Financial Crisis Case Study

POLICY BRIEF

After the collapse of the US housing market, the increase in mortgage failures and the bankruptcy of the Lehman Brothers company the financial crisis from American soon became Global. Its domino effect was felt everywhere since the American housing market was so profitable that even non-US banks invested in it, and therefore those international banks were exposed.

The main consequences of the global financial crisis are the bankruptcy of many companies, from the small ones to the larger ones; the most important example is the Lehman Brothers whose collapse led to the outbreak of the crisis. The bankruptcy of many companies led the global banking system to be under severe pressure and in some cases it led to their nationalization, the most striking case is the AIG’s; few expected there could be such a dramatic collapse of trust in the banks and in the whole financial system”. Economic recession hit most of the western countries and the unemployment rate rose significantly, especially the youth one. Furthermore, the laissez-faire attitude in

This kind of harsh austerity could have been avoided in favour of a more “gentle” one; furthermore, it was verified that countries who applied very harsh austerity measures are the ones that suffered the most, the suffering being proportional to the harshness of the measures. Every country was scared to live a Greece-style crisis but the UK was, and still is, far from the possibility having one since it borrows in its own currency and thus it cannot run out of money, it can always print more . The people who lost the most are those who were already in poverty, as stated in the Oxfam Case Study “The true cost of Austerity and Inequality”; moreover, austerity and its cuts brought effects on people’s mental health, since they feel constantly under pressure