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Financial Crisis Essay

682 words - 3 pages

Financial crisis:-
Financial crisis are those crisis which related to the economy of the country. In the scenario of financial crisis the value of assets going down gradually and the GDP’s of the country are going downward in negative zone.
How financial crisis held?
Financial crisis are held when the banks face the shortage of money. In this way investors sell of their assets and withdraw money from their accounts because they think the value of their assets will drop if they remain at financial institution.
Global financial crisis:-
Global financial crisis are those crisis in which the economies of the countries moving downward in destructive zone.
The global financial crisis, ...view middle of the document...

Due to which company face losses day by day.
E.g. DJIA (Dow Jones Industrial Average) fell below 10,000 mark (first time in four years) plunging more than 800 points in a single day in October. The fall was mirrored in stock markets, such as NASDAQ, NYSE, Nikkei 225, London's FTSE, Germany's DAX, etc.

Losses to Investors:-
Everybody (investment institution and individual investor) faces huge losses in MBS (Mortgaged Backed Securities) and related products.
Example:-
Banks alone are reported to have suffered USD 600 Bn of credit-related losses globally According to IMF (International Monetary Funds) estimates, American and European banks are predicted to loose USD 10 trillion of assets.
Freeze in Inter Bank Credit:-
Bankruptcy fueled anxiety in international banking market leading to block in interbank lending.
Increasing Unemployment:-
Unemployment increases due to the anxiety in international market. This trend is not only limited to financial sector exclusively.
Example:-
High number of layoffs was announced in the US through September 2008: 111,000 in...

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