Background The global financial crisis that was experienced in 2007/2008 affected many nations of the world. Some countries such as America and most European countries were hard hit since they were directly affected by the crisis. Other countries especially those in Asia and Africa were not adversely affected as they were not directly hit by the crisis. This crisis started in the United States after the housing bubble busted. Although the bursting of the housing bubble was the main cause of the crisis, there were a series of events that preceded it. One event that indirectly contributed to this crisis was the Russian debt crisis as well as the Asian financial crisis that took place in 1997/1998. These two events made many investors to divert their financial investments to other countries that seemingly looked stable. One of such country was the United States. The influx in the foreign funds increased the liquidity in most financial institutions. This made the financial institutions to institute friendly terms of credit so as to encourage borrowers to take loans. Due to the easy access to loans, many consumers became loaded with debt and consumption at this time was largely based on credit money. With increased access to loans, the cost of housing began to rise. This attracted many investors into the real estate business. Many potential home owners also borrowed to build their own houses. Most financial institutions entered into financial agreements such as Mortgage Backed Securities to help people own homes (Mayes, 2009). After some time, the prices of houses began to fall. The rate at which their prices plummeted was so high that within a very short period, their value was far below the value of the mortgages. Many financi... ... middle of paper ... ...dy and efforts will be made to contact the respondents and shed light on study issues before they are given the questionnaires. This will no doubt create an environment of respect and mutual understanding between the two parties. Conclusion The gulf area is one of the many regions in the world that were indirectly affected by the 2007/2008 global financial crisis. Although this crisis occurred in the United States, its ripple effect affected many countries. The crisis resulted in drastic fall in the global oil prices and these nations were adversely affected since their economies were dependent on oils. The crisis also affected other markets such as labor market, financial market, commodity market among others. These countries were however in a way cushioned from the impacts of the recession due to the sound fiscal policies that these countries are known for.
Mid September 2008 saw a significant change for the Australian economy, with the collapse of the Lehman Brothers triggering the Global Financial Crisis. The Global Financial Crisis was characterised by a tightening in the availability of money from overseas markets and resulting in governments having to intervene to maintain market stability. The Australian economy and its leaders generated considerable discussion about the prospect of a global recession, while most expected the financial crisis would have a major impact on the Australian economy, a factor that was not considered was the immediacy of its effects. The December quarter of 2008, saw business stocks devalue by $3.4 billion, the largest fall on record. In addition, there was a considerable softening in property prices, resulting in many companies/people having too much debt vs. too little wealth. With this, consumer confidence plummeted which in turn deteriorated consumption. Throughout the month of September and into October, the financial crisis spread from the United States to Europe, and all around the global economy, with economies contracting in growth.
The new millennium brought with it a housing boom which had reached an unsustainable level (Pollock, 2011). Housing prices grew rapidly, and Baker (2010) noted a rise in house prices of over 70% from 1995 to 2006. For example, he noted average home prices in Los Angeles rose more than $400,000 over the period of 1995 to 2006 and approximately $519,000 in San Francisco. Prices around the country increased substantially as well (Baker, 2010). To encourage homeownership, banks promoted creative financing options (i.e. adjustable rate, interest only,...
The U.S. financial crisis of 2007–2008 is considered one of the worst financial crises since the Great Depression of the 1930s. It almost made large financial institutions collapse and stock markets declined in a dramatic way around the world. The consumer wealth declined in trillions of U.S. dollars and played a significant part in the failure of key businesses and declines in economic activities. All these factors led to the 2007–2008 global recession and played a major role in contributing to the European sovereign-debt crisis.
The financial crisis occurred in 2008, where the world economy experienced the most dangerous crisis ever since the Great Depression of the 1930s. It started in 2007 when the home prices in the U.S. Dropped significantly, spreading very quickly, initially to the financial sector of the U.S. and subsequently to the financial markets in other countries.
“Since December 2010, the wave of uprisings and protests across the Middle East has produced spectacular changes in the region’s authoritarian republics but has largely bypassed its autocratic monarchies” (Yom and Gause, p. 1). The most interesting aspect of this trans-national movement of uprisings is how it “has largely bypassed the autocratic monarchies”. In this paper, I will focus on how the Arab Spring affected two such autocratic monarchies: the State of Qatar and the Kingdom of Bahrain. The Bahraini public motivated and frustrated with the way things were went to the streets to protest in mass in February 2011 (Freedom House, Countries at a Crossroads, p. 1). Since this could potentially weaken the existing government, as it did in Egypt and Tunisia, the autocratic government of Bahrain saw the protests as a threat to their power and legitimacy and met the protesters with a brutal crackdown and further political repression. These protests and the subsequent violence did not, however, occur in Qatar. So, why did the Arab Spring affect the domestic stability of the oil-producing constitutional monarchy of the Kingdom Bahrain but not the oil-producing constitutional monarchy of the State of Qatar? Domestic stability here is defined as “the absence of large-scale violence in a country” (Nathan). Energy-rich countries that have recently changed from absolute monarchies to constitutional monarchies are more likely to suffer domestic instability if two things occur. First, that the profits from energy resources have declined and are unequally distributed among its citizens among other policies of sectarian-based economic discrimination. Second, that in the case of the religious minority monarchy that hold the political majorit...
The United States fell into a deep finanical recession. One of the main causes was the housing bubble. This eventually lead to the housing crisis. When this happened it showed a rapid decline in home prices. How this housing bubble came to happen is the government not oversighting the key areas that included, consumer protection, private label mortgage securitization, bank capitlization, and finanical markets. The ones who were more likely to be targeted were consumers who already had mortages and had built up equity in their homes. Financial institutions were hit even harder, with many on the verge of bankruptcy, or failing because of the underwater mortgages. Leading to the bursting of the housing bubble were three major contributors. A cultural
The financial crisis of 2008 and 2009 is considered by others as the worst financial crisis since the Great depression of 1930. However there were other financial crisis which had happened after the Great depression which were equally disastrous. The one that comes in mind was the financial crisis of the 1980s and early 1990s. It is always overlook by others because of the 2008 credit crunch which happens to be the recent one. It became known as Savings and Loans crisis which basically let to substantial public-funded rescue of an industry that had crumpled and on it knees begging for help. The Savings and Loans crisis is smaller in nature compare to the banking crisis of 1920s and the 1930s. This crisis forced the state and federal regulatory and deposit banking insurance systems to their brim and finally leading to extensive changes to the regulatory environment. It was the bankruptcy of 1,043 savings and loan associations among the 3,234 savings and loan associations in the USA from 1986 to 1995.
The world woke up to the news of Wall Street collapsing in 2008 that threatened large numbers of financial institutions in the United States of America and across the globe. It is known to be one of the most financial crisis since the Great Depression of the 1930’s. The crisis was triggered by financiers from various lending institutions, Central bankers and other regulators who created the bubble in the financial sector. This had a domino effect across the globe triggering a massive bankruptcy across the financial institutions. Shares plunged in various stock markets in Americas, Asia, Europe, Africa, and Asia Pacific. That is an example of how interconnected (globalized) the world is, what happens in one part of the world can have an affect
All good things must come to and end. In late 2005, the housing bubble burst, and housing began to decline in price. People who refinanced, particularly those who financed with variable interest rates suddenly found their homes were valued at much less. The housing market became flooded with homes for sale, because the homeowners with variable rates and interest only loans could not continue to make their payments. (Greenspan) The rise in the number of homes for sale caused further lowering of home values.
How does the price of oil affect the economy? Since the middle part of last century, the price of oil has become one of the contributing factors of a countries economic activity. The economist in the United States, state that the price of oil can make a direct impact on the economy. The price of oil has both a direct and indirect effect on many parts of the economy. The price of oil affects the price of gasoline, which in exchange helps the consumer make an impact on the economy. Industries in the United States also feel the effect of the price of oil both good and bad. Oil produced in the United States also has an effect on oil prices, which lead to a direct impact on the trade deficit.
The causes of the crisis are various. In 1927, the Wall Street financiers started to buy shares on the stock market, followed by people pushed to invest their capital on the stock exchange. There were people who committed all they had, encouraged by consultants that were either not honest nor capable. The voice on the street thought, suggested that this unexpected growth was going to end very soon.
The recent Global Financial Crisis (GFC) initially began with the collapse of credits and financial markets, which caused by the sub-prime mortgage crisis in the US in 2007. The sub-prime mortgages were given to high-risk lenders (with bad credit history) who were in danger of defaulting, which eventually caused a global credit crunch, where the banks were unwilling to lend to each other. In October 2008, the collapse of the major financial institutions and the crash of stock markets marked the peak of this global economic slowdown (Euromonitor International, 2008).
Dubai’s debt exists as a fundamentally important aspect of modern economic research. Set against a backdrop of fluctuating stock prices, an unstable real estate market and an uncertain world economy, speculation about the future of Dubai is rife, despite Dubai initially appearing to bear the global financial crisis far better than most other affected countries.
Financial crises have influenced the os of financial markets in past. The most important the Great Depression in 1929-30, the 1970s inflation failures and the banking difficulties in the 1990s led to problems in the financial markets causing serious disturbance. The recent financial crisis which became known in 2007, though the roots were implanted much earlier, has been the worst situation financial markets have ever faced.
Every country has its ups and downs, unfortunately, countries having to deal with financial problems which tend to cause a tremendous effect on the nation as a whole. Financial crisis plays a huge role in countries going into a recession, and being unable to meet the demand for money. Sadly, developing countries are facing financial crisis the hardest, for example, countries such as Haiti, South Africa, and Afghanistan are just some of the countries who have trouble with financial issues for decades. Furthermore, developing countries are more than likely to face financial crisis due to not making enough trades, which depends on the amount of income that comes in and out of countries. Today, financial crisis has gotten worse in many developing