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Financial Crisis 2008 Case Study

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Introduction

The purpose of this report is to study Global Financial Crisis 2008.This study is inspired by the Wall street crisis and it covers why’s and after effects of the crisis. After this crisis many of the roots causes were observed like speculation, fragility of the system, greed of the managers which adversely affected the market.

What is financial crisis:
The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics (A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time), and many …show more content…

subprime mortgage crisis

Global financial crisis of 2008:
The global financial crisis of 2008 is a major ongoing financial crisis, the worst of its kind since the Great Depression (The Great Depression originated in the United States occurred on October 29, 1929, known as Black Tuesday.). It became prominently visible in September, 2008 with the failure of several large United States-based financial firms. The underlying causes leading to the crisis had been reported in business journals for many months before September, with commentary about the financial stability of leading U.S. and European investment banks, insurance firms and mortgage banks consequent to the subprime mortgage …show more content…

Since January 2008, Sensex fell 58 per cent in rupee and 68 per cent in dollar terms .
5.Food prices are rising.
6.Global tourism is slowing down.
Fighting the crisis:Global response

To control the crisis many ways were proposed and taken.
On September 15, 2008 China cut its interest rate for the first time since 2002. Indonesia reduced its overnight repo rate, at which commercial banks can borrow overnight funds from the central bank, by two percentage points to 10.25 percent. The Reserve Bank of Australia injected nearly $1.5 billion into the banking system, nearly three times as much as the market's estimated requirement. The Reserve Bank of India added almost $1.32 billion, through a refinance operation, its biggest in at least a month.
U.S. responses
The Federal Reserve, Treasury, and Securities and Exchange Commission took several steps on September 19 to intervene in the crisis. To stop the potential run on money market mutual funds, the Treasury also announced on September 19 a new $50 billion program to insure the investments,

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