Causes Of Global Financial Crisis 2008

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Global Financial Crisis 2008 was voidable as it was not a natural, inevitable catastrophe. I clearly believe that the crisis was a result of human mistakes, misjudgments, and misdeeds that resulted in systemic failures for which our nation has paid dearly. The current depressed state of consumer and business sentiment can be attributed to specific failures on the part of policymakers, regulators and bankers. Firstly, governments and central banks failed to constrain an expansion of credit that drove an unsustainable boom in asset prices. The United States banks created too much of money with the intention to push up the house prices and speculate the financial markets. Besides that, some government policies such as increasing the home ownership …show more content…

The financial crisis and recession in the U.S. spread globally through both financial and trade linkages. When the mortgages backing these securities began to fall in value, the value of the securities themselves began to fall. Investors attempted to liquidate their holdings when they see their assets price falling. Due to the absent of the buyers in the market, these assets became frozen. The interest rate (LIBOR) which they lent money to one another will began to raise by the international banks when the credit became scare and there is a lack of confidence in U.S. Financial …show more content…

They have to predict the return by calculating the P/E ratio based on the companies’ financial reports and follow closely with the changes in the economic. To succeed at investing in a market downturn, investors must stick to a plan, stay on top of fundamentals and keep emotional responses to market volatility from clouding decisions, if not, they may suffer a big loss during the financial crisis. In a nutshell, the financial crisis of 2008 has taught us that the confidence of the financial market, once shattered, can't be quickly restored. We have to take several actions in order to weather the financial crisis. In an interconnected world, a seeming liquidity crisis can very quickly turn into a solvency crisis for financial institutions, a balance of payment crisis for sovereign countries and a full-blown crisis of confidence for the entire world. But the silver lining is that, after every crisis in the past, markets have come out strong to forge new

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