Essays on Global Financial Crisis and Australian Policies Case Study

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The paper "Global Financial Crisis and Australian Policies" is a perfect example of a micro and macroeconomic case study. The global financial crisis which occurred in late 2008, led great impacts on the global financial system. The global credit markets were frozen while the investors lost confidence and governments struggled to prevent an economic meltdown. The crisis led to the sovereign debt crisis which threatened the world economy. The financial regulators and fiscal policymakers were challenged. The policymakers in most countries were forced to make difficult tradeoffs. There was an increase in risk and the subprime mortgage market collapsed as well as related markets.

The crisis was led to several events such as the large disparity in savings and investment that existed between the US and China (Berlatsky, 2010). Global imbalances were a key contributor to the crisis. Australia in response to the global financial crisis was strategic. There was an increase in focus on finance, competition and governance which were aimed at gaining sustainable growth. Australia was able to escape the worst of the financial crisis due to extraordinary policy actions.

Australia had a sound financial system during the crisis (Australia & King, 2009). This report looks at the impacts of the global Financial Crisis (GFC) and its impacts on the Global Financial System. The report then looks into ways in which the Australian policymakers dealt with the problems presented by the GFC. Causes Poor financial regulations in some of the countries were blamed as a part of the cause of the GFC. This involved collateral debt requirement, bank regulations, credit rating agencies regulations and remuneration arrangements. Most of the international banks were poor in managing financial risks.

The resultant was poor pricing of risks leading to a boom in the credit markets. Due to the low cost of risk, the global financial system became venerable (Forrest & Yip, 2011). The US mortgage market took advantage of low interest rates. Most of the American households took mortgages on a fixed rate, which was being guaranteed by the government enterprises.

References

Australia. & King, C. (2009). The global financial crisis and regional Australia. Canberra, A.C.T: Commonwealth of Australia.

Berlatsky, N. (2010). The global financial crisis. Detroit, MI: Greenhaven Press/Gale Cengage Learning

Eslake, S. (2009). ‘The global economic crisis of 2007-2009: An Australian perspective’. Economic Papers, Vol 28, No. 3, pp 226-238.

Forrest, R. & Yip, N. (2011). Housing markets and the global financial crisis: The uneven impact on households. Cheltenham, U.K: Edward Elgar.

Gruen, D. & Clark, C. (2010). What have we learnt? The Great Depression in Australia from the perspective of today. Economic Analysis and Policy, Vol 40, No. 1, pp. 3-20.

Hawtrey, K. (2009). The global credit crisis: why have Australian banks been so remarkably resilient? Agenda. Vol 16, No. 3, pp. 95-114.

OECD, (2010). Australia: moving to a seamless national economy. Organisation for Economic Cooperation and Development, Policy Brief, February.

Sykes, T. (2010). Six months of panic: How the Global Financial Crisis hit Australia. Crows Nest, N.S.W: Allen & Unwin.

Woodford, M (2010). Financial Intermediation and Macroeconomic Analysis. Journal of Economic Perspectives, Vol. 24, no.4, Fall.

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