Retrieved March 4, 2014, from http://www.investopedia.com/terms/m/monetarypolicy.asp Willis, B. (2009, August 9). U.S. Recession Worst Since Great Depression, Revised Data Show . Bloomberg.com.
The financial crisis of 2008 was estimated to be the most dangerous since the Great Depression of the 1930’s (The financial crisis, 2009). The catalyst was the 2007 bubble burst of the housing market which spread quickly to the US financial sector and ultimately affected the global economy. The American auto industry was devastated by this crisis. Detroit’s big 3 companies Ford, Chrysler and GM’s had their debt problems exposed as a result. Increased debt and lower cash flows forced the automotive giants to seek solutions that would allow them to remain a viable entity in the coming years.
2008); global imbalances between US the excessive consumption by depict and China the excessive saving by surplus fuelled the housing bubble and credit boom, it is closely connected with financial crisis (Obstfeld and Rogoff, 2009); misperception the risk of the subprime mortgage defaults; loose financial regulation that failed to control the standards in the mortgage market, and this point is supported by Crotty (2009) that regulators allow banks to hold assets off balance sheet without capital requirement to support them. After this introductory section, section 2 discusses the impact of recession on customer behaviour; section 3 presents an analysis on how does the recession affect the companies’ profitabilit... ... middle of paper ... ...une. Available at: http://www.tradewindsnews.com/weekly/w2009-06-26/article200083.ece5 (Assessed on: 30 November 2013) Vaitilingam, R., (2009). Recession Britain: Findings from Economic and Social Research. [Online] Available at: http://www.esrc.ac.uk/_images/Recession_Britain_tcm8-4598.pdf (Assessed on: 24 November 2013) UNCTAD, (2010).
The Great Depression versus the Great Recession Since being founded, America became a capitalist society. Being a capitalist society obtains luxurious benefits and rather harsh consequences if gone bad. In a capitalist society people must buy products and spend money to keep the economy balanced, but once those people stop spending money, the economy goes off balance and the nation enters a recession. Once a recession drastically takes a downturn, the nation enters what is known as a depression. In 2008 America entered a recession and its consequences were severe enough for some people, such as President Barack Obama, to compare the recent crisis to the world’s darkest economic depression in history, the Great Depression.
It does not take much attention focused at the media to see that our great nation is struggling economically. One of the major contributors to this current economic meltdown is the rapid increase in foreclosures across the country. The country’s immense housing crisis can be addressed by referring to not only the accumulating irresponsibility of the individual American loan borrower, but also the growth of greed at the corporate level which led to the financial market’s negligence. To stop the spread of this issue we should look at closer government watch of the market and specifically focus on consumer education. The Quagmire What is foreclosure?
Society as a whole could have collapsed. The situation was a loaded gun and the pulling of the trigger started by bankers being greedy by trying to get the biggest bonus and not being regulated when making investments that went bad. See Fig 6 Bank Run Northern Rock References 1. http://www.un.org/esa/desa/papers/2012/wp115_2012.pdf 2. http://www.theguardian.com/business/2013/feb/28/bonuses-the-essential-guide. 3. http://en.wikipedia.org/wiki/Subprime_lending#Subprime_crisis. 4. http://www.theguardian.com/business/2013/feb/28/european-union-cap-bankers-bonuses.
Available at: http://www.relooney.info/SI_FAO-Asia/Global-Crisis_23.pdf Blakenburg, S and Palma, J.G. Introduction: the global financial crisis. Cambridge Journal of Economics. Vol.33, pp.531-539, 2009. Available at: http://cje.oxfordjournals.org/content/33/4/531.full.pdf+html Online Publications Inman, P. Easy money hits home with lenders facing £250bn losses.
“Mortgage Crisis Spreads Past Subprime Loans.” February 12, 2008. The New York Times. October 5, 2008. http://www.nytimes.com/2008/02/12/business/12credit.html?_r=1&pagewanted=print Barnes, Ryan. “The Fuel that Fed the Subprime Meltdown.” 2007. Investopedia.
In a marketplace with quickly rising property values, the adverse impact of this activity was completely shadowed, and yet lurking in the background is the one market constant, what goes up must come down. Mortgage Brokers ethics The unethical aspect of this business practice is straightforward; that the individual brokers and loan companies knew beforehand that the borrowers would not be able to maintain the payments for these loans, and that the speculators would dangerously inflate the market. However they were more concerned with t... ... middle of paper ... ...pperdine.edu/jbel/vol2/iss1/6 Jennings, M. M. (2012). Business Ethics, Case Studies and Selected Readings (Seventh edition.). Lynn, S. R. (2008, January).
As economic conditions turned from bad to worse investors, academics and practitioners began to wonder how such a crisis could have been precipitated in the first place. Blame was placed on mortgage originators, the Federal Reserve and on the investment banks, to name a few. The credit rating agencies (CRAs), seldom in the spotlight, were also heavily criticized for their role in causing the crisis. CRAs certainly do play an important part in financial markets and Thomas Friedman, the Pulitzer Prize winning New York Times columnist, once remarked that there are two superpowers in the world: the US and Moody’s (Lowenstein, 2008). But did the CRAs really deserve blame or were they being held as scapegoats?