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Financial Crisis Essay

Essay about global financial crisis usually consists of several parts. These parts are:

  • Outline of global financial crisis

  • Causes of the crisis

  • Evolution, effects and response of global financial crisis.

  • Global solutions for the crisis

Our essay about global financial crisis will contain the same parts. Each part will present current information about the topic stated in the subtitle.

Outline of global financial crisis

Financial crisis which is growing in the world today is considered to be the worst financial crisis in the world since the Great Depression that took place in 1930s. Younger generation that is accustomed to new phase of globalization mild recessions the misery of Great depression doesn’t mean anything but a legend. However nowadays we experience something even more dangerous for our economy. Global financial crisis affected almost every country of the world with independent economy and received extensive coverage in the international mass media. Mortgage crisis, credit crunch, private defaults, bank failures and massive layoffs are just a few from the huge list of financial crisis visible aspects.

Causes of the crisis

While only few predicted the financial catastrophe, almost everyone has an explanation as to why it happened. Economists claim the reasons to be painfully simple.

  • Too big amount of foreign money that flew into the USA from Asian countries and China in particular.

  • Availability of easy credit that meant that too many people had borrowed for buying the property they couldn’t afford. These loans were bundled by bankers and sold to the investors that didn’t understand the complexity of these bundles and the risks that were inherent in them.

  • Failure of the government in regulation of the activities of the banking behemoths.

Though these causes seem to be quiet reasonable, a lot of complicated explanations will surface in the years to come due to the ongoing nature of the crisis. And yet the root of the financial depression may lie in the fundamental human instinct called greediness.

Evolution, effects and responses of global financial crisis

Global financial crisis has touched every industry of the world market. A lot of financial powerhouses had gone bankrupt. Mortgage giants had to be bailed out. USA government attempts to save industries has led to the increased budget deficit. Some experts predict that the epicenter of global power may shift away from the USA before the crisis ends. At the same time it has become clear that there is a strong necessity for Asian countries in restructuring domestic economies to encourage consumption. What initially was a local problem of excess credit in the United States has effected every member of global community. It is expected that the crisis of 2008 will be known in history as the first full-blown global crisis.

Global Solutions for the Financial Crisis

Financial specialists tell that in order to bring the global financial crisis to the end it is important to overcome every single reason that caused this crisis. Economists and central bankers still struggle to find a way out of the mortgage crisis. Government should restore consumer and investor confidence, then focus on designing regulations that would encourage responsibility and a long-term outlook. Furthermore, the need for global oversight of the banking industry has to be recognizes, either by strengthening existing institutions or by creating new international authorities. Initial certainty for this crisis is that no localized solutions for a problem that extends throughout the world can be found.

If you must write an essay about a global financial crisis, it should comprise certain parts such as:

  • Outline of the main aspects about the financial crisis.

  • Reasons of the financial crisis.

  • Development and effects of the financial crisis on the world economy.

  • Evaluation of possible solutions.

The essay presented below comprises the same parts presented above. Every paragraph will present a subheading that presents its content.

Outline of the Main Aspects about the Financial Crisis

The modern world experiences the worst financial crisis since the times of the Great Depression which began in the 1930s. The today’s generation that lives in the world of globalization and different recession phases almost does not know anything about the Great Depression. However, today people experience even more drastic changes and negative effects on the economy than in the past. Without exaggeration, almost every country experiences global financial crises, which gained much attention of the mass media. Bank failures, credit crunch, private defaults and mortgage crisis are just a drop in the big ocean of the evident negative effects of a global financial crisis.

Reasons of the Financial Crisis

While only a few economists predicted the global financial crisis, but nowadays almost every scientist provides personal explanation of what went wrong at that time. However, almost all causes are very simple.

  • Huge amounts of money were invested in the USA from China and Asian countries.

  • Almost all people were given credits to buy property they could not afford. Bankers bundled the loans and sold them to the investors, who were not aware of the risks they were exposed to.

  • The government did not pay enough attention to the banking activities and their regulation.

Although all these explanations are appropriate, there are numerous other causes of the global financial crisis that are widely discussed by researchers. However, the key reason may lie not in all those explanations suggested by economists, but in the basic human instinct – greediness and strive for huge profits.

Development and Effects of the Financial Crisis on the World Economy

It is evident that the global financial crisis has affected every field of human life. Numerous banks have gone bankrupt and the process is still seen nowadays. Many mortgage giants were exposed to the recession. The government of the US strived to improve the situation, but it led only to the deficit in budget, affecting all fields of human life. However, some researchers claim that the global power may be transferred from the US before the end of the crisis. Some Asian countries realize the importance of restricting their home economies to improve the consumption rates. In the past, only local communities suffered from the excess credit, but now it has affected the whole country. Thus, the crisis of 2008 is considered to be the first large-scale crisis in the history of the USA.

Evaluation of Possible Solutions

Economists and financial experts claim that in order to eradicate the global financial crisis, it is vital to pay attention to all possible reasons that provoke its spread. Numerous bankers and economists try to resolve the mortgage crisis. Government should return investments and consumer confidence, define the possible regulations for financial institutions, and introduce long-term cooperation. Moreover, the banking industry has to be completely restored with the help of cooperation with international specialists and international bankers who effectively sustain all challenges of the global financial crisis. However, nobody can predict whether the indicated measures will be enough to improve the existing situation in relation to the global financial crisis.

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