Financial Crises Analysis

In: Business and Management

Submitted By hirahamid
Words 1273
Pages 6
Topic Financial crises of 2008

Presented to

presented by


Table of contents


causes and factors

US government actions to solve the crises

Analysis and opinion regarding the likelihood of another financial crisis

The current financial crisis started in the US housing market in 2007. The crisis spread across the whole world and brutally hurt the economies of numerous countries, including the US, and reached a new level in September 2008 as a number of well-known US-based financial institutions, including AIG and Lehman Brothers, warped. It is considered by many economists to be the most terrible financial crisis since the immense Depression of the 1930s .Many causes have been anticipated, with varying weight assigned by experts. Both market based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010–2011 periods.

Causes and factors: A: The US housing market 1: creation of a housing bubble
US house prices increase significantly from 1998 to 2005, more than doubling over this period and extreme faster than average wages. Further support for the existence of a bubble came from the ratio of house prices to renting costs which rocketed upwards around 1999. The rise in house prices reflected large increases in demand for housing and a rise in the supply of housing. The significant increase in the demand for housing is endorsed to a number of factors.

a. Low interest rates
Continues low interest rates from 1999 to 2004 made adjustable-rate mortgages appear very eye-catching to possible buyers. Low interest rates were driven by the large current account deficit run by the USA. The Fed and many of the world’s…...

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