2007-08 Global Financial Crisis

About the cause of the 2007-08 Global Financial Crisis and the measures

Along with the development of economic globalization, the world economies have closely linked. Therefore, 2007-08 financial crises made economies have suffered varying degrees of influence. This was a from the USA subprime mortgage crisis and once in a century financial crisis by Arup Shah (2013). Famous American investor, entrepreneur and philanthropist Warren Buffett (2008) claimed that“ the US economy is in recession and degree would be more serious than most people expected”. I found some of the causes of the crisis, for example, investments and loans have distorted the economic development. Then, the U.S. government financial deregulation that leads to imbalance governance.

The economy hit by the subprime crisis. Hurt every international in varying degrees, especially in Europe and the United States. Next, let us see the world in what aspects are affected. The five major Wall Street investment Banks were once scolds, failure, mergers or acquisitions, a number of commercial Banks bankruptcies. Insurance giant AIG, the giant commercial BANK, CITI BANK, and of Fannies Mea and Freddie MAC, because the federal government is huge fiscal relief from destruction. Step in Europe America into recession. In a recession in the developed economies, most of Japan's recession. China is the least damage of the crisis in developing countries, the direct loss is small, but the indirect impact is significant in the global financial storm, the import and export industry in the forefront of the most direct impact was the most serious. First of all, from financial crisis to the economic level, a direct impact on exports. In the field of economic upheaval brought people psychological change, they are increasingly losing a sense of security. John Lipsky (2008) said, “it is conceivable that the harm of it how much deep is the people of the world must face a major challenge”. The financial crisis has a direct impact to the individual life. Inflation, business failures, economic difficulties to reduce people's ability to pay, this not only makes the increase in the number of people cannot afford the mortgage,

On the other hand, in the United States, the current for the management of financial industry, the main reason for the crisis and the tightness of monetary policy changes. Master’s Thesis (2009) analysis can prove that it is correct. Since the beginning of 2001, the federal funds rate by 50 basis points, the fed is monetary policy began to shift from raising interest rates for a rate cut cycle, loosening monetary policy. Such as lower interest rates and 13 times, until June 2003, the benchmark interest rate to one percent, reached the lowest level in recent years. In a loose monetary policy environment, therefore, housing mortgage rates also fell, provides opportunities for many investors, promote the prosperity of the American housing years. Also happens to have high risk of financial innovation product offered opportunities in the housing market expand rapidly. Nevertheless, rate cuts do not last long; it will inevitably burst bubble expansion to a certain degree. Sure enough, in June 2004, the fed's low interest rate policy into reverse, interest rates rebound in mortgage rates also rose, mortgage default risk is greatly increased, so cycle, exacerbated by the outbreak of the