Question

.What was the origin and consequences of the Global Financial Crisis in 2008? Describe in detail the unfolded events that lead to this crisis.

Answer 1

I'll provide you with the points. The details you will have to research on your own.

The global financial crisis of 2007-2008 has been the considered by the economists around the world as the biggest since the 1930's great depression. Initially it began in US as a crisis of subprime mortgage market but evolved into a major international banking crisis triggerred by the collapse of investment bank group Lehman brothers. It resulted in other consequential events such as european debt crisis, global recession and economic setback worldwide. Governments across the world bailed out their major financial institutions to prevent a collapse of world economy but it resulted in individual economic breakdown of financial system.

Causes:

• High percentage of defaults in US subprime home mortgage sector.
• Banking crisis due to high rate of mortage approval
• Growth and subsequently bursting of housing bubble
• Emergence of fraudulent underwriters
• Incorrect risk assessments
• Incorrect economic forecasts
• Boom in commodities markets
• Leverage crisis

Consequences:

• Crash of stock markets worldwide with severe damages to investor confidences
• Skyrocketing inflation
• Prolonged unemployment due to recession in market.
• cash crunch and liqudity crisis
• Decline in consumer wealth and international trade worldwide
• Promotion of monetary policy expansion and insitutional bail outs of
• Slowering growth of world economy.

Refrence: "https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008"