StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Causes of the 2007-08 Financial Crisis - Essay Example

Cite this document
Summary
The effect that real estate has on the economy of a country proves that it is important to the economy and has a direct effect of the performance of the economy of a country. Real estate industry is also hit quite hard when the economy is not doing well. The subprime mortgage…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98% of users find it useful
Causes of the 2007-08 Financial Crisis
Read Text Preview

Extract of sample "Causes of the 2007-08 Financial Crisis"

Causes for the 2007-08 Financial Crisis Deema Hamad almana 01651 ENGL 203 Dr, Tobias Christopher lee Qatar The effect that real e has on the economy of a country proves that it is important to the economy and has a direct effect of the performance of the economy of a country. Real estate industry is also hit quite hard when the economy is not doing well. The subprime mortgage crisis only served to prove this fact the more. The crisis came about due to imprudent and excessive lending by the banks (Chapra, M., 2009). The crisis came about in a chain reaction that started with the mixing of subprime and prime debt and passing the entire risk to the ultimate purchaser.

Due to this the mortgage originators had lesser incentive to motivate them to take careful underwritings (Chapra, M., 2009). The economy of the real estate industry was affected seriously by the step. With these kinds of effects that the real estate industry had on the economy of the world, it is quite evident that real estate industry is an economic to reckon.More attention was accorded to loan volumes rather than loan quality as banks fought to increase their investment opportunities hoping to maximize their profits as a result of the economic crunch (Torres, 2010).

In Greece alone, investors became reluctant to do business or even finance the Government deficits (Torres, 2010). With the decline in the confidence in government, falling by around 10% in many countries, it became very evident that the masses were discontent with the short term measures that were being taken by governments to try and solve the situation (Torres, 2010). The effects of the meltdown were felt quite deep down the social ladder. Starting at the top with the banks not trusting one another and the interbank credit being anemic, the unequal economic incomes affected the wage growth in countries where it would have been justified by the productivity development.

ReferencesChapra, M. (2009). The Global Financial Crisis Can Islamic Finance Help? INSIGHTS ,1, 27-38.Torres, R. (2011). Global crisis: causes responses and challenges. Responding to the global Crisis: Achievements and pending issue. United States, Washington: international labour office,Inc

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Causes of the 2007-08 Financial Crisis Essay Example | Topics and Well Written Essays - 250 words”, n.d.)
Retrieved from https://studentshare.org/english/1647220-causes-of-the-2007-08-financial-crisis
(Causes of the 2007-08 Financial Crisis Essay Example | Topics and Well Written Essays - 250 Words)
https://studentshare.org/english/1647220-causes-of-the-2007-08-financial-crisis.
“Causes of the 2007-08 Financial Crisis Essay Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/english/1647220-causes-of-the-2007-08-financial-crisis.
  • Cited: 1 times

CHECK THESE SAMPLES OF Causes of the 2007-08 Financial Crisis

The housing crisis in the U.S

Root causes Steve Latter (2008) has listed the following as the top six causes of the financial crisis in their perceived order of significance.... The crisis can be blamed on various factors characterizing the last 20 years period.... … The medium to short term triggers of the crisis can be traced back to 2005 when house prices surged and started dropping in late 2006.... he crisis has burst the housing bubble which has even aggravated the current economic situation in the US which according to economists is already tantamount to a recession....
6 Pages (1500 words) Coursework

Macroeconomics. US markets

Although global financial crisis result in more problem than those stated above.... This crisis continued till 2008, matured and gnawed the world economy.... Many people argued that it was started by the booming oil prices, whereas other people stated that this crisis is a result of poor economic policies of IMF and World Bank which overheated the global economy and resulted in the financial crunch.... Whatever the reason of this crisis, one can almost be sure that this crisis has affected subprime mortgages, declining house prices and caused investor bankruptcy....
5 Pages (1250 words) Essay

Discuss the reasons for the recent weakness of the US Dollar

London was the biggest foreign exchange market followed by New York “Somewhere between 40 to 60 percent of international financial transactions are dominated in dollars.... The first point of blow to its hegemony was the introduction of Euro in 1999.... Euro represented dominant economies in Europe and many countries adopted euro as their… By 2006 December the euro surpassed dollar with €610 billion more than $800 billion notes in circulation....
5 Pages (1250 words) Essay

Describe US subprime market and analyze the impact the crisis base on one macroeconomic

Getting consumer credit through various financial institutions especially banks requires consumers to maintain a certain degree of credit rating in order to qualify for those loans.... Unlike large corporate companies, consumers or rather individuals pose a different challenge and… It is because of this reason that various banks and financial institutions have developed their internal rating methodologies which they assign to various Banks than through their internal as well external credit scores or ratings decide to whom they should provide the credit....
4 Pages (1000 words) Essay

Financial crisis

The crazy lending habits of The reasons for current financial crisis in America can be attributed to many things like, The Federal Reserve, is making credit cheap, Home buyers, who took advantage of easy credit contributed to bid up the prices of homes excessively.... Most of the people who took the loans were failed to return it in time because of the recession in their economies and hence the financial crisis started to destroy the financial institutions.... Morgan Chase have weathered the financial crisis in reasonably good shape, while Bear Stearns collapsed and Lehman Brothers has entered bankruptcy, to name but two of the investment banks which had remained independent despite the repeal of Glass-Steagall....
4 Pages (1000 words) Research Paper

Analyse the performance of the components (C, I, G & NX) of Australias GDP since 2005

That is perhaps due to the recession due to the global credit crisis.... The above table shows that since the first quarter of the year 2007 Australia has been facing balance of trade crisis.... GDP, a major indicator of economic growth, is defined as the value of goods and services that are produced within the territory of a nation in a particular time period (in maximum cases one financial year is used)....
4 Pages (1000 words) Essay

The Economic Consequences of Mr. Bush

hellip; The author states that the International Monetary Fund has described America's mortgage crisis as the largest financial shock since the Great Depression.... This crisis was not a day's product.... Fannie Mae was established to stimulate the real estate market as a trial in accordance with the New deal of 1929 to boom the economy out of the 1929 crisis.... This caused a spurt in finance resulting in an abrupt increase in the number of financial institutions within America....
8 Pages (2000 words) Assignment

Financial Analysis and Valuation of Inditex

The author of this assignment "financial Analysis and Valuation of Inditex" examines both companies in comparison to share prices against themselves and the future outlook.... It is stated that the Z score analysis for predicting corporate failure was applied.... nbsp;… The Graphical illustration of GAP's and Inditex's share movement from 2001 to 2011, above and in the graph (appendix 2a) indicates that a general upward trend of Inditex's share price is evident....
7 Pages (1750 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us