The Global Finance Crisis And Its Affects - 1903 Words

The Global Finance Crisis and Its Affects Davon Key Savannah State University Abstract In September and October 2008, the US suffered a severe financial dislocation that saw a number of large financial institutions collapse. Although this shock was of particular note, it is best understood as the culmination of a credit crunch that had begun in the summer of 2006 and continued into 2007. The US housing market is seen by many as the root cause of the financial crisis. Since the late 1990s, house prices grew rapidly in response to a number of contributing factors including persistently low interest rates, over-generous lending and speculation. The bursting of the housing bubble, in addition to simultaneous crashes in other asset bubbles, triggered the credit crisis. The policy response to the financial crisis in the United States and elsewhere has largely been an attempt to rescue money manager capitalism. Moreover, in the case of the United States the bailout policy has contributed to further concentration of the financial sector, increasing dangers. We believe that the policies directed at saving the system are doomed to fail—and that alternative policies should be adopted. The effective solution should come in the way of downsizing the financial sector by two-thirds or more, and effecting fundamental modifications. The Global Finance Crisis and Its Affects The financial turmoil that engulfed the US during the 2007-09 began in the mortgage lending markets.Show MoreRelatedGlobalization And The International Political Economy1530 Words   |  7 Pagesone country s economics and politics influence trends in the word politics and the global economy (p. 328), has resulted in an area of scholarly study being coined, to wit: international po litical economy (IPE). 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