Essays on The Global Financial Crisis of 2008-2009 Has Been Blamed on Corporate Greed Coursework

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The paper 'The Global Financial Crisis of 2008-2009 Has Been Blamed on Corporate Greed" is a perfect example of finance and accounting coursework. If one were to define the term in economic language, one could state that in essence recession is the disturbance in the economic environment within a nation over a continuous period of time, in the nature of a business cycle (Singh and Yadav, 2009). When responding to times of economic deceleration, most governments tend to respond through the adoption of policies at a macroeconomic level-these are inclusive of things such as escalating money supply, escalating spends undertaken by the government by way of infrastructure spends and lessening taxation.

If one was to go by the Keynesian theory, a fall in AD then will mean there will be a fall in Real GDP. Summary Having provided a short definition of the meaning of recession one can now outline the exact focus of the following essay. For the most part, the essay will try and bring into context the assumption that the recession was in effect the result of a mix factors including primarily those of corporate greed and the lack of a financial regulatory mechanism that could prevent the US and the UK economies from falling into the property bubble trap.

The essay will also seek to outline the major impact that recession has had on real estate development, both commercial and developmental. It is concluding analysis the essay would put forward a gamut of ideas as having been propagated by theorists about how best to deal with the recession. Causes of Recession: The Literature The primary cause of the recent economic downturn can be traced back to an entire range of factors.

These factors are inclusive of the extreme debts that were taken on by people, and over-inflation in property values and prices, immense greed at the corporate level coupled with ignorance (lending firms deficit ) to accept loans that they could not afford and the ignorance and unwillingness to act on part of the Bush administration (Zamaan, 2009). Dependence on foreign merchandise and energy is also responsible for the crisis to a certain extent. With regards to a detailed yet simple analysis of the causes behind this recession, one needs to necessarily refer to the points that have been made by New York Times columnist and Nobel rice Winner Paul Krugman.   He states in no uncertain terms that for an understanding of the cause of this recession one needs to look at Asia (Krugman, 2009).

After the 1997-98 Asian Financial Crisis, countries in that part of the world started protecting themselves against future currency corruption by creating huge reserves of foreign revenue and assets and by exporting the added capital to the West.

This export of assets was in terms of real estate primarily, thereby driving up the prices of real estate in the West by leaps and bounds (Begley, 2009). Sub-Prime Crisis There was in other words, a big savings surplus, and most of this surplus flowed to the United States. A large part of it actually in percent of GDP terms actually flowed to Europe but the depth and freedom of US financial markets led to among other things, quicker money flow to mortgage financing and households' accessing that wealth.

Complicating the situation further was the fact that there was also the irresponsible behavior on part of bankers looking for manners and methods by which to create wealth for themselves while resulting in bankruptcy for companies aiding transfers of loan risks to others. The result of all of this was the creation of a bubble of wealth which was false and was therefore bound to burst sooner or later. What this did in essence, was that it led to the creation of a building boom which in essence was a bubble. The manifestations were things such as the availability of cheap mortgages.

These ended up attracting buyers that we're incapable of repaying the payments of the houses that they ended up buying-basically houses that they could not afford (Coy, 2008).

Reference

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Clark, T., (2004). ‘Cycles of Crisis and Regulation: the enduring agency and stewardship problems of corporate governance’. Corporate Governance: An International Review. 12(2). pages 153–161.

Coy, P. (2008). “Housing Meltdown,” Businessweek, February 11, pp.40-46.

Coval, J., Jurek, J., and Stafford, E. (2009). “The Economics of Structured Finance,” Journal of Economic Perspectives. 23(1) pp. 3-25.

Crawford, Peggy J. and Terry Young, (2006). “The Real Estate Market: House of Cards?” The Graziadio Business Report. January

Ewing, J., Matlack, C., Stecker, T. et.al. (2009). “What’s Dragging Europe Down” Businessweek, March 9, pp. 36-41

Economist, The., (2009). “Briefing Globalization and Trade: The Nuts and Bolts Come Apart,” The Economist, March 28, pp. 79-81.

Economist, The., (2009). “Greed--and Fear: A Special Report on the Future of Finance,” The Economist, January 24, pp.1-22.

Huntington Post., (2008). Citigroup Bailout: Feds Offer Massive Rescue Package To Financial Giant. Retrieved November 12, 2010 < http://www.huffingtonpost.com/2008/11/23/feds-consider-plan-to-res_n_145856.html>

Clark, T., (2004). ‘Cycles of Crisis and Regulation: the enduring agency and stewardship problems of corporate governance’. Corporate Governance: An International Review. 12(2). pages 153–161.

Singh, J., and Yadav, P., (2009). ‘Impact of Global Recession on Indian Economy with Special Reference to India’s Export’. School of Management Sciences Journal. 5(2). Pp93-102.

Zamaan, R., (2009). ‘The Causes and Ramifications of the 2008-2009 Meltdown of the Financial Markets on the Global Economy’. Eurasian Journal of Business and Economics. 2 (4). ppp63-76.James, H., (2007). “Payment Woes Worsen On Riskiest Mortgages,” The Wall Street Journal. Published April 4., 2007. ppA-2.

Begley, S.(2009). “Why Pundits Get Things Wrong,” Newsweek, February 23, p.45.

Coy, P. (2008). “Housing Meltdown,” Businessweek, February 11, pp.40-46.

Coval, J., Jurek, J., and Stafford, E. (2009). “The Economics of Structured Finance,” Journal of Economic Perspectives. 23(1) pp. 3-25.

Ewing, J., Matlack, C., Stecker, T. et.al. (2009). “What’s Dragging Europe Down” Businessweek, March 9, pp. 36-41

Krugman, Paul (2009). The Return of Depression Economics and the Crisis of 2008. W.W. Norton Company Limited

The Bush Recession. (2003). Democrat staff, Senate Budget Committee. Retrieved November 4, 2010, < http://budget.senate.gov/democratic/press/2003/fs_bushrecession073103.pdf>

James, H., (2007). “Payment Woes Worsen On Riskiest Mortgages,” The Wall Street Journal. Published April 4., 2007. ppA-2.

Crawford, P., and Young, T., (2008). ‘Sub-Prime Mortgages and the Big Bang’. Journal of Business & Economics Research. 6(10). Pp67-72

Economist, The., (2009). “Briefing Globalization and Trade: The Nuts and Bolts Come Apart,” The Economist, March 28, pp. 79-81.

Economist, The., (2009). “Greed--and Fear: A Special Report on the Future of Finance,” The Economist, January 24, pp.1-22.

Crawford, Peggy J. and Terry Young, (2006). “The Real Estate Market: House of Cards?” The Graziadio Business Report. January

Reinhart, C. M. and Rogoff, K. (2009). “The Aftermath of Financial Crises” American Economic Review: Papers & Proceedings, May 29, pp. 466-472.

Rosen, S. M., (2007). The Domino Effect: Dominate the Marketplace: New Product. AuthorHouse. Pp55-60

Singh, J., and Yadav, P., (2009). ‘Impact of Global Recession on Indian Economy with Special Reference to India’s Export’. School of Management Sciences Journal. 5(2). Pp93-102.

Zamaan, R., (2009). ‘The Causes and Ramifications of the 2008-2009 Meltdown of the Financial Markets on the Global Economy’. Eurasian Journal of Business and Economics. 2 (4). ppp63-76.

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