GLOBAL FINANCIAL CRISIS

2007-2008 Global Financial Crises (Legal and Ethical Dimension Of the Crisis)

2007-2008 Global Financial Crises (Legal and Ethical Dimension Of the Crisis)

Introduction

The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems (Fratianni & Marchionne, 2009).

Briefly describe the causes and major turning points in the development of the 2007-2008 global economic crises.

Today, because of the crisis, bankers, traders, hedge funds, financial innovation are in charge. The regulation is also charged. Financiers and regulators are accused of being responsible for this crisis, considered the worst since 1929. To find its cause, first recall the mechanism of financial crisis. It was caused by falling real estate market in the United States. The property prices have increased dramatically in the United States. Prices were driven up by strong demand.

An entire class of people has been somewhat easy access to property, participating in such high demand. This population benefited from so-called sub-prime loans. These loans offer, for example, even lower payments for the first two years and then drastically increased. The securities sold in the financial markets saw their value drop. This creates losses for financial institutions who bought them. On the other hand, the United States, increasing real estate allowed people to obtain new loans.

At the heart of the crisis, we always credit. An increase in the credit increases the property prices and consumption. The credit is not in itself a problem. It is necessary for the economy. But too much credit, it's called inflation. Indeed, credit is the creation of money, and the government's plan against financial crisis (and explanations on the functioning of bank credit and money creation) (Banerjee & Duflo, 2007).

The Legal and Ethical Dimension Of the Crisis

The economic crisis interpretations are correct, but ignore these consequences makers themselves, who learn to do good or evil, and others, creating moral or immoral cultures, promoting or destroying trust and extending consequences for your actions to others. What adds ethics to the economy a richer conception of human motivations and therefore, not always explanations different, but more complete, which can sharpen the implications, all long-term economic decisions. And this serves (Ahlin & Maio, 2010):

To identify problems, even before the economist's glimpse (if the staff of an organization lies to place their products, something goes wrong, and if it is not an isolated or later appear early in its consequences),

To better understand the nature of faults have occurred (excess risk, or regulatory arbitrage results have not only economic and, of course, its causes are not only economic), and

To design better solutions. And these solutions will give them the economist, not a moralist, who does not know how to design regulation or how to articulate an adequate risk assessment ...