How Failures in Financial Engineering Influenced the Recent Financial Crisis

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In this paper, an analysis of how the failures in financial engineering and Corporate Governance have been closely related with the recent Global Financial Crisis is carried out.

The Real Estate Bubble in 2006 leaded to the Subprime Mortgage Crisis in 2007 which expanded from the United States to the whole world generating the biggest financial crisis since the Great Depression of the 1930s. There are multiple factors that originate a crisis like this, and will be explained and analysed later, but in order to understand the global economic situation it is necessary to understand how the changes in the Corporate Governance have been one of the reasons of this and how this changes have been motivated by the Financial Globalization.

It
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In this paper, an analysis of how the failures in financial engineering and Corporate Governance have been closely related with the recent Global Financial Crisis is carried out.

The Real Estate Bubble in 2006 leaded to the Subprime Mortgage Crisis in 2007 which expanded from the United States to the whole world generating the biggest financial crisis since the Great Depression of the 1930s. There are multiple factors that originate a crisis like this, and will be explained and analysed later, but in order to understand the global economic situation it is necessary to understand how the changes in the Corporate Governance have been one of the reasons of this and how this changes have been motivated by the Financial Globalization.

It was not until the 1973 Oil Crisis that the Monetarism became the paradigm for economy given its overall positive effects on the recover, even when the Keynesian approach had been dominant since the Great Depression. That change is generally regarded as the inception of economic Neoliberalism. However, that term had been already used long time before by Charles Gide in 1898.

Both the Neoliberalism and Free-Market are based in principles that can tagged as questionable since can be seen as based in the wrong economic policies from an ethical point of view. The development of both leaded to the Financial Globalization that has been described above as one of the reasons for the changes in the Corporate Governance.

The main reason for
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