 billion U.S. dollars in part–to–three in 2008 (10 September) and culminate in the
announcement of bankruptcy on September 15, 2008. Similar unrest was also experienced almost
simultaneously by Merryl Linch, Citigroup, AIG and other large financial institutions.
This affected the weakening of the real sector with the bankruptcy of major U.S. companies like
General Motors, Ford, and Chrysler that threaten the continuity of work thousands of employees.
Sure enough, the U.S. unemployment rate rose to 6.7% in line with the increase in pessimism
among consumers and investors throughout the period from September to November 2008. That
is the level of termination of employment (FLE), the largest in the last 34 years. Carrying 533 000
employees laid off and reached a total of 1.91 million persons in 2008. (Source: U.S. department of
labor). Along with that, on 30 November 2008, the U.S. government also announced a decline in
the value of real GDP for part III in 2008 amounted to 0.3%.
Likewise, also in Europe, the banking crisis in Europe was marked by problems at a small bank in
the UK, namely Northern Rock Bank, in mid–2007. Northern Rock is a true small–scale private
bank in the UK. However, when there broke down in

Global Financial Crisis: Causes and Effect
Introduction
The financial crisis that began in 2007 spread and gathered intensity in 2008, despite the efforts of
central banks and regulators to restore calm. By early 2009, the financial system and the global
economy appeared to be locked in a descending spiral, and the primary focus of policy became the
prevention of a prolonged downturn on the order of the Great Depression.
The volume and variety of negative financial news, and the seeming impotence of policy responses,
has raised new questions about the origins of financial crises and the market mechanisms by which
they are contained or propagated. Just as the economic impact of financial market failures in the
1930s remains an active academic subject, it is likely that the...show more content...
Mark–to–market Accounting: FASB standards require institutions to report the fair (or current
market) value of securities they hold. Critics of the rule argue that these forces banks to recognize
losses based on "fire sale" prices that prevail in distressed markets, prices believed to be below
long–term fundamental values. Those losses undermine market confidence and exacerbate banking
system problems. Some propose suspending mark–to–market; EESA requires a study of its impact.
Deregulatory Legislation: Laws such as the Gramm–Leach–Bliley Act (GLBA) and the Commodity
Futures Modernization Act (CFMA) permitted financial institutions to engage in unregulated risky
transactions on a vast scale. The laws were driven by an excessive faith in the robustness of market
discipline, or self–regulation.
Shadow Banking System: Risky financial activities once confined to regulated banks (use of
leverage, borrowing short–term to lend long, etc.) migrated outside the explicit government safety
net provided by deposit insurance and safety and soundness regulation. Mortgage lending, in
particular, moved out of banks into unregulated institutions.
This unsupervised risk–taking amounted to a financial house of cards.
Non–Bank Runs: As institutions outside the banking system built up financial positions built on
borrowing short and lending long, they became vulnerable to liquidity

Introduction At least for a while, the bear seems to have buried the bull. Wall Street doesn't seem as
shiny as it used to. The global economy has just recently come out of a deep recession. At a time like
this, it is particularly relevant to examine the role of the State in overcoming economic crises.
Although government intervention in the matters of a fair free–market is not entirely consistent
with the doctrine of economic liberalism which has been today vindicated as a necessity in a free
society, in practical terms, it is impossible for the government to be not involved in something so
intrinsic to the over–all well being of its subjects. But what can the government do to get the country
out of an economic slump? What many...show more content...
According to Jonung (2009), the bank support was of crucial importance because it guaranteed the
durability of the banking system by restoring confidence in the Swedish institutions. The
Riksbank (Swedish central bank) ensured unlimited liquidity by effectively acting as a lender of
last resort. The Swedish ministry of finance attacked the crisis with a twofold approach. Firstly,
'Banks in trouble were asked to obtain capital from their shareholders,' on failure of which, the
banks would have been confiscated and brought under public control. This was a crucial part of the
recovery package which pushed banks to the edge in their efforts in the battle for survival, thus
minimizing the moral hazard problems. This is in sharp contrast to the towering moral hazard
problems which the U.S. faces with the corporate bailouts in the automobile and financial industry.
Secondly, the finance ministry created the 'Bank Support Authority' which supervised the process
of splitting the assets of the major Swedish banks into a bad bank and a good bank and managed
them according to their prospects. The initial investment that Sweden made on the policy response
to the crisis was more than 4% of its GDP but with the recovery of profitability of banks the net
spending by the government was less than 2%

The Global Financial Crisis And The Crisis Essay
Introduction
The Global Financial Crisis, also known as The Great Recession, broke out in the United States of
America in the middle of 2007 and continued on until 2008. There were many factors that
contributed to the cause of The Global Financial Crisis and many effects that emerged, because the
impact it had on the financial system. The Global Financial Crisis started because of house market
crash in 2007. There were many factors that contributed to the housing market crash in 2007. These
factors included: subprime mortgages, the housing bubble, and government policies and regulations.
The factors were a result of poor financial investments and high risk gambling, which slumped down
interest rates and price of many assets. Government policies and regulations were made in order to
attempt to solve the crises that emerged; instead the government policies made backfired and
escalated the problem even further.
Subprime Mortgages
The housing market crash, which broke out in the United States in 2007, was caused by high risk
subprime mortgages. The subprime mortgage crisis resulted in a sudden reduction in money and
credit availability from banks and other lending institutions, which was referred to as a "credit
crunch." The "credit crunch" and its effect spread across the United States and further on to other
countries across the world. The "credit crunch" caused a collapse in the housing markets, stock
markets and major financial institutions across the globe.
Subprime

|GLOBAL FINANCIAL CRISIS |November 12 |
| |2008 |
| | |
PART 2
Introduction
The stock price plunge and the severe credit crunch we are watching today in the global financial
markets are byproducts of the developments in the US six years ago. In late 2001, fears of global
terror attacks after 9/11 shook an already...show more content...
The resulting spiral underlay a developing financial crisis.
Initially the companies affected were those directly involved in home construction and mortgage
lending such as Northern Rock and Countrywide Financial. Financial institutions which had engaged
in the securitization of mortgages such as Bear Stearns, Indy Mac Bank, and Fannie Mae and
Freddie Mac, then fell prey.
It then began to affect the general availability of credit to non–housing related businesses and to
larger financial institutions not directly connected with mortgage lending. At the heart of many of
these institution 's portfolios were investments whose assets had been derived from bundled home
mortgages. Exposure to these mortgage–backed securities, or to the credit derivatives used to insure
them against failure, threatened an increasing number of firms such as Lehman Brothers, AIG,
Merrill Lynch, and HBOS.
Development of the global financial crisis
The development of the global financial crisis is a result of a number of complicated and
interrelated factors. Starting with the downturn of the housing bubble in the US economy, the fall
in the financial stability in the US, and the rising commodity prices, all of the factors, in one way
or other, has initiated the crisis. As stated by the United Nation in its Conference on Trade and
Development, and in its Trade and Development Report 2008, the major factors for the crisis are:
1. The bursting of the housing

ACCG 399: Accounting in Context
Accounting's Positivistic Tendencies: Overlaying a Social Science with Pure Scientific
RationaleвЂЁTutorial 5 – Week 6
Thought Activity
The film 'Inside Job' is explained the occurrence of the global financial crisis in 2008. It has shown
that lots of companies have bankrupted and millions of people lose their jobs and homes around the
world. Such as United States, Iceland, England, France, Singapore and China. There is a sentence in
this film has make me impressed, which is " the poorest always pay the most."
The director has separated this film into five parts, which are How we get there, The Bubbles, The
Crisis, Accountability and Where we are now. The entire film has shown a harsh reality, which is
...show more content...
In this film governments allow Banks to have home ownership program, its lend money to poor
people to buy houses. It starts out great and home ownership explodes. But when the crisis comes
and the bubbles burst, the poor people would not repay their mortgage, they cannot afford, and then
they become homeless. The rich people got the profit. It can be seen that during the financial crisis,
the poor people lose more, and the rich people get more. Therefore, everytime the government
intervenes in the free market, even on the grounds of virtue, bad things will happen. We need to be
wary when politicians try to do things on our behalf.
The initial causes of collapse of financial system in Iceland was deregulated banks within Iceland
were able to amass a debts load almost ten times their GDP, and eventually unable to carry this
debts, it will lead to crisis.
Actually, the positive accounting theory tries to make good predictions of real world events and
translate them to accounting transactions. To Achieved Positive Accounting Theory, we can Change
accounting policiesвЂЁ, Managing discretionary accruals, Timing of adoption of new accounting
standards, advertising, repairs & maintenance and capitalize operating expenses.
During the financial crisis, the market cannot correct itself, we need government regulations and I
think only US government can control Wall Street and the

Economic growth
The impact of the Global Financial Crisis on economic growth
As a result of the global recession, Australia's GDP was forecasted to contract by 0.5% in 2009–10
in comparison to other advanced economies which were expected to contract by 3.75% in the same
year. However minor the reductions in GDP, it was evident that Australia was not exempt from the
global recession although is better placed and is expected to perform better than almost all other
OECD economies. The global recession has also triggered a fall in household wealth and a
disruption in consumer confidence with consumption forecasted to contract by 0.25% in 2009–10.
Economic recovery package – use of macroeconomic policies
Fiscal policy
Fiscal policy, a...show more content...
Conversely, total expenditure for 2009–10 is forecasted to exceed revenue, increasing by 2% on
estimated expenses since the February 2009 UEFO at $338.2 billion. It is illustrated that the
majority of revenue the government receives is from Individuals income taxation and on the other
hand, expenditure is expended most in the Social security and welfare sector.
In response to the advent of the global economic downturn in 2008, the Government utilised fiscal
policy to provide an urgent stimulus to economic activity as well as a sustainable medium term
boost to aggregate demand. The Labour Government had carried out an expansionary
macroeconomic stance with a Budget recording $57.6 billion underlying fiscal deficit in 2009–10,
which was equal to 4.9% of GDP (largest percentage of GDP on record for the last 40 years) and
will remain a deficit until 2015–16.
Further, the Government employed deliberate Government policy decisions subsequent to the crisis,
adding to a major expansionary impact on the Australian economy. Early and decisive spending
initiatives have been put in place against the face of the global recession, ensuring the economy is
secured to make the most of the global recovery. Some of the key initiatives consist of:
The Government has spent $12.2 billion to assist households financially and support economic
growth. The household stimulus package provides extensive support from low to middle–income
earners

Issue
Due to the effect, of the global financial crisis of 2008–2009, advanced economies have seen a
significant increase in public debt. Canada risks a repetition of this experience and prominent voices
are calling for an additional round of fiscal austerity. Without enhancement, the problematic habits of
Canadian governments, such as deficit spending and growing government debt, bear short– and
long–term consequences for the country and its population. The biggest problem in Canada is
primarily the mounting costs of an aging society and not so much to yield a balanced budget and
gradually reduce debt in the recovery.
Background
в™ЈIn the mid–1990s and late 2000s, Canada's federal and provincial governments made substantial
advancements...show more content...
In the long run, productivity could be improved by increasing public investments, and backing
private investment and innovation in further effective ways than costly across–the–board corporate
tax cuts.
в™ЈAdditional spending on debt servicing costs inevitably translates to fewer resources available
for public priorities. (Lammam, MacIntyre, Ren, & Hasan, 2017)
в™ЈEmpirical research has found that a negative relationship exists between government debt and
economic growth (Reinhart and Rogoff, 2010; Cecchetti et al., 2011; Checherita and Rother, 2010;
Woo and Kumar, 2014; Chudik et al., 2015; Eberhardt and Presbitero, 2015; Г‰gert, 2015).
в™ЈAcross both advanced countries and emerging markets, high debt/GDP levels (90 percent and
above) are associated with notably lower growth outcomes. Much lower levels of external debt
/ GDP (60 percent) are associated with adverse outcomes for emerging market growth. (Reinhart &
Rogoff, 2010)
в™ЈThe expansion of government debt prompts long–term interest rates to rise. The outcome is a
rise in the cost of private–sector borrowing. Private capital investment can be discouraged as a result
of higher borrowing costs. This is important since private capital investment is a vital element of
long term economic growth.

The Global Financial Crisis on India Essay
Why do you think India remained relatively insulated from the financial crises?
"The contagion is truly global in a globalized world. How can the high priests of globalization in
India expect to insulate the country from this all–pervasive crisis?" – By S. Shivaraman
It is not right to say that a country is insulated from financial crisis in today's globalized world. In
some way or the other there will be an effect of failed programme of one country on the other. The
moment we say that we are global (global meaning when we do not have any restriction on
transactions with other geography's), we become non–insulated to the...show more content...
Indian economy has been affected by the financial crisis but the effect is less for which there exists
various reasons. But it does not mean that it is not affected at all, the individual areas show the
effect of these financial crises in the economy. In this paper I will write about the reason for both
why the effect was less and the areas which were affected by the financial crisis and how.
"At the outset, it must be admitted that the abundant caution exercised by the former RBI Governor,
Dr. Y. V. Reddy and going slow on opening up new complex financial products helped to insulate the
country's from a major financial crisis" .
There have been reflective discussions on the effects of the Global Financial Crisis on India. Facts
tell us that while the world economy seemed to be collapsing in 2008/09, India's GDP expanded
by 6.7%. The Federal Bank and the Bank of England cut their policy rates to rock–bottom levels to
0.25% and 0.50% respectively . This action was a means of adopting an expansionary monetary
policy in pursuit of enhancing economic activity and investment amongst consumers and firms. At
every Central Bank meeting, during the past 2 years, we saw governors extremely concerned about
the recession. They did whatever they could to pick up the economy and boost consumer confidence.
When interest rates reached their minimum levels, their hands were tied and they needed to look for
another tool. Over the

Financial Crisis : A Global Crisis Essay
Overview: The 2008 financial crisis is notably one of the worst financial disasters in American
history. It began with a large financial bubble, in which many investment, real estate, and insurance
companies made millions. When the bubble burst, stock markets fell, these companies collapsed,
and economies of supposedly strong nations were brought to their knees. Not only did the financial
crisis severely affect the economy of the United States, but the international markets as well. At the
time of the burst, many international stock markets fell, making this US financial crisis become a
global financial crisis. A global recession took place, and the US nationaldebt doubled.
Unemployment rose by ten percent. While the peak of the crisis was during the years of 2007 and
2008, the drastic effect on the economy the crisis caused is still recovering.
Causes:
There are several factors that contributed to the initial beginning of the 2008 financial crisis. Before
the crisis, there was a giant increase in real estate. As buying real estate became increasingly popular
in the marketplace, many real estate agencies and mortgage companies wanted to be sure they could
share in the profits. Mortgage loans became increasingly popular, so lenders began to hand out
massive amounts of loans to keep the demand for real estate strong and broaden home ownership in
America. To better serve the demand for real estate (or so they thought), lenders began selling
subprime mortgage loans. Subprime

The Global Financial Crisis Of Australia Essay
Introduction The Global Financial Crisis (GFC) was the the deepest recession after the World War
II economy recession. Australia emerged as the least affected by GFC as compared to other
developed economies of the world. After the quarter with negative growth, the march quarter 2009
(0.4% GDP growth), suggested that Australia was able to escape from the world–wide recession.
This article looks at each of these three different factors responsible for relatively strong
performance of the Australian economy over this period and will examine their role that each
may have played. Firstly, the fiscal stimulus policies adopted by Federal Government: secondly,
timely policy responses to the effects of the global financial crisis by Reserve Bank of Australia
and thirdly, the Australian economy trades significantly with Asia and in particular, China, and how
the economy was beneficial from Chinese growth in the global slowdown. (the performance of our
major trading partners, particularly China.) Australia emerged as the least affected economy by
GFC: Role played by each factor Australia was able to maintain continuously impressive GDP
growth as compared to other developed countries since the Global Financial Crisis (GFC) began in
2007. Australia survived from recession by attaining 1% positive growth in the 2008–2009 financial
year where many countries of OECD were in recession. Federal Government During the crisis,
Australia 's financial system was properly structured and

Global Financial Crisis Essay

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Global Financial Crisis Essay