The Financial Crisis - Essay Example

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The Financial Crisis

The valuable lessons learned from the crisis will also be discussed herein. Bear Stearns, AIG, Lehmann Brothers, Northern Rock, and Goldman Sachs are some elite names that suffered most because of the economic crisis also known as recession. Lehmann Brothers filed for bankruptcy while AIG and a few other elites just hung in there with the skin of their teeth. This economic crisis is still having repercussions on countries such as Greece and Spain; the whole of Euro Zone is facing a financial turmoil. There are a few other countries that have been not so severely affected by the same. The crisis was triggered off because of unchecked debt; banks kept issuing loans to people who invested heavily in buying assets; several things were taken for granted but when proved otherwise, there was hardly a place in the world to hide. Overvaluation in real estate is perhaps the biggest cause of the current economic crisis. It is better known as the subprime crisis in the US. The likes of Lehmann Brothers and other financial services went bust because they kept issuing credit to the people who thought the property price would increase and they would be easily able to pay off the debt that they are borrowing. It did not turn out that way and there was a short of equity. This is exactly why the financial institutions went bankrupt. ...Show more

Summary

Client’s name: Course: 10 August 2012 The great economic depression in 1930, in the US, was triggered off by the collapse of the US stock market which is now known as Nasdaq. It was the worst period of the US history; people slept on Hoover blankets and had no money to spend…
Author : leschericka
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