2008 Financial Crisis Summary

After the disastrous events of the 2008 Financial Crisis and all subsequent scandals that have rocked the banking sector, the economic impacts have affected the world. Skyrocketing debts, rising unemployment, currency devaluation and businesses filing bankruptcy were some of the effects of the recession. In our modern capitalist society that is integrated through Globalisation, such financial calamities have been detrimental, causing long-lasting turmoil across boundaries. Despite this, the global financial market is no stranger to such economic recessions. With the Great Depression in the late 1920s to the Asian Financial Crisis in the 1990s, the issues with addressing such financial problems has been put into the spotlight. There has been

From America’s involvement in the 2003 invasion of Iraq to the government’s lowering of interest rates. Stiglitz also discusses about the scale of the disaster in 2008 and critiques the solutions that the American governments under Bush and Obama have carried out in order to respond to the problem. Moreover, Freefall highlights the malpractices caused by the banks in lending mortgages and loan policies which have jeopardised clients and consumers. Stiglitz’s book mentions the aftermath of the crisis and the continued fragility of the international markets from the unaddressed flaws of the financial sector. With that being said, Freefall highlights Joseph Stiglitz's perspective on what should have been done by both the government and the banking firms in order to prevent a reoccurrence of another Wall Street collapse. It serves to provide an economic analysis and insights for potential legislators, economists and other stakeholders in the financial

Stiglitz’s opinions on the ludicrous TARP bailouts and austerity packages have signified governmental flaws in protecting the interests of the 1 per cent. It has changed my perspectives on Laissez-faire Capitalism. Prior to reading this book, I believed that government should refrain from interfering with business activities in order to maintain economic growth and prosperity as a Capitalist society. However, the lack of control and regulations by the state can allow wealthy institutions such as banks to accumulate large sums of debt. Although economic growth and prosperity is necessary for the development of the state, there must be measures and policies to ensure that debt and austerity remains sustainable, mitigating any possibility of a widespread recession. Nevertheless, Capitalism, Globalisation and the role of large-scale private sector firms remain integral to the development of any state. Even if the possibility of an economic recession is inevitable in a capitalist world, the current system has provided jobs and opportunities for millions of people. Other economic systems such as Communism have failed to uplift people out of poverty. With that in mind, Capitalism can be regulated and reformed in order to prevent another Lehman Brothers-style collapse. But, such regulations should maintain freedom of enterprise and