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Global Financial Crisis of 2008 and Its Impact on Future Preparedness

金融essay代写 The purpose of this paper was to investigate the global financial crisis of 2008 to understand how it influences future..

Abstract金融essay代写

The purpose of this paper was to investigate the global financial crisis of 2008 to understand how it influences future preparedness. The review of literature covers issues related to the Great Depression and the Great Recession. The intentional movement of capital appeared to be a contributing factor to the two financial crises. The booming stock market led to the Great Depression,

while the housing boom caused the Great Recession. The failure of Congress to respond to the warning by financial leaders was due to the lack of understanding of the hypothetical crisis. There was no evidence to prove the potential of a financial crisis occurring in 2008. Currently,

the trade war fueled by technology and the outbreak of the Covid-19 pandemic appear to be potential causes of financial crises. In the future, the government of the United States may need to identify effective regulations that control the economic sector and respond to the potential of a financial crisis.

Global Financial Crisis of 2008 and Its Impact on Future Preparedness金融essay代写

Introduction

A financial crisis has the potential to cripple the economy of a nation if there are no mitigation strategies or recovery interventions. The global financial crisis of 2007-2008 had an adverse effect on world economies, and countries took a couple of years before recovering. The lack of appropriate regulation of the financial industry contributed to the occurrence of the financial crisis of 2008,

whereby banks were allowed to partake in hedge fund trading with derivatives. Banks opted to offer mortgages to realize profitable sales on interest-only loans (Temin, 2010). However, the increase in the supply of mortgages led to a decline in housing prices, and homeowners could no longer afford to pay for them.

The United States economic sector plunged into a financial crisis known as the Great Recession.金融essay代写

The United States government had to intervene through appropriate regulation to help the economy recover from the financial crisis.
The great recession of 2008 occurred several decades after the Great Depression of the 1930s. The primary cause of the Great Depression was the stock market crash of 1929.

In the 1920s,the stock prices rose to unexpected levels, eventually contributing to a historic expansion (Temin, 2010).However, the historic expansion reached an inevitable decline near the end of the 1920s, leading to an economic crisis that lasted almost a decade. The economic crisis affected almost every country’s economy, whereby investment dropped, consumer spending deteriorated,金融essay代写

and unemployment increased significantly.The causes of the Great Depression differ from those of the Great Recession, which implies that future financial crises could be caused by other factors like health pandemics. Nations need to learn from the recession to implement effective measures for future preparedness.

Literature Review金融essay代写

Angle 1: The Great Depression

Economic imbalances caused by central bankers play a significant role in the occurrence of financial crises. The central bankers thought that they could control inflation and deflation through the intentional movement of capital. However, miscalculations have the potential to contribute to economic crises like the Great Depression of the 1930s. In the 1920s,金融essay代写

the stock market was experiencing historical expansions. The rise in stock market prices prompted Wall Street investors to intentionally move their capital to the stock market sector because of the promise of high investment returns (Temin, 2010). However, the stock market prices continued to increase until they reached an inevitable decline in 1929. The stock market crash led to Wall Street investors losing millions of investments,

which eventually led to the economic crisis. The investment in the stock market while neglecting other essential sectors of the economy led to the Great Depression.

Angle 2: The Great Recession金融essay代写

The intentional movement of capital to a specific sector of the economy while neglecting other sectors was also a contributing factor to the financial crisis of 2008. The mortgage sector had promising investment returns for banking institutions beginning in 2004. The United States experienced a housing boom starting from 2004 until 2007.

Banks decided to take advantage of the profitable sector and decided to give homeowners interest-only loans. The banks and other financial institutions intended to earn huge profits from the intentional movement of capital to the mortgage sector. However, the actions of the banking institutions created an economic imbalance (Temin, 2010).

Moreover, the supply of mortgages surpassed the demand in the market金融essay代写

eventually making homeowners unable to repay their loans. In 2008, the United States entered an inevitable economic crisis. Investors incurred huge losses from the investments they had made. The lack of transparency of financial leaders contributed to the occurrence of the Great Recession because the public could not make appropriate investment choices.

The financial leaders of the United States had foreseen the potential of the housing boom leading to a financial crisis; however, they kept reassuring the public about the stability of the housing sector (Temin, 2010). The financial leaders intended to get the attention of Congress without causing panic about the susceptibility of the housing sector.

The efforts by the financial leaders to get Congress to take action were futile because Congress was not convinced that the economic system was on the verge of plummeting. Congress was unable to make appropriate regulations for the hypothetical crisis without reliable evidence. The government intervened only after the Great Recession had occurred.

The burst of the housing boom would have affected the mortgage sector alone;金融essay代写

however, banks and financial institutions had placed too many bets on the economic sector. Insurance companies had also been involved in the housing boom through the provision of their services to investors. As such, the financial crisis affected the mortgage sector and ended up disrupting the entire financial system of the United States. Credit markets could no longer function,

investors could not predict the future of the economy, and insurance companies were rendered unable to rescue their clients from the crisis. Consequently, economic activities came to a halt. International trade was disrupted, which dragged the countries of the world into the economic crisis (Temin, 2010). There were huge investment losses and high unemployment rates.

Congress would have prevented the Great Recession if it a clear understanding of the potential of an economic meltdown. The implementation of appropriate policies or regulations has the potential to prevent the occurrence of a financial crisis. Europe took it upon itself to implement policies that would drive the region out of the economic crisis.

The policies involved increasing oversight of the economic sector to ensure that increased investment in a specific sector of the market does not increase the susceptibility of a financial crisis (Braun, 2015). The freedom to intentionally move investment capital is one of the factors that led to the Great Recession.

Governments perceived the economic crisis as a learning experience to ensure that there is an implementation of appropriate economic regulations that control actions in the market.

Combination of Angle 1 and Angle 2金融essay代写

According to Temin (2010), the Great Depression and Great Recession occurred because of the intentional movement of capital to a single economic sector. Wall Street investors had focused their resources on the stock market sector because of the high profitability rate. On the other hand, banks and financial institutions had focused their capital on the housing sector because of the housing boom experienced until 2008.

The similarity between the Great Depression and the Great Recession is that the stock market and housing boom may have proved profitable at first; however, they reached their highest before experiencing an investable decline. Subsequently, two financial crises affected the economy of almost every country of the world due to increased interaction or economic exchange through trade.

Countries of the world took a couple of years before they could recover from the adverse effects of the financial crises. The government of the United States introduced appropriate policies, such as The Recovery Act,

to recover from the Great Recession (Kirshner, 2014).金融essay代写

Europe also embarked on a journey to recover from the Great Recession by introducing similar public policies between 2008 and 2013 (Braun, 2015). Congress and financial leaders who had foreseen the economic meltdown also learned lessons from the economic crises.

Governments of the world have increased their oversight and intervention in the economic sector to prevent similar economic crises due to the intentional movement of capital. There is also a need to understand the difference between the two economic crises. The first one was caused by the stock market boom,

while the second one was caused by the housing boom. This difference highlights that future economic crises may be caused by different factors.

Emergence of Angle 3金融essay代写

Ciuriak (2019) contends that the superpower countries of the world could be engaging in a technological war, especially in a world where the economy is data-driven. The superpower countries also engage in foreign trade, which means that the trade war fueled by technology could have a significant influence on the economies of the world. The strife for the superpower position follows the notion of the winner takes most.

Technology also helps countries make transformative investments that revolutionize the economies of nations. Increased focus on investing in technology without appropriate evaluation of the impacts could lead to financial crises if there is a lack of regulatory policies.

The ongoing US-China trade war provides an example of how the differences between the superpower countries could disrupt international trade and lead to a financial crisis.

The outbreak of the Covid-19 pandemic appeared to affect the healthcare sector primarily;

however, the pandemic suffices to present a significant fair of challenges to the economic sector (Baldwin & Weder di Mauro, 2020). The pandemic reduced consumer spending and increased the unemployment rate in the world. Low income from investments also led to the closure of businesses. The pandemic forced people to stay at home due to fear of infections.

On the other hand, it is crucial to understand that the economies of the world are adversely affected by other factors like poverty and homelessness. The pandemic also appears to surge the death toll experienced by a country. The negative economic effects associated with the outbreak of Covid-19 provide a conclusion that the global health pandemic or similar health pandemics could halt economic activities,

eventually leading to financial crises.

Personal Valuation金融essay代写

The assessment of the past financial crises is a topic of interest because it helps highlight the contributing factors for economic crises like the Great Recession. The housing boom in the United States before 2007 had attracted investments from banks and financial institutions (Temin, 2010). The banks and financial institutions were involved in the intentional movement of capital,

which was a decision that significantly affected the entire financial system. Learning about the intentional movement of capital and its contribution to the 2008 financial crisis, as well as the Great Depression, is crucial to understanding the appropriate regulation or policies that could prevent future financial crises.

The topic can help governments understand the actions of investors,as well as their consequences, which warrants the development of appropriate public policies. Therefore, the topic of financial crises can help governments understand how to stabilize economies by controlling the key actors in an economy.

The topic helps create an understanding that there can be different causes of financial crises.金融essay代写

This creates awareness that future economic crises could be caused by different factors from the stock market and housing boom. The topic also highlights how the lack of transparency between financial leaders and the public could worsen the situation and make people experience significant losses. The topic also creates awareness of how Congress failed to respond to warnings by the financial leaders (Temin, 2010).

Governments of the world can also learn from the topic by understanding how Europe and the United States responded to the Great Recession through appropriate policies (Braun, 2015; Kirshner, 2014). The topic is also of interest because it helps discover how trade war fueled by technology and the Covid-19 pandemic have the potential to cause financial crises (Baldwin & Weder di Mauro, 2020).

Henceforth, the topic of the financial crisis helps create awareness. about the potential of future financial crises, which eventually leads to the implementation of preventive strategies.

The Topic Today and in the Future金融essay代写

It has been twelve years since the occurrence of the Great Recession, and most countries have recovered from the financial crises. Countries are currently focusing on growing their economies in a bid to address prevalent issues such as homelessness and unemployment. The United States has recuperated from the Great Recession and sustained its economy to remain a superpower country.

Congress has also embarked on making appropriate policies that would prevent future financial crises, such as The Recovery Act. The occurrence of an economic meltdown similar to the Great Recession could remove the United States from the superpower position. The particular setback would make the United States a loser of the ongoing US-China trade war (Ciuriak, 2019; Kirshner, 2014).

Thus, the country has committed to regulating and overseeing the economic sector to prevent future financial crises.The ongoing trade war fueled by technology and the recent outbreak of the Covid-19 pandemic have the potential to cause financial crises.

The occurrences appear to increase the unemployment rate, lead to homelessness, increase poverty rates, and disrupt international trade (Baldwin & Weder di Mauro, 2020; Ciuriak, 2019).In the future, the governments of the countries of the world could understand the shortcomings of the past governments that led to the occurrence of the financial crises.金融essay代写

The lessons from the past financial crises.could ensure that governments can act on hypothetical crises through regulations and public policies.

Governments can also learn how to control the financial crises of other or foreign countries from affecting their states. In this case, governments could identify ways to enhance self-reliance and improvement of the internal manufacturing sector.