The Global Financial Crisis Of 2007-2008

1123 Words Nov 5th, 2014 5 Pages
The Global Financial Crisis of 2007-2008 is the worst financial crisis since the 1930’s The Great Depression (Reuters, 2009). Even if bailouts of banks by national governments prevented the collapse of major financial institutions, worldwide stock markets continued to drop. Evictions and foreclosures overwhelmed the housing market while severed unemployment embraced the labor market (Baily and Elliot, 2009). This global financial crisis was responsible for the decline in the consumers’ wealth, and contributed to the great recession and European debt-crisis (LA Times, 2012). Varying opinions have been suggested to address the origin of the global financial crisis including conflicting of interests, complicated financial instruments, regulation failure, and biases of credit rating agencies (US Senate, 2011). Such explanations seemed logical but experts tended to argue for or against every particular solution, making it hard to fix the problem. In the aftermath of the global financial crisis, fiscal and monetary policies was imposed to strengthen the economy, and at the same time, to prevent future economic conundrums.
Reaching its peak in 2005-2006, the bursting of the US housing bubble, one of the main cause of the global financial crisis, immediately triggered the decline in economic activity. The quantity and default rates of subprime and adjustable rate mortgages increased afterwards. Also, as banks gives out more loans, housing prices started to rise accordingly (Lahart,…

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