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Financial Crisis Essay

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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