The Collapse Of The Financial Crisis - 1766 Words

It’s been eight years since the 2008 global financial crisis, and the effects of it are still being felt. The crisis was initiated by a housing bubble in the United States that popped, causing a downward spiral that led to the worst depression since The Great Depression of 1929-39. This resulted in millions of people loosing their homes and jobs. Over the years, research and documentaries such as Inside Job, have shed light on what exactly caused this whole crisis, and what policies were implemented to fix it. If we could point to the single biggest cause of the 2008 financial crisis, I would argue it was the complete deregulation of the financial industry. Everything else that contributed to crisis was a result of financial deregulation. These include: low-interest rates, sub-prime mortgages, securitization—collateralized debt obligations (CDOs) and credit default swaps (CDSs), rating agencies, and insurance companies. A thirty-year period of financial deregulation began in the early 80s, and continued all the way up to the financial crash of 2008. Deregulation was needed at that time because the financial system had become too heavily regulated, resulting in stagnation of the economy. What seems to be lost in all this is the ability to find the right balance between regulation and deregulation. For example, before the great depression of the 30s, the laissez-faire outlook was really popular. The United States had an unregulated financial system, and the U.S. economy grewShow MoreRelatedFinancial Crisis And The Collapse Of The Lehman Brothers2206 Words   |  9 Pagesmandatory that every company, institution, firm, organization, business or enterprise – small or huge – has to undergo a financial crisis. Once in a while, it must find it hard to balance its books of accounts. If the situation gets severe, then the organization may even close down. This paper will give a detailed review of one institution -The Lehman Brothers - whose financial crisis led to its fall (Wong Smith, 2010). It will examine the beginning, the end, and the outcomes of the same. In additionRead MoreThe Financial Crisis And The Collapse Of The World Wide Financial System858 Words   |  4 PagesThe 2008 financial crisis was one of the worst economic times since the 1929 Great Depression. It led a worldwide economical, social, and political instability that shook the very foundation of the term â€Å"laissez-faire†, or free market. Millions of people around the world lost their homes and their jobs, while large corporations and entire countries were at the brink of insolvency. Others, who are as unfortunate, lost their life savings and pension funds. 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This can be observed by simply looking to the devastation and chaos caused by banks trying to makeRead MoreCredit Derivatives in the Recent Global Financial Crisis1671 Words   |  7 PagesCredit Derivatives in the recent Global Financial Crisis 1.0 Introduction: In the recent times credit derivatives have become a very popular financial security for investors. If we take a look at the chart given below we can see how the popularity of credit derivatives increased in the past decade. The maximum volume of derivatives was traded during the years 2005 to 2007 of which 2006 was the highest at $2000bn. Then when the financial crisis occurred at the end of 2007 the trading decreased rapidly