The+Global+Financial+Crisis


 * // The Global Financial Crisis //**

//** Introduction **// The global financial crisis is one of the most important issues on the world in twenty-first century which contribute to the emergence of many political and economic problems. There are many reasons led to this crisis. It also created many consequences which led to countries to search for solutions to this problem.

It is a collapse in the economy due to a breakdown in the prices of financial markets. [|http://www.highbeam.com/doc/1O18-financialcrisis.htm]
 * // Definition //**

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 * // How did the financial crisis begin? //**

1- In the middle of 2007, it began in the USA. 2- In the middle of 2006, about 40% of US mortgages became non prime mortgages that means very high loan to value ratios. 3- Until the middle of 2008 when the global growth would alert the start of the damage in the USA. 4- In September 2008, the final stage of the crisis started when many important US financial institutions had financial problems with lack of liquidity and closed. 5- Rise in borrowing costs for both financial and non financial institutions due to the severe contraction in market liquidity and heightened concerns about risks. 6- This risk spread to other countries when some its financial institutions had borrowed from these markets. 7- In the last 12 months, the debt defaulting in US has doubled.

[| http://www.docviewer.org/view.php?url=http://homepages.ihug.com.au/~gep/The%20Global%20Financial%20Crisis.pptx& t=The%20Global%20Financial%20Crisis]


 * // Causes //**


 * 1-Financial instability **

the capitalism tries to move from stable finance to speculative finance (unstable) and the crisis has led to falling share markets and foreign exchange markets.
 * 2-Subprime structure **

Linking mortgage lenders risk to the prices of houses is the main cause and the securitization spreads the problem and added complexity.
 * 3-Leverage **

It is a technique to multiply gains and losses. The ways to attain leverage are buying fixed assets, borrowing money, and using derivatives.

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=Lehman Brothers=


 * Goldman Sachs **

=**Morgan Stanley**=


 * Merrill Lynch **

=**Bear Stearns**=


 * // Consequences //**
 * 1-Discredited financial capitalism **

Result of this crisis is the loss of confidence between customers and financial institutions, as well as between the countries themselves.

the deflation leads to a shortage of liquidity in banks
 * 2-Tremendous shrinkage in wealth **

Resulting from the financial crisis, the emergence of many political problems, especially those in Europe and the U.S.A
 * 3-Political unrest **


 * 4-Fiscal and policy short-termism **

Almost the countries try to help their industries by taxing or restricting foreign goods.
 * 5-Protectionism **

It is the cause of discouraging investment and spending led to falling economic growth rates and rising unemployment levels.
 * 6-Uncertainty **

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//** Solutions **//

1-The governments give permission to markets and bankrupt banks to work.

2- Cut a global interest percentage to zero.

3- Fix the international prices of oil and gas.

4- Support the debt into regional banks.

5- Make an agreed global investment plan, supported by the big banks.

6- Repair of international standards and corporate law to reduce the costs of removal of carbon from the global economy.

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//** Conclusion **// In conclusion, the negative impact of financial crisis on the global economy is still found to the present day although the countries applied many of the solutions which were mentioned above.

//** Bibliography **//

[|http://www.highbeam.com/doc/1O18-financialcrisis.htm] [| http://www.docviewer.org/view.php?url=http://homepages.ihug.com.au/~gep/The%20Global%20Financial%20Crisis.pptx& t=The%20Global%20Financial%20Crisis] [] []

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