The Global Financial Crisis had a profound impact on almost all parts of the world. Millions of people around the world had to change their lifestyles, many financial institutions went bankrupt, thousands of employees lost their jobs, many people ended up living on the streets, governments in most part of world had to interfere, with bail out plans regardless of the fact that how capitalistic and free market their economy was, to save their institutions. Many countries, which were climbing up the ladder of economic growth, witnessed decline in growth rates and worse, many western countries ended up posing shrinking of the economy. Stock markets in all around the world crashed very badly. The Gross Domestic Product of the world economy was 61.38 Trillion US dollars in the year 2008, which fell down to the level of 58.26 trillion in the year 2009. The trend also continued in the year 2010, however, there are no authentic figures released for the same yet (Buckley, pp. 201-203, 2011; United States Financial Crisis Inquiry Commission, pp. 28-30, 2011).
Most the countries, specifically the United States government turned towards the Keynesian school of thought of overcoming an economic recession. John Maynard Keynes, who became prominent in the United States and Europe during the great depression, strongly believed that there is no invisible hand in the economy, which causes business troughs and peaks. If an economy wants to move upwards in the business cycle then the economy will have to increase its aggregate demand, which is the sum of consumption, investment, government spending and net exports (exports minus imports). Higher aggregate demand would force the economy to move towards an upward spiral of growth and thus pushing the economy towards a boom. In hope of stimulating the economy with fiscal packages, the US government announced bailout packages of worth more than one trillion US dollars to help the economy to recover (Carpenter, Sanders & Harling, pp. 3148-352, 2011). The UK government also injected money into the economy in various fashions to help solve the liquidity crisis. The United States injected money into various corporations such Fannie Mae and Freddie Mac,