Financial Crisis And Its Effects On Economy

2008 financial crisis caused severe trauma on the world economy, although the economy of China grew moderately, China 's financial system is very fragile, the financial laws and regulations are deficient, the structure of foreign change reserve is very risky, because China has huge foreign exchange reserve of US dollar, which makes China also suffer from the financial crisis. Financial crisis is caused by the American subprime mortgage, to combat the financial crisis, the United States issued a substantial amount of U.S. dollars, which makes the U.S. dollar depreciate continuously, and this action makes many countries that have great amount of foreign exchange reserves in U.S. dollars suffer huge losses. China has the largest foreign exchange reserves in the world, in 2008, China’s foreign exchange reserves had reached $ 2 trillion, the continues devaluation of the U.S. dollar make China suffered a lot, thus the international capital system based on U.S. dollars has been questioned, China and other countries that also hold a huge amount of U.S. dollars started to build a new international capital structure. In 2011, China, Japan

The impact of the financial crisis in 2008 is so far , it has resulted in various industries have revived a shock, even many large companies have been forced into bankruptcy.Inflation is a result of the decline in the quality of life, the weakening of people 's ability to pay. The outbreak of the financial crisis from the United States and then spread to the world,so this essay analyzes the reason of the US financial crisis, it is equally applicable to the countries in the world and take warning,that is the lack of supervision of financial institutions in the United States.

In 1997 the country’s exports were no longer booming and the Thai economy entered a unsafe and unpredictable phase. Foreign investors were skeptical about the current-account deficit and the big loans property developers. Bad debt continued to mount up and the stock market crashed to depths not seen in eight years. This caused the baht to fall prey to speculative attack. High debt, heavy borrowing, large current account deficit, and the semi-fixed exchange rate system all played a part to the Thai crisis.

A financial crisis involves the value of financial institutions or assets dropping rapidly. It is often associated with a panic on the banks causing investors to sell off assets or withdraw money from savings accounts. This is the result of concern that the value of those assets will drop if left at the financial institution. As the crisis intensifies there is a significant change in the amount of risk that world financial markets are willing and able to accept. This results in easy credit conditions becoming a situation of tight credit and is accompanied by reduced consumer and business confidence. According to experts, credit is the most vital piece to a successful economy. Consumers and businesses rely on credit to make large purchases. In recent years, the American economy has experienced the most severe global financial crisis since the Great Depression of the 1930’s. Unemployment rates rose, and stock and housing markets tumbled. These combined had dramatic effects on American households.

The Crisis of 2008 has been the worst financial crisis since the devastating era of the Great Depression. The Crisis of 2008 just like the Great depression left millions of people unemployed, and homeless. After the crisis the causes were viewed like speculation, fragility of the system, and greed of the managers which adversely affected the market.

According to the specialists, there are many reasons for this global financial crisis. We try to focus some prime reasons behind this

The financial crises that occurred in 2007-2008 had such a big impact on the world that it is now considered a global financial crisis (GFC) or global economic crisis. It is commonly believed that it began in July 2007 with the credit crunch; U.S. investors lost trust in the value of subprime mortgages which caused a liquidity crisis. This had the effect that the U.S. Federal Bank injected a large amount of capital into the financial markets. By September 2008, the crises had worsened as stock markets around the world became highly volatile.

Companies are facing a highly uncertain environment due to financial-crisis and global economy. Regardless high-competitiveness markets, organizations foresee as a priority become an intelligent enterprise leveraging people, process, data and technology through establishing strategic plans. The strategic planning is a complex process of collectivity efforts between executives, middle managers and employees. Organizations endure several factors during this practice depending of the maturity life cycle, complexity, sector and clear definition of the future stage.

Financialisation is the process in which financial institutions/markets increase in size and gain greater influence over economic policy and outcomes (Palley, 2007).Another link to financialisation is high degree of leverage. This is because with leverage, you can get a loan for 9/10s of the money, so you only need a small portion, and you are able to make lots of profit. Leverage is linked to financialisation in a sense that if it works, you get lots of profit with a working system, however if it doesn’t work, then you can lose lots of money, and in high degrees of leverage, you can be losing lots of money by the investment not working out, and someone then has to pay off the loaned money. In this essay, I will be analysing whether or not financialisation was the main cause of the 2008 global financial crisis, or if there were other factors involved in the great recession. I will be arguing that financialisation was a cause of the crash, but because it was aided by other factors, it is not the sole reason behind the collapse. The points that I will be making in my argument will be in relation to the financial crisis in the context of financialisation, talking about market deregulation and subprime mortgages. The second point that I will make will be about the greed of the CEOs on Wall Street, and their irresponsibility when it comes to the money of others. The final point that I will be making will be about the irresponsibility on behalf of the regulators, and how they

In 1992, stocks fell, and real estate and assets were affected and they call this the,” Bubble Burst”. How this came about is the financial system was dominated between politician, financial institutions, and regulatory authorities and they limited bankruptcy. Regulatory and market innovations subsidized risk taking from both financial institutions and their business clients. Monetary policy focused Japan’s yen appreciation and high GDP growth rates, low inflation rates, and made asset values increase. Increased monetary growth led to increased bank lending.

companies and investments in financial instruments. Fourth, the currency turmoil affects U.S. imports and exports as well as capital flows and the value of the U.S. dollar; the U.S. deficit on trade was rising as these countries import less and export more. Fifth, the crisis is causing economic turmoil that is exposing weaknesses in many financial institutions in Asia; some have gone bankrupt. The economic problems of the troubled Asian economies are adversely affecting the United States, Japan, and others.

From the analysis of the causing factors of the Thailand currency crisis in 1997, several remarks are made in order to provide recommendations. It is hoped that these recommendations would help avoid future financial crisis similar to the 1997.

The fixed exchange rate has given a fake sentiment of security in the southeastern Asian countries, (Thailand, South Korea, and Indonesia) this system has encouraged these countries to conclude a huge debt denominated by the U.S. Dollar, in additional to this the exports of these countries were weak in the mid-seventies because of , the high value of the U.S. Dollar against the Japanese yen, on the other hand China devalued its currency in 1994, the huge inward capital flows and the weakness of the exports had reflected on the widening of the deficits in current accounts as well as a significant portion of the inflows were in the form of a short-term loans, which leads these countries to an external distress.

The United States is obviously in a state of economic despair. This essay has supporting facts that prove the economy is definitely not on the mend. The public has been led to believe that this downward spiral is almost over. What will be proven in this paper is that foreclosure rates are still dramatically increasing and that the total in unemployment rates is deceiving. Without more jobs, consumers won’t see the gains in income needed to encourage them to spend more. The only thing that does seem to be on the rise is the amount of people seeking help for psychological distress which comes from losing their jobs. It is time for America

In the period between 1997 to 1998, a great economic storm blew the some fast-developing countries, especially Thailand, Indonesia and Malaysia. They had great economic develop before the crisis, but left almost everything at the end of the storm. The most obvious impact by the crisis is the capital outflows and currency devaluation. So, people in those developing countries began to find who should be respond to the crisis. International speculators were good targets to be blamed due to their actives during the crisis. The President of Indonesia, Suharto, even claimed “There are [parties] trying to engineer the fall of the rupiah to the 20,000 level [against the dollar]. It does not make sense.