Global Adjustment Case Study

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Recommended: Causes of the financial crisis of 2008

Is Global adjustment to the crisis and current imbalances likely to occur and if so how?
a. What could be done to encourage smooth adjustment? To prevent another global financial crisis?

First of all the financial crisis and current imbalances likely to occur again and remain problematic towards US and the rest of the world because one of the factors is the global unbalance where it effect the policy to rebuild. We can take example as Lehman cases which before this the invest and become bankruptcy, they assumes that many other new institutions are construct but are being protected under government which they play safe. In addition, huge capital flow also can increase assets prices and help policymakers to choose which is the toughest is in the financial regulations.
Secondly, China become more huge and bigger in their financial for their inter trade analysis where their country policy are subsidize the world asset markets by the export of consumption power in order to keep lower interest rates. Moreover, despite from pressure all around the world, all country give good response and action towards this crisis. Then, an option is suggested where by keeping low the surpluses in their country and all Asian …show more content…

So China can put some efforts and have a mercy to promote their country to help all this underdevelopment and inefficiencies on the financial. All this can solve if, for example the Chinese big player or the richest one have access to offering in high rate of returns, this will results in household saving because this will effect on lower but no higher in the substitution. As well as the household in China also will decrease in their foreign extra

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