Global Financial Crisis

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Tutorial 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
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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 policies
, 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
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