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Financial Crisis Paper - Essay Example
Finance & Accounting
Pages 7 (1757 words)
Name Financial Crisis Economic crisis, also referred to as economic crunch, is a phase that a country experiences which is comprised of an economic downturn due to financial instability. A country that encounters economic crisis will most likely face a number of consequences such as a fall in Gross Domestic Product (GDP), scarce liquidity and inflationary trends…
It is a result of improper policies implemented in the financial system which gives birth to numerous micro and macro economic problems. These reasons have varying severity and have affected the global economies of the world. The recent recession has webbed the entire global economies into its victimization and caused severe distress among both, developed and under-developed countries of the world. Recent economic crisis has paved way for inequality across many nations and has had a dampening impact upon their financial position. This crisis has led to other severe crises and it is matter of global concern. Economists believe that the deregulations of 1980s are the major root causes for the recent financial crisis which is likely to bring an end to free market economics. Reagan administration initiated liberalization, which brought about breakdowns in series due to which the government intervened and ultimately the structure destroyed the whole financial system. The Financial Crisis In 2008, the global market collapsed, The Bush administration figured out that only government intervention could save the companies whose failure could fetch destructive reactions. American Insurance Group (AIG) and Fannie Mae and Freddie Macare are those two giants which suffered from this crisis. ...
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