With a globalized system, a credit crunch can cause a ripple effect in the entire economy and very quickly turning a global financial crisis into a global economic crisis. The subprime mortgage crisis led to the failure and closure of large financial institution one of which was the collapse of Lehman Brothers in September 2008. This sent a wave of fears around the world in the financial markets. Large projects were called off, corporate sector stopped borrowing due to high interest rates, trade credit was impossible to attain, with falling demand, particularly for investment goods and manufacturing durables such as automobiles, trade volume collapsed. The crisis had threatened the collapse of many other large financial institutions but was prevented by the bailout of banks by national governments.
The Great Depression revealed the dangers of supplanting real industry and enterprise with a “casino economy” in which the high interest rates impose an intolerable and unsustainable debt burden on private income. Hence regulations were put in place to curb over speculation and increasing interest rates. Glass Steagall Act was one of them. However regulations became a target of Reagan administration reformers. For example, the Garn-St. Germain Act allowed S&L associations to take demand deposits and make commercial and industrial loans.
Employers are losing ground in their battle against it. According to the 16th annual CCH Unscheduled Absence Survey, employers are struggling to find effective programs that keep healthy workers on the job because unscheduled absenteeism can cost large companies an estimated $850,000 per year. The 2006 survey revealed an absenteeism rate of 2.5 percent—that’s up from 2.3 percent in 2005, 2.4 percent in 2004 and 1.9 percent in 2003. Absenteeism has a material effect on the bottom line of most companies, yet few managers really understand the magnitude of the problem at their company. The unscheduled absenteeism rate in the U.S. hourly workforce is approximately 9%; almost one in ten workers is absent when he or she should be at
It was 2008 financial crisis. After a crisis, the government decided to implement the four trillion stimulus plan and loose monetary policy. To meet with that, the central bank lowered the deposit reserve rate many times. But according to the Wall Street journal reported in 2011, central bank governor，zhou xiaochuan and central bank officials actually have objection about the stimulus policy. They worried about its money was too much and would cause bad loans and inflation.
Furthermore, in Mexico, export, tourism, remittances income is the main source of income, but now these industry has been got hit hard. For Europe, the financial crisis led to the credit crunch. In the run-up to Christmas 2008, result from the employers has no enough money, many employees will not return to work until January 19 (Guardian newspaper, 2008). It can be seen, the British real economy faces severe challenges. Once the financial crisis severe abnormalities, affecting the scope is unprecedented, and even leads to bankruptcy in some countries, such as Iceland (IMF, 2011).
Spain, is a country that the world knows as a hustling part of Europe, and of course for its ham. Well, unbeknownst to me Spain has endured interesting macroeconomic situations that have affected different parts of its society. Being part of the European Union is unique in the way in that it is often compared to sibling countries such as France and Germany, but also adds another dimension to social and economic problems the country faces because they often are compared to those countries as well. It is one of the world’s largest economy coming in at 13th place, but even so, it has struggled with coming out of the world recession and is still making amends to ensure proper growth. As one of the last to emerge from the world global recession
For instance, numerous vast banks are attempting to benefit amplification just about fizzled in 2008 due to speculations that perplexing, unsafe ventures that ended up being dangerous, bringing about a sharp decrease in their offer costs. They are not adequately hazard element once more into their speculation methodologies and a substantial practice that neglected to boost shareholder riches. The time estimation of cash is an imperative idea in settling on money related choices. the objective of augmenting riches remember this idea. Under this idea, all money streams produced an entire life the task are reduced back to present quality utilizing the rate of return required as the markdown rate, and the outcome depends on the present estimation of future
Asian Financial Crisis (AFC) 1997 In 1997 the financial crisis came to light, and essentially being a short term phenomenon, it caused crash of the Malaysian economy. Among the factors that caused the financial crisis in Malaysia were speculative attacks, deficiencies in risk management, form of corporate governance and equity market, and the legal infrastructure .The Malaysian economic was vulnerable due to the unsustainable pace of economic growth and over-valued exchange rates. The relationship between firms, government and banks in Malaysia in the financial crisis period cannot be describe as good compared to the other Asian countries. There was no clear policy on directed lending to big firms, and to that extent one cannot say that the
The press is pointing out that many Indian companies could have similar hidden problems. If investors get suspicious, this could severely damage the corporate sector and the country’s chances of getting back to 9 percent growth. My guess is that Satyam itself will not survive. It already has liquidity problems. It has a large number of corporate customers, who are locked in to Satyam in the short run, but who will each be looking for an alternative: they cannot afford to rely on a firm that may not survive.
Human tend to make mistakes but if there is a second chance they could do it better, bank is the opportunity for them to fight again. Basically, most of the big companies having debts from banks too and the company are still operating gaining profit. Yet, bank did not giving loan blindly to everyone the bank will have some credit ranking process to ensure the applicants are qualified and potential to return the loan in future, this act solve issue that too much borrowers can’t afford to pay off their debts will bring down the economic of the nation into financial crisis such as year 2008 financial sub-prime crisis.