The Global Financial Crisis also referred to as the late-2000s financial meltdown is considered as the worst financial meltdown since the Great Depression of the 1930s. The financial meltdown affected the whole world as it resulted in bailout of banks by national governments, downturns in stock markets globally, and collapse of large fiscal institutions (Jickling 2). In some areas, especially those areas which suffered most, the housing market suffered resulting in several evictions, prolonged unemployment, and foreclosures. The Global Financial Crisis .
This financial crisis led to failure of major businesses, reduction in consumer wealth that was estimated in trillions of U.S. dollars, and a decline in economic activity that led to adverse global economic recession in the year 2008 (Muolo & Padilla 23). Economists have estimated that this financial crisis led to significant economic problems globally despite that it happened in the United States. The Global Financial Crisis.
In summary, it can be states that the main cause of the financial meltdown was interplay of valuation as well as liquidity challenges in the United States banking system in the year 2008. In this case, the banking system did not consider regulating lending of money to investors. Basically, the governments and central banks failed to adjust their regulatory practices to address financial markets of the 21st century. Additionally, credit rating agencies failed to precisely price the risk that was involved with fiscal products related to mortgages. The Global Financial Crisis.
Alexander, Christian & Guzman, Mecklenburg. Financial Crisis Management: Systemic Risk Crises, a Paralyzed Lender of Last Resort and Special Resolution Regimes. Sudbury: Sage, 2011. Print. The Global Financial Crisis.
Foster, John & Magdoff, Fred. The Great Financial Crisis: Causes and Consequences. London: Longhorn, 2009. Print
Jickling, Mark. Causes of the Financial Crisis. Congressional Research Service. April 9, 2010. Web. <www.fas.org/sgp/crs/misc/R40173.pdf> Accessed March 15, 2012. Print
Kolb, Robert. The Financial Crisis of Our Time. Victoria: Routledge, 2011. Print
Muolo, Paul & Padilla, Mathew. Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis. New York: Prentice Hall, 2010. Print. The Global Financial Crisis.