Financial Crisis of 2008: Causes and Solution

Introduction

The global financial crisis is one of the biggest issues since last few years. This disaster has touched virtually every country. The economic recession of 2008, also referred as late-2000s recession, Great Recession or the Lesser Depression, is a marked as a global economic decline initiated in the early December 2007 and then took a somewhat sharp down turn by the September of 2008. This period of recession not only affected the United States of America but also left a lasting imprint on the economy of the entire world. This major global recession can be characterized by a series of systemic imbalances and is said to be sparked by as a result of the outbreak of the 2007-2012 global financial crisis.

Reduced profits, loss of jobs, rising prices, delayed wages, stipends, pensions and unemployment were the common repercussions of the crises. People are just in a panic. The newspapers comprise of shocking notes that some businessman committed suicide because he could not feed his family. Unfortunately, such cases are rare 2008, financial crisis characterized by deterioration of the main economic indicators, in almost all countries of the world. The mortgage crisis in the United States appeared in 2006, which impact on the entire world countries. Then the reduction in the sale of real estate's (houses), along with this, issue has developed into a credit crisis in 2007. Credit for virtually any product can get anyone. In this paper, we will discuss the global financial crisis and how each state did to overcome this crisis.

Justification of the Research

This research will let the reader understand how global financial crisis is emerged and affected the world economy. The research will study the correlations and impact of the crises on the world economies and how did it ruin the biggest and the most regulated economic structures of the globe. This study will also be helpful for the researchers. Because once the researchers know to what extent the biggest economy of the world has been hit by the 2008 financial crisis, only then other researches will be started to explore more on this issue.

My research would also be of immense importance to the managerial community, as once they know about the extent to which world is hit by the financial crisis then the managers would feel more comfortable about making effective managerial decisions.

Literature Review

The debate regarding how this economic crisis originated has been mostly focused on the individual parts played by the United States public monetary policy along with the practices of the private financial institutions. In the United States of America, the mortgage funding in particular was habitually decentralized, opaque and somewhat competitive. Thus it is believed that the competition held between the various lenders for the revenue and the market share evidently contributed to the declining underwriting standards and the risky lending practices.

The financial crisis is considered to be the most important event of the economic history in the present scenario. The after effects of the financial crisis ...