...Global Financial Crisis: Likely Impact on Bangladesh [Abstract: The current financial crisis that originated in the United States and quickly spread to Europe and Asia could be a global crisis soon. Reckless lending by banks and financial institutions and slack regulatory system were at the root of the crisis, which is perhaps the gravest since the Great Depression of the 1930s. Amid a severe credit crunch, the rich economies have entered into a deep recession. IMF economists predict the global economic growth to fall from 5.6% in 2007 to 3.9% in 2008, and to 3.0% next year. Billions of dollars pumped by the rich and the emerging economies to bail out the distressed banks or to boost their economies have failed to stop the rot. Bangladesh is apparently immune from the crisis, its economy not being very tightly linked with the rest of the world. It has been enjoying a relatively healthy growth of exports, industrial activity and remittances. Yet, a prolonged recession in the rich countries may cause a slowdown in exports, inflows of remittances, foreign aid and FDI, thereby hurting GDP growth. IMF has said that GDP growth in Bangladesh this year will be lower – 5.5% instead of the officially projected 6.5%, if the global recession lingers. Bangladesh policy makers will need to stay alert to the possibility of the economy being hit by the global slump and adopt appropriate mitigating measures.] Introduction The United States economy is now experiencing a severe credit...
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...THE FACULTY OF ECONOMICS LJUBLJANA THE CRISIS IN GREECE subject: TAXES MAY 2013 TAXES THE CRISIS IN GREECE author: P.Fux Contents INTRODUCTION ...................................................................................................................... 3 GENESIS OF THE FINANCIAL CRISIS (USA) ................................................................. 3 THE TIPPING POINT ........................................................................................................... 3 IMPACT OF BANKING CRISIS ON EU - DEVELOPMENT OF FISCAL CRISIS .............. 4 WHAT HAPPENED IN GREECE............................................................................................. 4 DEBT IS HER OLDEST COMPANION ............................................................................... 5 CRISIS HAS SHOWN FIRST EFFECTS.............................................................................. 5 HOW MARKETS SAW GREECE ........................................................................................ 6 GREECE'S PROBLEMS SINCE THE CRISIS HAS ARISEN and BAILOUTS ..................... 7 The huge numbers of Greece's debt in pictures (2012) ...................................................... 9 A FEW WORDS ABOUT GREECE'S RATIOS ..................................................................... 10 THE GOVERNMENT SPENDINGS ..............................................................
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...little economics”. The global financial crisis has questioned the efficacy of the existing institutional framework and forced us to rethink on how our financial systems are regulated. It has also posed an important question whether the root cause of this global crisis has been the highly praised ‘Open Market Approach’. The inter linkages in the global economy has ensured that no country remains isolated and unhindered by the crisis. With the economic crisis looming over the people at large, unemployment seems to be at all time high and the whole world having a pessimistic view of the future, capitalism seems to be at loss of reason for this crisis, let alone a find solution for it. There was a time when being a capitalist economy was a matter of pride and people were excited to be part of the “free” economy but somewhere down the line the excitement seemed to have vanished. What was thought to be an epitome of equality, turned out to be the cause of inequality. In an article by Joseph E. Stiglitz “Of the 1%, By the 1%, For the 1%”, 1 percent of the people in USA take nearly a quarter of the nation’s income. He further adds that the top 1% of Americans control nearly 40% of the country’s income. The income disparity along the inactiveness by the government to improve the global crisis has led to the eroded faith among the people towards Capitalism. This paper aims at understanding the various factors that led to the current crisis, its cause and impact on the world economy...
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...2008 the world observed what is being labeled the world financial crisis since the Great Depression of 1920-30. The initial indication of a severe financial melt-down appeared in October 9, 2007 when the Dow Jones Industrial Average set a record by closing at 14,047. One year later, the Dow was just above 8,000, after dropping 21% in the first nine days of October 2008. Major stock markets in other countries had plunged alongside the Dow. Credit markets were nearing paralysis. Companies began to lay off workers in droves and were forced to put off capital investments. Individual consumers were being denied loans for mortgages and college tuition. After the nine-day U.S. stock market plunge, the head of the International Monetary Fund (IMF) had some sobering words: “Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.” It has been maintained that huge economy inequalities coupled with low rate of profit in the US economy contributed to an increased capital flow to the financial sector and the increasing provision of credit to US workers whose real incomes had declined. Under auspices of financial innovations, debt was sold in complex new financial products to investors. Cheap and apparently riskless lending drove the rising leverage of investments. ‘Securitization’ helped to spread the risks to global financial markets and deficient government regulation...
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...of the financial crisis of 2007, there has been a great deal of debate regarding the key underlying causes. For example, when people discuss the collapse of the financial markets, the most frequently mentioned word is subprime mortgagewhich is considered as the culprit of the crisis. Yet, is subprime mortgage the root of the crisis? If it was, then the question would be how this type of financial product, which is only marginal part of the financial market, could cause such a catastrophic crisis. Specifically, systemic risk was developed. Essentially, subprime mortgage is a mere part of superficial reasons of the crisis and was induced by other underlying factors which will be discussed in the essay. Due to the current situation, it is necessary to correct such misunderstandings. According to the statistics issued by the National Bureau of Statistics of China, GDP growth rate of China has dropped from nearly 12 per cent three years ago to a more subdued 7.5 per cent in the second quarter. Despite a year and a half of recession, Euro zone’s GDP rose at an annualised rate of 1.1 per cent in the second quarter, this pickup still leaves GDP across the Euro area 0.7 per cent lower than a year ago (The Economist, 2013). This essay will argue that in order to resolve the current economic problems it is crucial to identify the underlying causes rather than accepting superficial reasons. It will also be argued that there are three key reasons for the crisis: monetary policy mistakes...
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...| Department of …………………………… January 2014 Abstract How did the Subprime Crisis, a small problem of U.S. financial markets, affect the entire global banking system? The aim of this paper is to analyze the effect of the subprime crisis on the banking sector in Europe, with a close attention on the case of Spain. Spain is currently facing the worst crisis ever experienced in its financial history, so it would be interesting to analyze what is the real situation of the banking sector and what will be the reforms that could lead to a consolidation of the financial systems. The strengths and weaknesses of the financial sector will be analyzed in order to see the changes needed to maintain its competitive position. The first part of the paper will briefly explain the subprime crisis, origins and impact on the financial world as new form of contagion. In the second chapter the consequences of the subprime crisis in the Spanish banking sector will be described. The last chapter of the thesis will present an analysis of the reforms made, using legal intervention. It will be concluded with a general point of view regarding the present situation of the Spanish banking system, the potential results of the current measures and the perspectives of new reforms. Contents 1 | Introduction | | 2 | Introducing the Subprime Crisis i. The subprime crisis: origins and evolution ii. Implications of the mortgage bubble The Spanish Banking sector: Before and after i. The evolution...
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...NBER WORKING PAPER SERIES THE FINANCIAL CRISIS AND THE POLICY RESPONSES: AN EMPIRICAL ANALYSIS OF WHAT WENT WRONG John B. Taylor Working Paper 14631 http://www.nber.org/papers/w14631 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2009 I am grateful to John Cogan, Angelo Melino, John Murray, George Shultz and participants in the Global Markets Working Group for helpful comments and suggestions. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2009 by John B. Taylor. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong John B. Taylor NBER Working Paper No. 14631 January 2009 JEL No. E0,G01 ABSTRACT This paper is an empirical investigation of the role of government actions and interventions in the financial crisis that flared up in August 2007. It integrates and summarizes several ongoing empirical research projects with the aim of learning from past policy. The evidence is presented in a series of charts which are...
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...AIG Presentation Matthew Fong Minkyung Lee Yesl Lee Koo chul Jung Contents History of AIG Financial Crisis of AIG Bailout Policy Bonus Payments Outrage Conclusion Bibliography Cornelius Vander Starr - Established an insurance agency in Shanghai, China. -The first Westerner in Shanghai to sell insurance to the Chinese in 1949. -Management of the company’s lagging U.S and holdings to Maurice R. Greenberg. M.R.Greenberg -American businessman and former chairman and CEO of AIG -The world’s 18th largest public company. -Selling insurance through independent brokers rather than agents to eliminate agent salaries. -Currently CEO of C.V.Starr and Company. 1919 American Asiatic Underwriters(AAU) -Sell American insurances in Shanghai. Asia Life Insurance Company - Target is Chinese to sell life insurance - Hong Kong, Indonesia, Philippine, Jakarta. 1926 American International Underwriters(AIU) - Header agent in America, they were guarantee for American’s accidents.(started from Home foreign business) -New strong agent in Latin America around 1930~45 1968 -Starr died and Greenberg became a CEO 1970 -Greenberg was succeeded as CEO by Martin J,Sullivan. -Martin J. Sullivan began his career at AIG in London Office. 1984 -AIG listed their stocks on New York stocks exchanges and AIG be came the largest insurance company. 2005 -Became embroiled in a series of fraude investigations conducted by the Securities and Exchange Commission...
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...Meltdown: American Housing & Global Financial Turmoil Dr. Farooq Malik Noor Main Problems: 1. Financial crisis 2. Before 1990’s many households went into default. 3. In early 2008, the most immediate problem was a wave of foreclosures 4. In 1996 accelerated in average house prices across the United States had risen fairly to reach about 12 percent per annum in late 2005. After this, there was anxiety about inflation and interest rates were increased steadily, with the Federal Funds rate reaching 5.25% in September 2006. 5. Failure of about half of the 32,234 Savings and Loan Associations “S&L’s” that existed in 1986. 6. In 2006, credit risk. 7. Losses of billions 8. subprime crisis Main Cause of the problems: 1. Failure of the financial system in planning and managing the system 2. During the Great Depression, refinancing became difficult. Lenders mostly offered short-term mortgages that needed to be refinanced because they had “balloon” payments at the end. 3. US system for financing home purchases had gone wrong, what had appeared to be a glorious housing boom. 4. Rise in prices was due in part to the Federal Reserve’s policy of maintaining low interest rates after the 2001 recession. Fearing a recession that did not materialize made the Fed keeps interest rates low to be set to only 1 percent from July 2003 to July 2004. In spite of signs of growth in output and prices. 5. S&Ls is about originating fixed 30-year mortgages to be...
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...What are the causes of the global financial crisis? Name: Course: Tutor: Date: What are the causes of the global financial crisis? Introduction Achieving stability has always been the number one priority in any county or organization. Financial stability is probably one of the most sort after achievement everywhere in the world. When a country or company fails to attaining financial stability then things are deemed to go wrong. The global financial crisis brought about the worst kind of financial instability in the global economy. It started in the United States and spread all over the world like wild fire. Even the top performing economies in Asia like China were not left out. This economic turbulence brought about both economic and social hardships (Helleiner,1994) . This was partly blamed on the already established Capitalist ideologies that prevailed especially in the United States. This crisis exposed most economies to financial difficulties as it proved the dependence of most nations on dollar denominated financial transactions. The only way to salvage these economies was through fiscal and monetary interventions by the Governments of the day. Bail-out packages were presented to major economy drivers and industries to help ease the financial crisis that had affected their operation. The collapsing of large financial institutions like the Lehman Brothers bank brought about a lot of chaos in the industry. Large bailout packages were used to help revive...
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...Financial Crisis By Hisham Al Rawashdeh Under supervision of PhD Muna Al Muallah Financial Management Petra University Jan 2016 Table of contents:- • Definition • Types of Financial crisis • Financial Crisis Causes • Theories • Financial Crisis of 2008 • Implications of Financial Crisis of 2008 on the emerging market. • Next Financial Crisis. • References Definition The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in changes in the real economy. Financial crisis and Economic Crisis • Financial Crisis usually occurs in specific sectors, unlike the economic crisis which affect the entire economy. • If left unchecked, the financial crisis implications can lead to an economic crisis. In early 2008, many felt that this financial crisis would be limited to the banking sector and the housing market. However, the shortage of credit has had a very powerful impact on the real economy. Because banks are not lending, investment...
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...REACTION PAPER THE MEN WHO CRASHED THE WORLD I. SUMMARY THE FINANCIAL AND stock market meltdown of September-October 2008 is unlike anything that the vast majority of us have seen in our lifetimes. Americans would have to be old enough to remember 1929 and the onset of the Great Depression to have seen a crisis of this magnitude. People in Japan, it’s true, know all about the “lost decade” after the late 1980s bank crashes – but the late situation is a disaster on a global scale. Great Depression is actually, the outcome of this crisis and is unpredictable. Among other differences, the 1929 stock market crash and subsequent credit crisis led to the Great Depression of the 1930s in part because governments responded with “tight money” policies until too late, an act of suicide which central banks and governments today definitely will not repeat. Quite the contrary, extremely energetic state interventions in Europe and the USA – very much against the recent ideological free-market “run of play” – have halted the fears of a total global banking collapse and the short-term stock market panic. It’s indeed instructive how quickly the entire ideology of “unleashing the free market” and financial deregulation could be thrown aside in order to rescue giant banks that are “too big to fail.” The U.S. Treasury will not only be purchasing (at above-market rates) the “toxic assets” held by these institutions, but pumping hundreds of billions more into them by buying “preferred shares”...
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...Threats The impact of the global financial crisis on the world economy A Review of the Literature Foundation Year, BSc (Hons) in Banking and Finance Valikhujaev Voriskhon CA2394385 Group #112 Gerson Lapid, Mirzahidov Mirsodiq November 28, 2009 Abstract Two years have passed since the most severe global financial crisis launched in the USA. During this short period of time a lot has been made by the governments of the countries that suffered from the crisis. Yet, it is still expected that they need to implement more in order to eradicate the negative impacts from the crisis. Only the time will show which country or countries really succeeded in overcoming the crisis and which still need to learn. This paper focuses on how the crisis started, discusses its the main causes, analyses what made it spread to other countries and how much it cost to countries involved in international trading. The impact of the global financial crisis on the world economy A Review of the Litearture The beginning of the 21st century was marked by the start of one of the severest financial crisis that affected dramatically almost all countries of the world. Launched in the USA, in 2008 due to the failure of Lehman Brothers investment bank, it spread out quickly to other countries destroying their economies...
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...Positive and Negative Effects of the Global Financial Crisis Harlita H. Tomlinson Capella University BMGT8114: Accounting in the Global Era Dr. Wendy Achilles June 8,2014 Table of Contents Abstract 3 Positive and Negative Effects of the Global Financial Crisis 4 Background on the Global Financial Crisis 5 Global Financial Crisis and Its Negative Effects 9 Lack of Financial Sector Regulation and Oversights 9 Increase in the Number of Bankruptcies 11 Global Financial Crisis and Its Positive Effects 12 Designing Regulations to Monitor the Financial Sector 12 Global Governance as a Side Effect of the Global Financial Crisis 13 Lessons Learned 16 Domestic Lessons Learned 16 Global Lessons Learned 17 Lessons from Romania. 18 The Role of Financial Executives in GFC 19 Conclusions 21 References 24 Abstract The first financial crisis of the twenty-first century has not yet ended, according to Gorton and Metrick (2012), the wave of research on the crisis has already exceeded any single reader’s capacity, with the pace of new work only making this task harder. The Global Financial Crisis is considered by many economists to be the worst financial crisis since the Great Depression. Global Financial Crisis resulted in the threat of the total collapse of large financial institutions, the bailout of banks by national governments, and market downturns around the world. In the aftermath of this crisis, the housing market declined significantly and has not...
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...How fiscal policy adversely affected the European 2012 economic crisis By I chose this topic, because it intrigued me that another nation could encounter the same issues as the United States. The information contained throughout, will encompass the developments in the Euro area, the Euro’s three crises and Economic recovery. The intent is to educate you on the reason for the crises in Europe and how it can be avoided in the future. First let’s take a look at the reason for the financial crises in Europe. According to one of my sources, “The financial crisis that erupted in 2007 originated in massive bank losses on US mortgage loans. It spread rapidly to the Euro Area and other parts of the world, and led to the worst global recession since the Great Depression” (European Economy 3). The result of these events caused a increase in government purchases and transfers of households and tax cuts. I remember that a number of banks applied for help and were bailed out by the government, to include some major car manufactures as well. According to (European Economy 3) Bank losses explain about a quarter of the fall in EA GDP and consumption in 2007-09, and more than three-quarters of the fall in private nonresidential investment. It also implies results suggest that government support for banks noticeably dampened the fall in EA GDP, consumption and investment during the crisis. In the short run, the rise in government consumption would...
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