Words. Small distinct meanings, when arranged together they form a phrase, a phrase that may change an entire economy.
The recent financial crisis is attributed in many ways to financial innovations in the mortgage market that made it easier for people with high risk of default to access credit. Although these financial innovations gave millions of Americans an opportunity to purchase a home, their overall social benefit is questionable (Johnson, Kwak 2012). In his address at the Federal Reserve Bank in Atlanta in March 2007 Ben Bernanke pointed out, that despite "the challenges and the risks that financial innovation may create, we should also always keep in view the enormous economic benefits that flow from a healthy and innovative financial sector" (Bernanke 2007). The goal of financial innovations is to make financial intermediation easier, moving capital to where it is needed most. Bernanke continued to state that financial innovations promoted economic growth, and made the economy more resilient to busts. However, In the aftermath of the Great Recession it is clear that the risk of financial innovation can lead to a devastating cost to society. Johnson and kwak (2012) argue that "we cannot say that innovation is “good” simply because there is a market for it. The fact that there was a market for new houses does not change the fact that building those houses has turned out to be a destructive use of capital."
Barack Obama, the current president of the United States, stated ,in a speech during the 2008 election, that we need regulations so that we can help those on Main Street and Wall Street reach their full potential (“Obama: Help Main Street as well as Wall Street”). He wants to help both parties involved and wants a solution that protects Americans. Paul Krugman also talks about how regulations in the 1930s created financial stability for over fifty years (Krugman). Financial stability is key for job growth. Wall Street with government regulation might not be perfect, but it is the best solution for the
Paul Volcker began his professional career in 1952 joining the staff of the Federal Reserve
After reading “On the Brink” by Henry M. Paulson, Jr. the novel truly shows the economic catastrophe from 2007-2009 in the United States. Paulson spent three years as the United States Secretary of the Treasury 74th Secretary of the Treasury. He demonstrated awesome efforts to guarantee that America didn't encounter a financial disaster. Preceding his part in the Department of the Treasury, Paulson was the Chairman and Chief Executive Officer of Goldman Sachs along with the Secretary of the Treasury. “I’ve watched the economy flounder and the mood of our citizens darken as they struggled with unpaid debts, foreclosure jokes, ravaged nest eggs, lost jobs, and lost confidence in themselves and in our system (XIV Paulson).” In other words, paulson
1993 brought yet another President to the Whitehouse, Bill Clinton Greenspan saw a different style, a more open approach and a more agreeable partner. Perhaps with the new winds of change Greenspan provided a recipe for recovery. The Economy was not at his best. He proposed lower term rates, which would increase demand for new mortgages, refinancing and consumer loans. With a better economy, investor would get less return on bonds which will motivate them to invest in the stock market, all this to better the economic conditions. Conditions got better but and no major crisis disrupted the positive indicators. It is reported that by 1995 conditions were under control. The inflation was at a decent level and overall economic growth was slowing. At this point things were not let unchecked, which allowed for a better balance and control. However, internal pressures were forming among the ranks within the administration, and opposing views to Greenspan’s approach started to pressure the direction that has been established. For instance, White House staff Leon Panetta went publicly indicating that they needed more cooperation from the Feds in reducing the interest rates. Other voices indicated that the economy didn’t need any help that any obvious unbalance would fix on its own. I fond ironic through my reading that every time conditions were favorable the Feds and others grew suspicious. In reality, a good economic environment opened up opportunities to question practices and to prepare for future unseen conditions. During this time many believed that the economy could grow faster than 2 ½ percent per year as proposed by Greenspan. His views were challenged by a group of investors and businessmen who in close meeting with President Clinton expressed how things could be handled differently by manipulating factors to allow for a faster grow
Bernanke’s decision to employ extremely stimulative measures was a response to the severity of the recession. A second reason was that the financial crisis accompanying the recession eroded the capital of many banks and made them more hesitant to lend.
John Maynard Keynes was concerned with the lack of ability for the private sector to create jobs and stimulate the economy. His research and theory prompted him to create ideas that would help fix the uncertainty of the business cycle and pull a county out of recession.
In the article ‘A Critique of Pure Gold’, it is explained how the Libertarians want to bring back in the United States the use of the ‘Gold Standard’ to stabilize the economy, lower the taxes, and combat rising prices, however, they are unsuccessful because they fear its consequences. Despite their efforts, they are encountering difficulties in convincing people that we should revert to using the gold standard. They are also having problems defining the correct value at which to standardize the price of gold at, as this can cause either inflation or deflation, and neither one of them would have a good impact on our economy.
The bubbles of speculation was clearly incited and stimulated through the news media. The different forms of available media, be it the newspapers, radio, television, or the internet, all of them are competing to get the public’s attention. Despite not giving detailed analysis much attention, the news media always came up with different specific reasons for any move in the stock market. They were able to justify each of their reasoning every time.
Germany, one of Europe’s largest countries, is a country consisting of many landscapes. The landscapes in Germany consist of vast plains, steep mountains, and thickly forested hills. Germany is famed for its technological advancements and its high level of industrialization. The economic status of Germany has been in excellent standing since World War II due to the country’s dominant export industries, fiscal discipline and consensus-driven industrial relations and welfare policies (Germany Country Profile, 2012).
John Maynard Keynes was born on 5th June 1883 in Cambridge into a wealthy academic family. His father was an economist and a philosopher and his mother befell the city’s first female mayor. He surpassed academically at Eton and Cambridge University, where he deliberated mathematics. Keynes was British economist and one of the most powerful of the 20th century.
This paper’s intention is to explain two issues: (1) causes of the sub-prime crisis and (2) the major parties responsible. Through a detailed analysis, excessive deregulation of the financial system, bad lending, excessively accommodative monetary policy, lax regulation and housing bubble are the factors leading to the sub-prime crisis which in turn led into an economy crisis and global financial meltdown. This is due to over-confidence in the financial market and irrational behavior by the borrowers, lenders and the investors driven by monetary greed which aggravated the sub-prime crisis.
In a socialist society, there is no private property and, at least theoretically, everyone cares for those less fortunate. In this form of government everyone has generally the same amount of money, which means the rich person’s money goes to the poor so that everyone can be middle class. In its ideal form, a socialist economy rejects the characteristics of capitalism in favor of the following features:
Adam Smith was born and raised in Kirkcaldy which is a town in Edinburgh. His date of birth is unknown although he was baptized on June 5th, 1723. Smith attended the University of Glasgow in 1737. Years later, after giving a number of lectures at the university of Glasgow, he got elected chair of logic at the University of Glasgow in 1751. When the equivalent position for moral philosophy became available that same year, he was elected to the place. This resulted in him doing a set of other things in the same field and which then led to him starting to get interested in the field of economics. He published a range of books and made his first appearance with the Theory of Moral Sentiments. Later on he published another book An Inquiry into the