This website uses cookies to ensure you have the best experience. Learn more

Maroeconomics Financial Crisis 2008 Essay

846 words - 4 pages

| |
| |
There were many factors that lead to the financial crisis of 2008. In 2001 America was facing the possibility of a recession, in part due to the terrorism attack. Fearing this recession the Federal Reserve decided to cut interest rates drastically with the plan to slowly increase it over time. Banks and other financial institutions saw this as an opportunity to make money and used the low interest rate to capitalize in real estate. Banks began the spiral of offering no money down mortgages with the cheap money interest rates to subprime borrowers, many which had little money and no assets. As the real estate business began to boom the prices of houses increased. Many people ...view middle of the document...

When split this act applied one third of this money into government investment projects such as roads, bridges, and electrical grids. Another third was spent to assist the people hardest hit by the crisis as well as local governments. This money was used to provide stimulus checks and spending incentives to qualifying families. The final portion of the money was for tax cuts and credits. (Treatment).
TARP was another government funded program consisting of many programs to alleviate stress from the economy. These programs dedicated money primarily to areas such as the banking industry, the credit market, and the auto industry to bail out companies that failed to raise the private capital needed to avoid bankruptcy. Although the majority of this act was for industry allotments were made for struggling families and individuals facing foreclosures on their homes. (TARP).
Government money however, was only a temporary solution. Many pieces of legislation were passed to prevent similar situations from arising in the future that put checks and balances into financial institutions. The Dodd Frank Wall Street Reform and Consumer Protection Act was a major piece of legislation passed by the Obama administration in 2010 outlining many provisions and new government oversight programs to be implemented applied over the following several years. Under this act departments such as the Financial Stability Oversight Council and Orderly Liquidation Authority were created to monitor major financial institutions that could potentially negatively affect the country’s economy. The...

Other Papers Like Maroeconomics Financial Crisis 2008

Financial Crisis Essay

740 words - 3 pages The article titled The End of the Financial World as We Know It provided a very detailed review of what lead up to the 2008 financial crisis. I felt that the author did a very good job being objective and taking a very difficult topic and presenting it in a straight forward manner. thought I did feel a little disheartened after reading the article. How could this have been let to go so far and have we really learned anything from the 2008

How the American Mortgage Crisis Spread to Europe

1727 words - 7 pages securitization to nearly die. Several financial institutions experienced great losses on their bonds, which made them more reluctant in lending out money. This made the interest rate increase and it became hard for investors to finance their investments (Blackburn, 2008). How did it evolve into a global crisis? In 2008 after several different financial institutions went bankrupt, the international monetary fund gave a statement that: “The world

Fair Value Accounting and the Gfc

1821 words - 8 pages determine what impact accounting standards had on the crisis. The SEC determined that fair-value accounting was not to blame and should not be suspended (United States Securities and Exchange Commission, 2008). They suggested that “the key issue underlying the credit crisis is the lack of information and transparency about complex financial instruments. The solution to this is clearer disclosure, not less disclosure” (Marcy, 2009, p. 73). The


590 words - 3 pages The financial crisis in US in 2008 According to leading economic figures,The 2008 Global Financial crisis is considered the worst financial crisis since the Great Depression of the 1930s.Whilst the cost of the crisis has so far remained under examined, significant risks remain for the world economy in coming years. First of all, easy money policy is one of the reasons that made the financial crisis in US in 2008. Because of trade

Current Financial Crisis and Banking Industry

859 words - 4 pages approve action plans to revive the economy, as well as cushion the economy from future negative impacts of financial crisis on the banking industry and other sectors of the economy. References Moore, & Heidi, N. (2008). Maybe someone does have a clue. Wall street Jornal. Perrow, C. (1981). The President's commission and the Normal Accidents. The Accident at Three Mile Island : The Human Dimension, pp 173-184. Reinhart, C., Kiregaard, J., & Sbrancia, B. (2011). Financial Repression Redux. IMF Finance and Development Vol 48 No.1. Turner, B. A., & Pidgeon, N. (1997). Man-made Disasters, 2nd Edition. Butterworth Heinemann: Oxford Publishers.

Coporate Institution and Corporation

2919 words - 12 pages 4. Conclusion and lessons learned from the crisis 8 5. References 10 Executive summary The global financial crisis in 2008 has led to one of the biggest recessions spread all over the world. It caused a considerable slowdown in almost all developed and developing countries. Although all Governments around the world have been trying to correct and improve the situation, its negative impacts on the world economy are still inevitable

Financial Crisis

4509 words - 19 pages ' to avoid the country going into recession, December, 2008 December, 2008: Madoff Ponzi scheme scandal erupts December, 2008: Belgium government resigns as a result of Fortis nationalization Events Of 2009 January 2009: Blue Monday Crash 2009 January 2009: U.S. President Barack Obama proposes federal spending bill approaching $1 trillion in value in an attempt to remedy financial crisis January 2009: Lawmakers propose massive bailout of

Financial Economics

2283 words - 10 pages 1.Introduction This essay is based on the financial crisis from 2007 to 2008, which discuss whether the time at that moment is different. Here, we focus on the financial crisis happened in USA around these two particular years, therefore we mainly talk about ‘U.S Sub-prime Crisis’. Section I is to summarize the ideas that Reinhart and Rogoff provide according the book ‘This Time is Different: Eight Centuries of Financial Folly’ (2011) and

Subprime Mortgage Crisis

762 words - 4 pages Outline * Introduction The subprime mortgage crisis is a series of events and conditions that lead to the 2008 global financial crisis, which has caused the worst recession since Great Depression. The subprime crisis has made the five biggest investment banks become history and reduced thousands of American citizens begging on the street corners without a place to lay their heads. There is a proverb in China, “One can cope with the


1392 words - 6 pages rescue the most important organization, and save world economy (Rajan, 2008). The purpose of IMF regarding financial crisis rescue measures is to prevent the deterioration of the financial crisis and spread, and ensure crisis countries economic recovery quickly for reducing the losses to a minimum. Rescue mechanism of IMF for financial crisis will be determining the final results regarding situations of the countries. The outbreak of the financial

American Airlines

1028 words - 5 pages in the U.S. Impact of the financial crisis The financial crisis hit AA hard as it was already suffering due to the inflation of oil prices. The high price of oil resulted in a very high cost of fuel for the company’s jets. Oil prices have gone up to more than $130 per barrel. The increasing cost of oil has cost the company almost $3 billion since the beginning of 2008. The stock prices went down in response to the crisis and the

Related Essays

South Africa’s Macroeconomic Performance Before, During And After The Global Financial Crisis Of 2007 2008

1045 words - 5 pages The global financial crisis of 2007 – 2008 impacted every nation in the world, but the timing and severity of the impact varied greatly depending on various factors such as the sovereign debt as a percentage of Gross Domestic Product (GDP) prior to the financial crisis, as well as the level of exposure to the Collateralized Debt Obligation (CDO) sub-prime mortgagebacked securities of the different countries. Where governments and banks

Financial Crisis Problem: Is The Government Bailout Right? It Is An Essay About The Financial Crisis In 2008, In My Economy Class

1630 words - 7 pages increasing money supply, lowering interest, and so on, the reason why credit crisis happen becomes more complex. (Anonymous, 2008)The global financial crisis of September-October 2008 is a major ongoing financial crisis, the worst of its kind since the Great Depression. It became prominently visible in September, 2008 with the failure, merger or conservatorship of several large United States-based financial firms. (Akbar, 2008.) Many economists argued

Financial Crisis Essay

682 words - 3 pages 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, mashing the world slowly but really begin to show, its effects in middle of 2007 and 2008. Stocks markets have collapsed, large financial institute have break down, and government in even the richest

Financial Crisis And Its Impact On China

1824 words - 8 pages INTRODUCTION In the year 2008 the world saw one of the greatest financial crisis since the great depression of the 1930s. This financial crisis also known as the “Great Recession” caused various problems for different economies worldwide. The collapse of the Lehman Brothers bank, a sprawling global bank, in September 2008 almost brought down the world’s financial system. Large sums of tax payer based bail-outs were needed in order to shore up