Essays on Causes of 2008 Global Financial Crisis Case Study

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The paper "Causes of 2008 Global Financial Crisis" is a perfect example of a macro & microeconomics case study.   The 2008 global financial crisis (GFC) has been termed the worst by economists, since the great depression that occurred in the 1930s (Shiller, 2008). The crisis was marked by a major decline in the global economy beginning in late 2007, which then experienced a sharp downturn by September 2008. Frankel and Saravelos (2010) assert that the initial phases of the financial crisis which started as a form of liquidity crisis became patent from august 2007.

This is when BNP Paribas ended its withdrawals from the potential three hedge funds, referring to “ total evaporation of liquidity” . The global financial crisis has affected the whole global economy, but with greater detriment in some countries as compared to others (Shiller, 2008). Various factors have been directly or indirectly known to the 2008 financial crisis, with analysts placing varied weights upon specific causes (Frankel & Saravelos, 2010; Shiller, 2008). The crisis resulted in failure or even the risk of failure within major financial institutions worldwide. The crisis is associated with complex financial activities of the period between 2002 and 2008.

These included the easy credit conditions experienced during that period which promoted high-risk lending and extensive borrowing practices; real estate bubbles which caused their burst since then (Shiller, 2008); international trade imbalances (Obstfeld & Rogoff, 2009). ; securitization; monetary policy choices that related to government expenses and revenues. Moreover, the approaches employed by countries in bailing out the then troubled private bondholders, banking industries, as well as assuming socializing losses or private debt burdens (Rose & Spiegel, 2012). The 2008 financial crisis was a major global downturn that was characterized by various kinds of system imbalances and sparked by the outbreak of the subprime mortgage crisis in the United States.


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