Assignment on Global Financial Crisis
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Added on 2020-06-04
Assignment on Global Financial Crisis
Added on 2020-06-04
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Global FinancialCrisis
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1Possible Causes of financial crisis & measuring its probability to be repeated.....................1Impact on Global financial Crisis on economies....................................................................3Proposed Reforms..................................................................................................................6CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................8
INTRODUCTIONThe rise of global financial crisis can be traced back to July 2007. this period goes by thename of economic crunch have had a difficult time in dealing with the economic scarcity duringthat time. This crisis affected businesses and consumers in the most significant manner since thegreat economic depression of 1929. In context of Australia it all began when Bear Sternsannounced problem with their security related holdings. The focus were related to securitieswhich were rendered to people with non-standard credit history. This assignment aims to discusspossible cause of great depression and ascertaining its scale and impact on the differentcountries. MAIN BODYPossible Causes of financial crisis & measuring its probability to be repeatedThe situation of economic recessions in the country carries a direct negative impact onthe business functioning and confidence of consumers in the economy (Claessens and Forbes,2013). The decline in confidence of consumers shortens the demand of goods and servicesultimately affecting the business cycle. The efforts under such circumstances are directedtowards being a defensive mode. This decline in confidence introduces situation of panic in themarket. Such circumstances further leads to unemployment, cost cutting measures andproduction of nominal amount of products and services. However the impact on the Australianeconomy can be far less when compared with the USA or UK. The outcomes ascertained werecomparatively better than in cases of other countries. The major outcomes which were seenduring that times is that was reducing in the household income by approximately 10%. 11The first major cause of the great financial crisis is high rates of interest which have beendeployed by the banking institutions on loan holder. This duty is granted to the federalreserve to control and regulate the financial activities and direct it towards sustainability.The Federal reserve of the country have been known to push higher rates of interest onpeople so that there is an appreciation in the value of dollar. The another reason for whichhigher interest rates were imposed is that to get economy out of Stagflation. The boom inthe economy of the American economy was unsustainable and which led to its bust.Therefore the credit of this recession goes to distortion of real prices of property andfinancial market which inclines in formation of decisions relating to investment in animproper manner. 1
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