Financial Crisis 2008

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Recommended: Causes of the financial crisis of 2008

Just after ten years of Asian financial crisis, another major financial crisis now concern for all developed and some developing countries is “Global Financial Crisis 2008.” It is beginning with the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. (Global issue)

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

Subprime mortgage crisis- The Subprime mortgage crisis is an ongoing financial crisis characterized by contracted liquidity in global credit markets and banking systems. A downturn in the housing market of the United States, risky practices in lending and borrowing, and excessive individual and corporate debt levels have caused multiple adverse effects on the world economy. The crisis, which has roots in the closing years of the 20th century but has become more apparent throughout 2007 and 2008, has passed through various stages exposing pervasive weaknesses in the global financial system and regulatory framework. There are some reasons of this subprime mortgage crisis like-

Boom and bust in the housing market - Americans spent $800 billion per year more than they earned. Household debt grew from $680 billion in 1974 to $14 trillion in 2008, with the total doubling since 2001. During 2008, the average U.S. household owned 13 credit cards, and 40 percent of them...

... middle of paper ...

...eceived preferential loans from the troubled mortgage lender. Fannie Mae was the biggest buyer of Countrywide's mortgages.

Conclusion:

Greed leads a great financial crisis for global economics. The banks were not aware about the future. However they can’t think the future. There are lacking of U.S government in their banks rules and regulations. So, for our safety future we have to reserve our cash.

Bibliography:

Reference:

http://economictimes.indiatimes.com/Indicators/Global_financial_crisis_The_Story_so_far/articleshow/3507868.cms

http://www.weltwirtschaft-und-entwicklung.org/cms_en/wearchiv/042ae699af0b75901.php

http://www.acton.org/commentary/425_greed_hurts.php

http://www.globalissues.org/article/768/global-financial-crisis

http://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

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