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Do Modern Finance And Government Intervention Crash The Financial System? - Research Paper Example
A series of bank failures and corporate scandals in United States over the last decade not only affected the US economy but also crashed the global financial system as a whole. The 2008 financial crisis is considered the worst financial crisis after the Great Depression in 1930s. …
This crisis resulted in severe issues including threat of total failure of large financial institutions, evictions, foreclosures, stock market downturns, housing market meltdowns, job terminations, and prolonged unemployment. Evidently, the 2008 global financial crisis significantly reduced the growth rate of countries worldwide and many western economies including US suffered huge net losses. A large number of business organizations went out of the business and thus many investors lost their money. Investigation reports indicate that it was the US housing bubble that led to the damage of financial institutions worldwide. Even though the US Federal government has pumped a huge volume of money into the market, the US economy has not yet completely recovered from the impacts of the crisis. This research paper will critically analyze the crash of the global financial system by referring to the book ‘Alchemists of loss: How modern finance and government intervention crashed the financial system’ written by Dowd and Hutchinson. The paper will particularly evaluate whether the elements of modern finance and government intervention have played a role in crashing the financial system.
An Overview of Modern Finance
Emergence of floating currencies was a major event led to the development of modern finance. ...