INTRODUCTION
The term of financial crisis means that the situation happen when some of financial assets going loss and crashed a large amount of the nominal value. It would effects to the financial institutions when investors take out or withdraw all of their assets in the banks. This is because those of investor expect that the value of the assets would fell down if them saving in that institution.
Besides that, the financial crisis also can be defined when the assets in financial institution is over valued. The valued of the assets would be drop rapidly if the price fall in the lower price and give the bad impacts on our economic. The economic was suffered effects of the offering lower goods price and the business cannot run well because not profitable.
There a few type of financial crisis which are involved banking crisis, speculative bubbles and crashed and international financial crisis. All of the crisis have the own factors that financial crisis happen. Firstly, banking crisis happen because of the larger withdrawal the amounts of money. As we know, the bank was make the investment using the money that people invest. The banks can make more profit when invest of that capital. Logically, if everyone want withdraw all of the money at the same time the bank will suffer insolvent.
Secondly, speculative bubbles and crashed. The factor of this crisis is about the buyers buy the assets in the purpose to resell these assets with the higher price in the future. The things are riskier in assets price effects on market participants focus in these assets to resell it. Thus, it is difficult to predict whether an assets price actually equals to the fundamental value. So, it is hard to detect bubbles reliably.
Lastly, inter...
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...try reportedly 1.9 million register migrant workers and 600,000 unregistered ones. Thus, to solve this problem Malaysia still can hired those workers for the services and required some skill but should ensure that they treated fairness and compulsory to have legal ways needs the permits.
In other side, building good governance and ethical regulatory framework. Obviously, some of the companies do not follow the rules under Bursa Malaysia Listing Requirement and Malaysia Code Corporate Government. We can see some of the companies still have corruption in financial system and then them manipulated the record so that the corruption clear from others. This attitude also can bring to the economic recession if the peoples still using the dirty ways. So, the government should concern and take actions to maintain the social cohesion and reduce the corruption.
CONCLUSION
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
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.
To explain the crash of the stock market greatly reduced “American aggregate demand substantially. Consumer purchases of durable goods and business investment fell sharply after the crash” (Romer). The financial crisis made consumers and firms to stop spending money and start saving their money. Another aspect of the Great Depression was the banking crisis. The banking crisis began due to the financial crisis and that made consumer lose confidence in their banks and demand that their bank give them their money back. Banks, “which typically hold only a fraction of deposits as cash reserves, must liquidate loans in order to raise the required cash. This process of hasty liquidation can cause even a previously solvent bank to fail” (Romer). The loss of confidence in the solvency bank cause people to starting saving the money at home and that in return causes many banks to close and at this time the Great Depression was at full
A panic occurs when a large number of people frantically tries to exit the market, causing severe stock market crashes and widespread bankruptcies. Generally, panics are preceded by the bursting of bubbles in areas of speculative activities, which causes speculators to default on their loans. The failure of speculators may not cause significant damage to the economy alone, but such failures may cause depositors to panic, irrationally fearing that they too would lose their investments and withdrawing from the market – hence the name “panic”. The withdrawal of funds would then cause significant liquidity problems for banks and other financial institutions, which
As Robert Samuelson said, "The real vulnerability is a highly complex and interconnected global financial system that might resist rescue and revival." (Samuelson, 2008, 35) This is in response to the economic crisis of 2008. The cause of these economic problems was the crash of the United States’ stock market. The stock market crash can be broken into three parts; factors that lead up to the crash, the events during the crash, and what occurred to try and contain the crisis after the crash. The crash of 2008 can also be compared to the 1929 crash that sent the country into the Great Depression.
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.
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
Many times when you think of a financial crisis, you think of the Great Depression that occurred in the late 1920’s, or at least I do. Due to the fact that I was only 8 or 9 years old, I do not remember the financial crisis of 2008 having that much of an impact. It did not directly affect my family like the Great Depression did with so many families almost a hundred years ago. When I learned about this first financial crisis in the beginning of the 20th century, I would see pictures of people at soup kitchens and getting food from other sources. This was such a drastic event in my mind. Yet, when the financial crisis occurred in 2008, nothing changed in my life, and I did not see people begging for food in the streets so, I was naive to the
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.
First of all, I would like to talk about about the nature of crises. In order to manage a crisis, one must first understand that crises occur abruptly, it cannot be anticipated or forecasted, and/or it may not occur within an issue category. There are two crisis definitions mentioned in (Buchholtz & Carroll, 2009) that can help us to better understand what crisis means:
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.
First, when the stock market crashed banks began to shut down causing havoc because people were not able to make transactions. (Could not deposit or withdraw money.) Since people were not able to access their money people were beginning to get frightened on the possibility of not being able to pay their bills, or be able to provide enough to maintain food on the table for their families.
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).
In 2008, the world experienced a tremendous financial crisis which is rooted from the U.S housing market. Moreover, it is considered by many economists as one of the worst recessions since the Great Depression in 1930s. After bringing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It ruined economies, crumble financial corporations and impoverished individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brothers and AIG. These collapses not only influenced own countries but also international scale. Hence, the intervention of governments by changing and expanding the monetary and fiscal policy or giving bailout is needed in order to eliminate and control enormous effects of the financial crisis.
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.