Question

Section 1.7 of the textbook presents the Financial Crisis of 2008, with emphasis on its antecedents and its significance in the future of the financial world. Based on the textbook and other research, answer one of the following:

1. The 2008 Financial Crisis started in the U.S. Were there global economic impacts of the crisis? Explain impacts and countries most effected by these impacts.
2. What is the total amount of financial assets destroyed globally during the 2008 Financial Crisis? Cite source and explain how assets were destroyed.
3. Which governments intervened and how did they intervene to either reduce the impact of 2008 crisis or prevent future similar crisis?
4. There were several financial institutions that went bankrupt or failed during the crisis. Discuss one of these companies and find out where the company/executive of this company are now.

Answer 1

The financial crisis actually started in the year of 2007 and it was severe global financial crisis and it was most severe crisis after the great depression of 1930,as per economists.

The crisis began in the year of 2007 with a depreciation in subprime mortgage( subprime mortgage is one that is normally issued to borrowers with low credit rating. Lending institution generally charges high interest rate on subprime mortgage comparison to prime mortgage for compensating the high risk in lending) in US. And it developed in international banking crisis with the collapse of investment bank Lehman Brothers on September, 2008. Excessive risk taking of investment banks like;Lehman Brothers helped to magnify the crisis globally.

The crisis globally was followed by globally economic downturn and impacted and volatilized the Asian market (China, Hong Kong,India,Japan etc.) after the US subprime crisis.

Severely affected countries in this crisis are Russia,Mexico, Hungry,Argentina, Jamaica,Mexico, Hungary, Ukraine etc.