Short Essay On Financial Crisis

The global monetary standard and thus the integrity of monetary reserves need to be safeguarded, and a recycling of trade surpluses would wean world demand away from its dependence on us overspending without the world getting stuck in a depression.

The global monetary standard and thus the integrity of monetary reserves need to be safeguarded, and a recycling of trade surpluses would wean world demand away from its dependence on us overspending without the world getting stuck in a depression.An exploration of the roots of the current credit crisis in the process of financialisation, where profit-making occurs increasingly through financial channels rather than through trade and commodity production.This paper attempts to understand the nature of the current financial crisis by identifying the main characteristics of the system that became vulnerable to collapse due to falling asset prices.

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Many had already collapsed, and many others would before long.

The Great Depression of the 1930s is remembered as the worst economic disaster in modern history—one that resulted in large part from inept policy responses—but it was far less synchronized than the crash in 2008.

Deregulation, which relies on private market discipline does not prevent or contain such epidemics.

On the contrary, it fosters a climate that encourages them.

In particular, it describes the mechanism by which sub-prime mortgages and securitisation products helped to exacerbate the problem.

In contrast to many other descriptions, it employs no advanced mathematical techniques, allowing non-specialists to appreciate the important dynamic processes at work.

The politics of trying to save capitalism by saving only the financial capitalists may well turn out to be the last twist of the knife from free market fundamentalism to pave the way for a deeper and lasting recession.

This paper describes the current credit crisis and explains aspects of its macro and micro features.

It first discusses the distributional background of the crisis, which is followed by an assessment of the impact, again on distribution, in different countries and then outlines the policy implications.

Contrasting and analysing the role of regulation and regulators in dealing with two financial crises in the United States brought on by epidemics of control fraud - the us savings and loan debacle of the 1980s and the ongoing financial crisis that first became acute in the us non-prime mortgage sector - this essay argues that there is no substitute for effective regulation.