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Financial crisis impact on economy essay
Global financial crisis 2007-09
Financial crisis impact on economy essay
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Introduction 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. The overwhelming spread of the global crisis and poses great challenges for the Asian and Pacific regions as well as Vietnam. Vietnam is known as one of the most open economies of the globe and it relies deeply on external capital sources (e.g. FDI or ODA) to support its development demands. Thus, Vietnam is highly vulnerable to the vast effects of the financial crisis on global trade and financial flows. Firstly, this essay attempts to analyse the causes of the financial crisis which originated from the U.S. Secondly, the impacts of the financial crisis on Vietnamese economy particularly on the general economy outlook as well as the labour market will be examined. Finally, this essay will present the responses of Vietnamese government so as to reduce influences of the recession. II. The global financial crisis and Vietnam A.Main causes of the global financial crisis T... ... middle of paper ... ....html (Accessed: 20th August 2010). Pham, Q.N. (2009) Impact of the global financial and economic crisis on Vietnam, a rapid assessment. Available at: http://www.ilo.org/asia/whatwedo/events/lang--en/docName--WCMS_103550/index.htm (Accessed: 3rd August 2010). Krugman, P. (2009) ‘Revenge of the Glut ‘, The New York Times, March [Online]. Available at: http://www.nytimes.com/2009/03/02/opinion/02krugman.html (Accessed: 3rd August 2010). Steverman,B. and Bogoslaw, D. (2008) ‘The financial crisis blame game’, Business week, October [Online]. Available at: http://www.businessweek.com/investor/content/oct2008/pi20081017_950382.htm?chan=top+news_top+news+index+-+temp_top+story (Accessed: 1st August 2010). Velde,D.K (2008). The global financial crisis and developing countries. Available at: http://www.odi.org.uk/resources/download/2462.pdf (Accessed: 5th August 2010).
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.
Shahrokhi, M. (2011). The global financial crises of 2007-2010 and the future of capitalism. Global Finance Journal, 22, 193-210. doi: 10.1016/j.gfj.2011.10.010.
Cabral, R. (2013). A perspective on the symptoms and causes of the financial crisis. Journal of Banking & Finance, 37, 103-117
Phil Angelides, B. T.-E. (2011). The Financial Crisis Inquiry Report. Washington: U.S. Government Printing Office.
With economic growth, there is always a danger present that demand may grow faster than the potential for production. This will lead to inflation, which will affect the country's competitiveness in the export and severely impact the living standards of the people. Viet Nam faced astounding rates of inflation in the years after Doi Moi, 400 percent in 1988...
The "subprime crises" was one of the most significant financial events since the Great Depression and definitely left a mark upon the country as we remain upon a steady path towards recovering fully. The financial crisis of 2008, became a defining moment within the infrastructure of the US financial system and its need for restructuring. One of the main moments that alerted the global economy of our declining state was the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and after this the economy began spreading as companies and individuals were struggling to find a way around this crisis. (Murphy, 2008) The US banking sector was first hit with a crisis amongst liquidity and declining world stock markets as well. The subprime mortgage crisis was characterized by a decrease within the housing market due to excessive individuals and corporate debt along with risky lending and borrowing practices. Over time, the market apparently began displaying more weaknesses as the global financial system was being affected. With this being said, this brings into question about who is actually to assume blame for this financial fiasco. It is extremely hard to just assign blame to one individual party as there were many different factors at work here. This paper will analyze how the stakeholders created a financial disaster and did nothing to prevent it as the credit rating agencies created an amount of turmoil due to their unethical decisions and costly mistakes.
In addition, Vietnam had and still has a Communist government and a socialist economic model. However, the Vietnamese are trying to move more towards a free market system. Meaning that the Vietnamese want a market economy where the forces of supply and demand are not controlled by the government, nor any other authority. Moreover, every members of the government are elected by Vietnam’s National Assembly. Additionally, Vietnam is one of the fastest growing financial country in the world with, according to bbc.com, a nominal GDP that reached about $170 billions. Also, Vietnam became one of the highest leading agri...
Weiss, M.A. (2009) ‘The Global Financial Crisis: The Role of the International Monetary Fund’, CRS Report for Congress.
Shortly after the financial crisis in 2008, many economists had to rethink their approach to the market. Everyone knew we had a panic because the stock market and the housing market collapsed. American economy was reaching to the bottom. Many people considered it as a second worst recession after the great the Great Depression. But what was the cause? Who were responsible for the crisis? What can we learn from this turmoil? In the recent New York Times Sunday magazine article, Nobel Prize winner Paul Krugman offered his explanation for the causes and insight toward fixing the economy.
Bernanke, B. (2009, January 13). The Crisis and the Policy Response. Speech at the Stamp Lecture, London School of Economic, London, England. Retrieved from http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm
The 1997 Asian Financial Crisis drew attention to just how fragile our global economic system can become either when overexposed to foreign market intervention, or when underperformance remains unchecked. Prior to June 1997, The Republic of Korea encountered issues as 10 of its 30 top performing chaebol (Conglomerate) collapsed underneath debt which far exceeded their respective equities. Korean steel production giant Hanbo faced additional stress after amassing a $4.39 billion debt for one new steel mill. Kia Motors fell due to accruing almost $2.1 billion in loans that was awarded on the basis of “need,” as opposed to independent judgment of credit and cash flow determined by the lending authority. Central banking authorities in Indonesia, Hong Kong, Thailand, the Philippines, and Malaysia came under threat as their respective currencies were jolted by speculative attacks from foreign investors. Political theorists have multiple assumptions behind what was the absolute cause behind the Asian Financial Crisis of 1997, but one country most analysts focus on is Thailand.
Debt crisis is becoming common and faced by most citizens in Malaysia. Between June 1997 and January 1998 a financial crisis swept like a brush fire through the "tiger economies" of SE Asian. Over the previous decade the SE Asian states of Thailand, Malaysia, Singapore, Indonesia, Hong Kong, and South Korea, had registered some of the most impressive economic growth rates in the world. Their economies had expanded by 6% to 9% per annum compounded, as measured by Gross Domestic Product. This Asian miracle, however, appeared to come to an sudden end in late 1997 when in one country after another, local stock markets and currency markets imploded. When the dust started to settle in January 1998 the stock markets in many of these states had lost over 70% of their value, their currencies had depreciated against the US dollar by a similar amount, and the once proud leaders of these nations had been forced to go cap in hand to the International Monetary Fund (IMF) to beg for a massive financial assistance. (W.L.Hill, n.d.)
The 2008-09 global financial crisis is a familiar topic in this decades to understanding its implications for future. Nowadays, the world faced much more than a financial crisis. In addition, side effects of the financial crisis must be half of a discussion in order to understand holistically about the consequences that led to the global financial crisis and spread the effect around the world. The 2008-09 crisis in general changed the world’s economic and financial landscape as a whole. In order to understanding this issues as a whole, there is the two basic types of costs for investors and consumers: economic costs and financial costs. Both are interrelated each other and tend influence each other. The world economy was faced by financial and its deepest downturn in decades and the first simultaneously recession in the industrial world since the first oil crisis of 1973-74. The International Monetary Fund significantly reduces its forecasts for global 2009 real growth from 2.2 percent to 0.5 percent, as the macroeconomic implications of the financial crisis became better understood, and as the depth of the financial crisis itself became apparent,. This reduction occurred only three months after the IMF’s earlier forecast. At that time, many industrialized countries faced by their financial crisis. This statement was state in a book Global Financial Crisis: Impact and Solutions by Paolo Savona, he said, “ . . . the industrialized countries were the hit hardest with the forecasts of their real growth dropping to a declined of 2 percent down from the October estimate of a modest 0.5 percent. Hardest hit was the United States, where growth was expected to declined by 1.6 percent from the earlier estimate zero...” (Paolo Savona, 201...
As stated earlier, this global financial crisis that superficially seems to be causing only negative effects on the global economy, also caused positive effects in global economy in the long term. This was a pivotal event in the global economy and beneficial opportunity to evaluate global economy and pro...
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.