Introduction

In early 21st century, the 2007-2008 financial crises are one of the Kay incidents which considered as the global economic crisis for the human being. Since the great depression it can be known as one of the major financial crisis across the world. However due to this financial crisis, every sector has faced several issues and especially it has lead to the near collapse of the banking system overall. Most of the market researchers have discussed that, this kind of financial crisis didn’t happen overnight and there were several factors which have affected several sectors negatively and lead to this financial crisis. However this is important to discuss about this financial crisis along with its causes and effect in this context, we are here to help you with Online assignment help Victoria. Hence, this research study will focus on the global financial crisis which has taken place in 2008 and shattered the global business totally for a time being. People would be able to understand regarding their causes and effects through this report.

Discussion on Global Financial Crisis

The global financial crisis in 2008 which is also known as market crash is one of the most serious and crucial economic crisis across the world. However, this kind of crisis is considered as the worst financial disaster after the great depression (Brem et al. 2020). The beginning of this crisis was in 2007 which has grown into the full blown international crisis. It can be already discussed that there are certain factors which have influenced the economy in a way to face this kind of financial and economic disaster. Among different market factors, essay typer Edmonton, immoderate risk taking by the financial institutions, predatory lending targeting the groups who have low income as well as housing bubble are some common factors which have affected poorly the global economy. In accordance with this discussion, it can be seen that, in 2007, the financial market was giving the sign of the collapsing of the market as reckoning was overdue for a year binge on the cheap credit (Tooze, 2020). In this regard, two bear sterns hedge funds have already collapsed. Furthermore, BNP Paribas has already given the warning that the investors might not withdraw their money from three of their funds and along with this, the British Bank; Northern Rock was looking for the emergency funds from the Bank of England. These were the early sign of the global financial crisis. However, despite these warning signs the investors have suspected for engulfing the global financial system which has brought the stocks giants of Wall Street in their worst position. This overall scenario therefore has been triggered the great recession (Shen et al. 2021). Due to this economic collapse the ordinary people has faced issues as they have already lost their jobs, their homes, their life savings and more. However, Online assignment help Canada, following this discussion, there are some features which can be pointed out as the key takeaways in this study. These features are as follows, such as,

• As the financial crisis has developed in 2007-2008, the prices of the home has started to decrease in early 2006 (Nyblom et al. 2019)
• On the other side in early 2007, the subprime lenders have started to began their file for bankruptcy
• As two big hedge funds have failed in 2007, it weighted down by the investments regarding their subprime loan and in this regard, as losses from subprime loan has caused the panic; it has totally frozen the global lending system in this context (Mazzucato, 2020)
• Along with this, in 2008, September, Lehman Brothers has collapsed due to their bankruptcy which is considered as one the biggest bankruptcy across the world

Signs of Trouble

Based on the above discussion, it can be stated that, by 2004, the homeownership has peaked at 69.2% and as a result home prices have started to fall by early 2006. This kind of situation has made more trouble for the general people across the USA. They even weren’t able to sell their house without lending any money from their lenders. If these people choose mortgages at adjustable rates, they have to bear more costs whereas the values of the home have been going down (Akbar et al. 2021). Hence, following can be the sign which can define the demolition of the global financial and economic system in 2007-2008, such as,

1. 2007, August: The Falling of Dominoes

It can be seen that the interbank market which keeps the moving money across globe have been frozen totally and at a large due to the unknown fear. In this regard, the Northern Rock also was in a need of emergency funds and approach Bank of England. This has happened due to the liquidity issue. Along with this, in 2007, Swiss Bank UBS has become first bank which has announced the losses of $3.4 billion from their investments related to the subprime investment (Klutse, 2020). Apart from this, most of the financial institutions have faced issues to assess the value of trillions of dollars.

1. 2008, March: Demise of Bear Stearns

In 2008, the economy of the USA has already faced recession and financial institutions were struggling to maintain their liquidity. Moreover, the stock markets of this country have been tumbled because of the terrorist attack along with this recession. Furthermore the federation has cut their benchmark rate by three-quarters which is the biggest cut throughout the quarter-century and it has slowed the overall economy (Ma and Ren, 2021).

1. 2008, September: The Incident of Lehman Brothers

The collapse of the Wall Street bank, Lehman Brothers is considered as one of the largest bankruptcy across the US history which was happened in September. This has become the symbol of the devastation for the investors which has been caused by the global financial crisis in this context (Arrieta-Paredes et al. 2020). However the US government, treasury department, federation have been struggled to put the financial and economic confidence in a previous way.

Causes of Global Financial Crisis

Based on the above discussion, there are several causes for this global financial crisis (Graham, 2021). These different reasons are as follows, such as,

Lending Standards Relaxation

One of the key contributors was financial deregulation in relation to financial crisis. The key expectations were that the house price will continue increase. But as a result, the households within the USA have gone into debt for buying as well as building the homes. This kind of situation has further encouraged the house developers as well as households to over borrow (Bakkar et al. 2020). Hence, as a result, most of the mortgages within the USA have been exceeded the buying process of any houses.

Financial Instruments

After 2021, investment banks have looked for the easy profits which can create collateralised debt obligations from the purchased mortgages on the secondary market. As subprime mortgages have been bundled with the prime mortgages, investors weren’t able to understand the associated risks with the products or financial instruments.

Regulations and Policy Errors

Regulations regarding MBS products as well as subprime loans were poorly regulated and too lax. Most of the individual borrowers in this regard not only wasn’t able to repay borrowed loan, but also, have been overestimated the income of the borrowers which have cause more issues (Walters, 2019). On the other side, as the crisis has been escalated, most of the central banks as well as governments were failed to fully appreciate the expansion of the non-performing loans during the boom season.

Effects of Global Financial Crisis

Due to this global financial crisis in 2008, the public indignation was totally widespread. It can be seen that the bankers have been rewarded for the reckless tanking the economy (DesJardine et al. 2019). But at the same time it should be noted that the economy is moving again, hence, the investments within the banks could be fully recouped by the government along with the interest in this context. On the other side, it can be seen that the passage of the bailout packages have been stabilised the overall stock markets which can hit the bottom during 2009, March. As a result, it has embarked on one of the largest bull markets in their history. But though this has happened and economy will recover, still the human sufferings ad economic damages are immense (Goldman, 2023). The unemployment due to financial crisis has reached 10% and also almost 3.8 million Americans have already lost their house to their foreclosure. 

Conclusion

From the above discussion it can be found out that the financial crisis in 2008 has totally crashed the market, hence it is one of the biggest disasters which has negatively impacted across the world. The investors have faced also more issues and it has totally changed the lives of the people. Both unemployment rate as well as loss of the savings rate has been increased. Furthermore the banks and financial institutions have also faced severe problems. Thus from this discussion it can also be found out that the US housing market was totally collapsed and large investments which have been made in this regard has gone totally. This kind of situation has made overall global imbalances. Hence, this is recommended that the economic analysts or global rating agency as well as government need to take proper precautions for reducing the negative impact of this global financial crisis in their near future. 

Reference list

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