Exploring the 2008 Financial Crisis: Analyzing Causes & Solutions

This essay examines the 2008 financial crisis in Western nations, exploring potential causes and assessing whether it could have been avoided. It discusses the role of government policies, economic imbalances, and international cooperation in either exacerbating or mitigating the crisis. The analysis covers issues such as excessive investment in specific sectors, weak monetary policies, and the impact of globalization. It concludes by emphasizing the importance of addressing income inequality and implementing effective financial regulations to prevent future crises. Desklib provides access to similar essays and study resources for students.

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Introduction
The financial crisis in Europe and its economic decline since the period of Great Depression as
well as unprecedented bailouts under the EU member state government along with credit
guarantees for large number of the banks has created stronger political and popular backlash in
most of the EU member states against the financial institutions as well as in particular banks. The
study discusses about any possible chance you could have a rose to avoid the financial crisis of
2008 in western unions by implementing government all policies of Europe. The prime objective
of the study also includes examination of the potential causes as well as assessing the
inevitability of these causes during the period of financial crisis.
Discussion
Possibilities of avoiding the 2008 financial crisis by Western Nations
The global financial recession on the crisis in the year 2008 has been the result of the downturn
which has been identified in one of the significant local sectors belonging to the US economy
and causes greater threats to functioning of the Global markets which are financial oriented.
Structured problems which had been identified in the Russian financial sector had eventually
exacerbated negative consequences after effects of global crisis that had prevailed in the Russian
economy by that time period. Over the global level Prime steps of minimising costs of crisis
must have dealt by restricting the growth and development of protectionism preventing hard
landing belonging to large group of significant economics and coordinating the measures under
economic policy. The great recession of 2008 has been exactly opposite of the great boom
identified in 2003 where the world GDP had a substantial growth of one third increase in the
total output. Business public as well as the Government of countries which were involved in the
great recession of 2008 might have happened and real straight out the international crisis of
economy on large scale of Great Depression. if gloomy forecasts would not come through then
the measures undertaken by government would have been effective.
Another possibility of avoiding the financial crisis could be a balanced financial sector of the
different economies of the world it would have resulted in a tremendous increase in the trade
protectionism which has been headed off and actions of distinct governments would be
coordinated. The street downturn could have been avoided by launch economic and it might have
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been possible for keeping the Global recession within the accounts of reasonable limits
(Grigor’ev and Salikhov, 2009). According to Marxist theory possible amount of contradictions
where observed to build up by the same time and conditions has been sufficiently created for the
cyclical crisis over accumulation at the time of intensive Boom growing imbalances in sectors as
well as consistent increase in the inflation. If the government of every Nation could have taken
appropriate steps or undertaken the actions such as internal market rules in 2009 before the
2008’s recession even then the conditions had not been worse. In the year 2007 when the Boom
had lost stability then only the governments of different economics was supposed to take
adequate actions or implement new policies for controlling the inflation and money supply
within the economy to avoid the recession phase. By the periods estimates of future growth of
the international economy became much more Pessimistic. After the causes which has led to the
recession, one of the chief reasons behind the avoidance of the financial crisis could be incorrect
monitoring of the systematic problems within International economy involving private as well as
public financial sectors by the OECD (organisation for economic cooperation and development).
Mitigating consequences resulting from the financial crisis as well as seeking the best way out of
the recession phase without causing any major loss for developing and developed groups of
countries could be the fundamental way for preserving The stability along with limiting scale of
the crises. The income inequality among the developed and developing Nations had been one of
the major causes of the recession or global crisis. for instance at the time of recession there has
been an enormous gathering of negative or deficit Balance of payments in United States
however, an enormous growth in the surplus of developing countries which has amounted almost
trillions of the dollars are 1.2% of the entire world GDP could have been controlled brought
under balance by the government through monetary and fiscal policies (Grigor’ev and Salikhov,
2009). Globalisation could have caused a stable and lower inflation and unemployment rate in
economies and recession phase could be definitely avoided.
Examining potential causes and assessing their inevitability
Significance and relevant causes could be charged against the recession of the global economy in
2008 and are efficiently sorted in this section. The most certain issues with economy at the time
of this global boom during the year of 2003 till 2007 have been sect oral in nature. Too much
investment in certain things such as energy housing and commodities has been observed.
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Inflation and unemployment will significantly lower growth in the GDP was too mild to develop
the economy and deficits in the budgets had been even observed (Helleiner, and Pagliari, 2010).
Evidences also say that a weak dollar had been one of the prime causes behind the Global
economic recession of 2008. By that time period things like energy housing as well as
communities had been classic hedges against the superfluous production of dollar.
Argumentatively, other economics have suggested that the chief reason behind the recession has
been lower birth rate in the developed as well as developing economics. The picture of a
negative economy or the economic crisis is generally been portrayed by no growth in the
families or extension in the generation of the residents of a country. Low birth rate and
significantly resulted in lower unemployment rate which had ultimate led to minimum
accumulation of the savings and its liquidation. Several financial instruments of the day leverage
and expansion of the credit had been used for compensating the deficiency of growth and
economic due to 0% but read by the era of 2008 (DOMITROVtC, 2012).
The imbalances in Savings and loan investment has resulted in possible phase of the reservation
encountered by the entire world economy accompanied by a higher rate of inflation which was
quite uncontrollable due to the incorrect monetary policies used by governments of the
developed economies. Beginning of the regulations under financial sector with sudden and
extended use of the newer financial instruments had eventually resulted in the loss of
productivity because many workers did not have any significant idea of using those equipments.
The financial sector within the developed economies on an entire not started to depend
adequately on the short term liabilities for financing the long term assets. Considering the
liabilities off the records in balance sheet had made possibly the prettiest picture in the quarterly
reports, however, released the banks out of their original Reliance on the credit markets.
Therefore instead of reducing the risk through an even distribution financial system apparently
became the source of an unparalleled expansion of credit in the market.
The loose monetary policy within setting up of the Global Slow Down of inflation as well as in
flow of capital from the developing countries and resulted in conducive negative interest rates in
real terms for the developed countries by the period of 2008. This had evidently caused bubbles
to be formed within markets for various assets such as stock market and real estate market.
Bankruptcy of several popular organisations such as the Lehman brothers hand evidently caused
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them to restrict to their production of goods and services and invest in the real estate sector
which had forbidden the accumulation of Savings and ultimately affected the entire economy.
The economic activities where usually homes by the credit palaces which has timed out from the
crisis of liquidity as well as distrust within banking system and effective severely the capital
investments in future. Loss of extreme control on the financial markets through systematic
collapse of agencies had exacerbated the recession phase along with the inability of Financial
Institutions for assessing entire risks. Other causes or reasons behind the recession in 2008 had
been transfer of capital from the savers to investors as well as borrowers, agglomeration of the
capital, monitoring usage of the phones within the project's, risk diversification and contractual
enforcement.
Conclusion
The budgetary emergency in Europe and its monetary decrease since the time of Great
Depression and also uncommon bailouts under the EU part state government alongside credit
ensures for huge number of the banks has made more grounded political and prevalent reaction
in the vast majority of the Year part states Against the money related organizations and in
addition specifically banks. This review talks about any conceivable shot that could have a rose
to maintain a strategic distance from the budgetary emergency of 2008 in western unions by
executing government all strategies of Europe. The supreme focus of the review likewise
incorporates examination of the potential causes and in addition evaluating the certainty of these
causes amid the time of monetary emergency.
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References
Buckley, A. 2011. Financial Crisis: Causes, Context and Consequences. Harlow: Prentice Hall
DOMITROVtC, B. (2012). The Weak Dollar Caused the Great Recession. Forbes, p. 32
Grigor’ev, L, and Salikhov, M. 2009. Financial Crisis 2008. Problems of Economic Transition
(51) pp.35-62
Otter, D, & Wetherly, P,. 2008. ‘Chapter 9: Growth vs. austerity: The macroeconomy in a
globalizing world.’ In The Business Environment (2nd edition). Glasgow: Oxford University
Press.
Anonymous. 2010. ‘Vatican economist: recession caused by low birth rate’ Catholic Insight. [e-
journal] 18(4). Available through: Anglia Ruskin University Library website
<http://libweb.anglia.ac.uk> [Accessed 12 June 2005].
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