StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

The Financial Crisis of 2008 - Essay Example

Cite this document
Summary
The media has contributed to the opinion that the subprime lending and low government intervention as the triggers for the current recession, but new and slightly different ideas have been offered by various observers. Dramatic rising social inequality in the U.S in the past thirty five years is supposed to be the underlying cause of the current financial crisis [Wisman &Barker, 2008].According to this idea, to maintain a relatively higher standard of living, individuals from the lower and middle srata of society started consuming more, as a result of which savings declined, working hours increased and households resorted to higher debts…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.3% of users find it useful
The Financial Crisis of 2008
Read Text Preview

Extract of sample "The Financial Crisis of 2008"

Download file to see previous pages

[Wisman &Barker, 2008]. An interesting and relatively new idea is put forth by James Livingston in his book "Their Great Depression and Ours," Challenge. He argues that the cause of the Great Depression in the 1930s was poor wage performance leading to large profits in search of few investment opportunities. In another article, Saving Private Savings, or, The God That Failed he discusses at length the plausible reasons reasons for the current economic crisis. While not blaming anyone in particular for the present economic crisis, he opines that economic growth is possible only through higher consumer demand and spending.

This in turn requires higher savings. In his words, "economic growth has proceeded as a function of declining net investment for the last 90 years."As the sequence of events that should have been tax cuts, savings, investments by the government and higher job growth, higher wages and higher spending got mixed up, higher private savings from households and business firms were parked in the stock market, the speculative bubble had to burst, both in 1920s and now.2) What are some of the similarities and differences between the current crisis and the one that launched the Great DepressionThe Great Depression of the 1930s was brought on by the crash of the Wall Street in September and October 1929.

Stock prices tumbled by almost 50% in a matter of two months. The market had probably been overbought and had reached a peak before it came crashing down. The unpredictable stock markets that had been steadily rising for some time shed the excess fat and trimmed down considerably. Investors who had made good gains in stock markets the preceding years had borrowed from banks to invest more on the stock markets. When the markets crashed, there was panic all round. Banks were unable to recover debts, news of banks closing down spread and people wanted to withdraw all their savings.

Banks were weary and wanted to sit on cash and stopped lending. This led to closure of the manufacturing units dependent on credit which in turn led to large scale unemployment. Finally the government took drastic steps to check the recession and the economy stopped declining.The similarities between the causes leading to the Great Depression and the economic situation seem to be the greed of human beings. Excess of anything is bad, especially greed. Rothschild is of the opinion that "herding" or the tendency to follow the crowd and "leveraging" or borrowing to make financial investments, were also common factors.

In both the situations, greed fuelled people into higher borrowings and ultimately, they lost out on the capital too. In the 1930s, it was the greed of the common man that led to the Recession, while in 2008, it was the greed of the investment bankers and other financial wizards that led to the recession. Another similarity has been

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/miscellaneous/1503068-the-financial-crisis-of-2008
(The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 Words)
The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/miscellaneous/1503068-the-financial-crisis-of-2008.
“The Financial Crisis of 2008 Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/miscellaneous/1503068-the-financial-crisis-of-2008.
  • Cited: 0 times

CHECK THESE SAMPLES OF The Financial Crisis of 2008

Restructure of the Global Economy after the Financial Crises

I would sit in a round table with both Milton and Adam to discuss The Financial Crisis of 2008 and ideas on how to improve the global economy today.... During The Financial Crisis of 2008 the global economy hit rock bottom as the world entered into a recession that devastated the standard of living of billions of humans across the world.... Bankruptcies skyrocketed during The Financial Crisis of 2008.... The banking industry was one of the parties responsible for the crisis due to the fact that they were making housing loans to people that did not qualify....
3 Pages (750 words) Essay

Role of Federal Reserve System in Overcoming the Financial Crisis of 2008

This paper talks about the increased role of Federal Reserve System, as being the main financial regulator, at the time of unfolding of The Financial Crisis of 2008.... It argued, that the FED was the most important global player in tackling the financial crisis.... This paper offers a comprehensive review of Federal Reserve System policies, both traditional and non-traditional, which were maintained in an attempt to successfully overcome the ramifications of the world financial crisis....
7 Pages (1750 words) Essay

Unemployment in Brazil after the Financial crisis of 2008

This essay talks about the problem of unemployment in Brazil, which was observed in the country after The Financial Crisis of 2008.... The international financial crisis after the 2008 September had a considerably negative impact on Brazilian economy, leading to a significant increase in the unemployment level....
3 Pages (750 words) Essay

The Financial Crisis of 2008: Origins, Blame, and Impacts

The origins of the financial crisis lie in the changing attitudes of the 1980s when America began to experiment with deregulation and unbridled capitalism.... hellip; When the biggest financial crisis in US history hit the headlines in the Fall of 2008, the world's greatest financial gurus pointed fingers in disbelief as if the headlines in the Wall Street Journal were the first inclination they had that a major problem was boiling just beneath the balance sheet....
5 Pages (1250 words) Essay

Nayyar's Globalization Process

Globalization has yielded enhanced… tegration of national economies via trade liberalization, financial sector deregulation, and capital account liberalization and flows derived from foreign direct investment (FDI) by transnational corporation.... Globalization has accentuated inequalities via mechanisms such as trade (financial) liberalizations, privatization, and deregulation....
6 Pages (1500 words) Essay

Economic Insights into Apple Inc and the Economic Trends in Nigeria

The first objective of this paper is to provide economic insights into the demand concept by using a practical representation of Apple Inc.... The second objective of this study focuses on the historical, current and future forecast on the GDP, inflation and employment rate in Nigeria.... nbsp;… This paper will seek to analyze the elasticity of the product in terms of demand elasticity, income elasticity, and cross elasticity....
11 Pages (2750 words) Case Study

Financial Markets after Enron and WorldCom Collapse

lthough several institutions were trapped in The Financial Crisis of 2008, only a few ended up shouldering the burden of the economic downtown.... “Secret Liens and The Financial Crisis of 2008” American Bankruptcy Law Journal, Vol.... 2008 Economic and Financial CrisisThe financial crisis of 2008 emanated from a mix of bad political, financial, corporate and economic decisions.... irst off, there were large inflows of foreign funds into the United States following the Asian financial crisis of the late 90s and the debt crisis in Russia....
2 Pages (500 words) Assignment

Safeway Inc

The Financial Crisis of 2008 had major effects in many multinationals and domestic companies Safeway Inc.... Due to The Financial Crisis of 2008-2009, the company had to rethink on its social responsibility to boost sells.... financial crisis directly affects the revenue obtainable by the company.... ?Global financial crisis: Global impact and solutions.... One of such impacts was the financial shock on capital structure bearing in mind that Safeway Inc....
1 Pages (250 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us