The emergence of the global financial crisis that was
experienced between the periods of 2007-8, was extremely crucial and the
adverse effects were felt across the global divide. According to the studies
conducted, the global financial crisis has been identified as the one of the
worst critical events that American economy and the other global economies have
experienced signified the advent of the great depression. Over the period, the
consideration of the various sectors of the economy has shown that the sectors
arte interrelated and they depend on one another and this has enhanced
realization of improved GDP. However, the consideration of the global financial
crisis was immense because it reduced the performance of all the sectors of the
economy. Analysts have stated that the housing sector of the economy was the
leading cause of the credit crisis because the factors involved in the
formation of the crisis has been attributed to the extents of escalations of
the housing prices. Concerns raised by***** have been beneficial in expressing
the causes of the crisis. Upon this realization, the government of the United
States initiated ideal corrective measures with the aim of restoring the
performance of the economy but the measures employed were not significant to enhance
establishment of increased performance. Finally,
the existing financial institutions have been identified as some of the leading
institutions that are responsible for the causes of the financial crisis. The
reports compiled by ****** has stated by th4 leading financial institutions
sort to maximize their returns by investing tin the purchase of the homes with
the hope of selling during the periods of high prices. In reality, this
incentive is ideal for business but it resulted in the establishment of
uncertainties in the market thereby leading to the establishment of decline in
the performance of the houses and the market. In a bid to illustrate the
lessons learnt from the global financial crisis, it is extremely crucial to
consider the causes and some of the effects of the financial crisis.
Origin of the global
financial crisis
Over the period, economists around the globe have always
stated that the advents of economic performance is characterized by attributes
of cycles that depicts booms and busts and normally, the seeds of subprime meltdown are shown during the
unusual time. The economy of the United States has continued to experience the
significant effects fluctuations because of the variations caused by the
factors like the terrorist attacks, dotcom bubbles and the reigning account
scandals. The leading cause of the
problem has been stated to be the Federal Reserve because they lowered the
rates of interests and this attribute resulted in the increase of liquidity.
One aspect that characterizes this is that there was more money in the economy
because it was easily accessible to everybody including the jobless with no
assets. Analysis conducted across the subprime borrowers was that they all had
the passion of owning their ideal houses and they ventured in the purchase of
homes and this aspect significantly increased the prices of the houses. The
federal government further lowered the interest from 1.75% to 1% which was
marked as the lowest interest rates in the record of 45 years. The lowering of
the rates had adverse effects because it encouraged the citizens to go for more
loans in the banks and this resulted in further increase in the prices of the
home prices. The signals of the crisis were realized in the economy because the
home owners defaulted in the payment of the loans and the lenders had to resort
to the other aspects of aspects of payment. The records have shown that the
attributes of home ownership reached a whooping 70% in 2004 and the demand for
the house was falling significantly. The fall in the houses resulted in a 40%
decline in the US construction index and both new home owners and the subprime
borrowers were all experiencing ideal problems. The subprime lenders were
forces to close down due to bankruptcy because the borrowers defaulted in
payment and the lenders could not regain their payments. The fall in the house prices
was an extremely crucial event because it had adverse effects in the economy,
the leading financial institutions had the opportunity of making purchases of
the existing houses at lower prices with the hope of selling at higher prices
but the financial crisis continued to reign thereby plunging the economy into
serious financial problems.
The emergence of the global financial crisis that was
experienced between the periods of 2007-8, was extremely crucial and the
adverse effects were felt across the global divide. According to the studies
conducted, the global financial crisis has been identified as the one of the
worst critical events that American economy and the other global economies have
experienced signified the advent of the great depression. Over the period, the
consideration of the various sectors of the economy has shown that the sectors
arte interrelated and they depend on one another and this has enhanced
realization of improved GDP. However, the consideration of the global financial
crisis was immense because it reduced the performance of all the sectors of the
economy. Analysts have stated that the housing sector of the economy was the
leading cause of the credit crisis because the factors involved in the
formation of the crisis has been attributed to the extents of escalations of
the housing prices. Concerns raised by***** have been beneficial in expressing
the causes of the crisis. Upon this realization, the government of the United
States initiated ideal corrective measures with the aim of restoring the
performance of the economy but the measures employed were not significant to enhance
establishment of increased performance. Finally,
the existing financial institutions have been identified as some of the leading
institutions that are responsible for the causes of the financial crisis. The
reports compiled by ****** has stated by th4 leading financial institutions
sort to maximize their returns by investing tin the purchase of the homes with
the hope of selling during the periods of high prices. In reality, this
incentive is ideal for business but it resulted in the establishment of
uncertainties in the market thereby leading to the establishment of decline in
the performance of the houses and the market. In a bid to illustrate the
lessons learnt from the global financial crisis, it is extremely crucial to
consider the causes and some of the effects of the financial crisis.
Origin of the global
financial crisis
Over the period, economists around the globe have always
stated that the advents of economic performance is characterized by attributes
of cycles that depicts booms and busts and normally, the seeds of subprime meltdown are shown during the
unusual time. The economy of the United States has continued to experience the
significant effects fluctuations because of the variations caused by the
factors like the terrorist attacks, dotcom bubbles and the reigning account
scandals. The leading cause of the
problem has been stated to be the Federal Reserve because they lowered the
rates of interests and this attribute resulted in the increase of liquidity.
One aspect that characterizes this is that there was more money in the economy
because it was easily accessible to everybody including the jobless with no
assets. Analysis conducted across the subprime borrowers was that they all had
the passion of owning their ideal houses and they ventured in the purchase of
homes and this aspect significantly increased the prices of the houses. The
federal government further lowered the interest from 1.75% to 1% which was
marked as the lowest interest rates in the record of 45 years. The lowering of
the rates had adverse effects because it encouraged the citizens to go for more
loans in the banks and this resulted in further increase in the prices of the
home prices. The signals of the crisis were realized in the economy because the
home owners defaulted in the payment of the loans and the lenders had to resort
to the other aspects of aspects of payment. The records have shown that the
attributes of home ownership reached a whooping 70% in 2004 and the demand for
the house was falling significantly. The fall in the houses resulted in a 40%
decline in the US construction index and both new home owners and the subprime
borrowers were all experiencing ideal problems. The subprime lenders were
forces to close down due to bankruptcy because the borrowers defaulted in
payment and the lenders could not regain their payments. The fall in the house prices
was an extremely crucial event because it had adverse effects in the economy,
the leading financial institutions had the opportunity of making purchases of
the existing houses at lower prices with the hope of selling at higher prices
but the financial crisis continued to reign thereby plunging the economy into
serious financial problems.
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