I believe that the main reason for the economic depression that happened to United States in 2008-2009 was as a result of failure by the insurance companies and banks. The cri8sis was mainly as a result of a combination of global macroeconomic imbalances and weaknesses that were so sever in the financial system and Western system of the U.S. Ever since mid 1990s, the world economic growth involved many macroeconomic imbalances between two different group's of countries and the main ones involved the US and the Great Britain. Other countries included the Asian countries (Velde 22). The problem rose when the US did not invest a lot as a share of its GDP while consuming more than it had saved. The countries with trade surpluses also increased their production and their exports and in the process, they end up accumulating big holdings of foreign exchange denominated in currencies of their major export markets and most specifically the United States.
I feel that the main reason of this decline was mainly because of the housing bubble that happened in 2006. The effects of this bubble were seen at around October the year 2007. It was the crisis that happened as a result of subprime mortgages (Velde 17).
The results of the crisis in the housing mortgage began getting apparent and more serious at the beginning of 2008. The crisis was first felt in the monetary system of the US and proceeded to become a global crisis. This crisis resulted in grave problems of liquidity and as a result, it resulted to other monetary problems for instance, there was an international food crisis, diverse stocks crumpled, for instance the collapse of the stock market that was experienced in January 2008 and also in October 2008 was as a result of the financial problems that occurred.
[...] As a result of this together with poor government monetary regulation and supervision, investors and banks risked loans especially that o9f subprime home mortgage and mortgage refinancing in the US. The elevation of delinquent loans for US home mortgages in 2007-2008, precipitated the U.S financial crisis since the monetary institutions liability to asset ratios started reducing. Over liquidity also resulted from the imbalance in the financial system. One aspect of the liquidity was the very quick augmentation of foreign trade treasury of central banks in rising countries most specifically China and other oil exporting countries. [...]
[...] The crisis was first felt in the monetary system of the US and proceeded to become a global crisis. This crisis resulted in grave problems of liquidity and as a result, it resulted to other monetary problems for instance, there was an international food crisis, diverse stocks crumpled, for instance the collapse of the stock market that was experienced in January 2008 and also in October 2008 was as a result of the financial problems that occurred. However, in as much blame is on Fernie and his brother, I feel that the main causes that lie behind the discernible and instant causes that caused the financial depression are more complicate than we would like to believe. [...]
[...] The plan would require that all loan givers must consent to all expenses, together with interest, principal, cover, and duty to be added to the advance mortgage balance. For that reason, the mortgage rate would be rising. As prices of housing become stable and increase again in the future, the worth of the home would happen to be equivalent to the credit balance at the same time. No one will have incurred any money loss. Conclusion In order to avoid this kind of financial slump in future, efficient preparation and forecasting should be put into practice so that problems like depression can be minimal. [...]
[...] Private equity organizations countered billions of dollars of debit to procure companies and generated hundreds of billions of dollars in affluence by merely shuffling paper instead of coming up with anything valuable. Speculation of oil prices and increased redundancy also elevated inflation further. American citizens also got greedy. The economy of America is built mainly on credit and it can be a beneficial tool when utilized in a wise manner. The credit can be used to buy huge assets for instance houses and cars. However, credit in 2008-2009 was not checked and people used it uncontrollably. [...]
[...] So instead of keeping on blaming people we should be trying to bring back America to its feet again. Work cited Christine R. Velde .International Perspectives on Competence in the Workplace: Implications for Research, Policy and Practice. Springer Howard Handelman. The Challenge of Third World Development .Pearson Prentice Hall Holger Preuss .The Economics of Staging the Olympics: A Comparison of the Games 1972-2008 Edward Elgar Publishing Paul Krugman. The Return of Depression Economics and the Crisis of 2008 W. W. [...]
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