The paper "Reserve Bank of Australia - Effects on Australian Government" is a great example of a finance and accounting coursework. The ruthless expenditure cuts being initiated by European governments with a view to tackling their problems in debts have led the region into recession and also the rise in health problems and suicides. Since the onset of the financial crisis in 2008, governments across Europe have reduced their spending in government-run services like medications and medical facilities. According to analysts in The Examiner, measures of austerity have not solved any problem economically.
They have only created a very big problem with austerity. The austerity has reduced employment and brought lack of social welfare services especially those funded by the government. These have been witnessed in those countries that slashed their spending because of austerity events. In Spain, for instance, patients have been grumbling about reducing medical care. Hjans Kluge of The World Health Organization’ s at the European office has given advice to the nations concerned against radical medical reforms. Effects on the Australian Government Reserve Bank of Australia reports that the first sign of the financial market emerged in 2007 when some firms related to US corporation started experiencing stiff problems in their mortgage-backed securities.
The problems became too serious especially for those customers of subprime mortgages. The whole scenario spread to other financial firms that were offering the same services. The scenarios caused the banks to be very cautious in lending. What followed after that was hoarding their cash holdings. Because of this shortage of cash, interest rates started to skyrocket making the whole system to malfunction. Although the equity market took long to be rattled, the stocks prices started declining later.
Even though other developed countries have faced severe effects, Australian firms have done fairly well in this recession. The growth of the Australian financial system, however, has slowed down while unemployment has risen. Australian dollar depreciated as the crisis intensified. After the Lehman's bankruptcy, the Australian government was forced to intervene to enhance liquidity. By the timely action, the dollar recovered. Money and credit markets in this country have proven to be a bit resistant to the crisis than other developed countries.
As it has come out, Australian banks are not holding any toxic securities. This means that the monetary and fiscal responsibility of the government was timely and effective. The government also set up a guarantee of credit. This was aimed at promoting stability in the financial business. As the Stubborn Mule states, with countries now practising strict lending standards, weaker business and consumer confidence there is slow demand in Australia's commodities. This puts Australia at a point where it will not escape (2008). Effects to Domestic Firms According to Murray (2009), due to the global financial crisis facing Europe and America, more than 30,000 small businesses vanished between the periods of 2007-2010.
This loss of jobs occurred between 30,000- 126,000 employment opportunities. As reported in the Sidney Morning Herald, since 2008 many small Australian businesses have been hit. Compared to a bigger business, the impact of the global crisis has been so severe on small businesses. Small businesses have been more reluctant to recover than bigger business. Small businesses have not been treated with speciality throughout this period. Bigger businesses are normally treated well because they have heavy tangible collateral to access credit.
Banks lending traditions are so stringent on small businesses and therefore locking them out (Hutchens 2012).
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