The Global Financial Crisis and the Current Economic Situation in the World Economy

International
Economics
Student name:
2/6/2020

International Economics 1
Contents
Introduction................................................................................................................................2
Common causes of global financial crises.................................................................................2
Specific causes of 2007-2009 GFC............................................................................................2
The financial crisis affected Greece...........................................................................................3
Comparison between the US and Greece...............................................................................3
Country’s government responded to the crisis.......................................................................5
Country’s current economic situation within the world economy.........................................6
Conclusion..................................................................................................................................6
References..................................................................................................................................7

International Economics 2
Introduction
The global financial crisis refers to time period of the dangerous stress that is present in the
monetary marketplaces as well as in the banking systems in the mid of 2007 and early 2009.
During the duration of the GFC, there was a different issue that has been witnessed by
different countries. The paper aims to explain mutual reasons of the global financial crises
with the examination of the particular cause of 2007-2009 GFC. The country that has been
selected for the evaluation is Greece other than the U.S. The comparison of the impact on
2007-2009 GFC on Greece and the US economy has been done. The thesis statement of the
paper is to determine reasons and belongings of the global financial crisis paper on Greece.
Common reasons of global financial crises (GFC)
The global financial crises majorly caused due to deregulation in monetary industry. It
permits the bank to get involve in hedge account interchange with products. The major causes
include extreme risk-taking in a favorable macroeconomic atmosphere, regulations, and
errors in policy, pressures in the monetary method, spillovers to further nations and many
others (Reserve Bank of Australia, 2020).
Specific causes of 2007-2009 GFC
The specific causes of 2007-2009 global are subprime mortgage crises. In the research, it has
been determined clearly that 2007 financial crisis is considered as failure of the faith that
might arise among banks and the year early to 2008 monetary crises (Amadeo, 2020). The
subprime mortgage crisis is the reason behind the crisis which is majorly affected by
unregulated usage of the derivatives. The banks permitted to get engaged in the hedge fund
for conducting trading with the derivatives (Amadeo, 2019).