The economic and financial crisis from 2008 to 2009, also known as the global fi

Question

The economic and financial crisis from 2008 to 2009, also known as the global financial crisis, was considered to be the worst financial crisis since the Great Depression. The general situation at financial markets has been additionally complicated by introduction of new financial products and another mode of operations including globalization. Global financial market seem to be playing different function in economy and it has been working due to new regulations. Introduction of new trade platforms, online access to information, integration and globalization of the market caused some revisions of finance theories. What are reliable predictors of economic and financial crisis? Describe some achievements and pending issues in context of global crisis? Are we still in danger of economic and financial crisis today? I NEED 800 WORDS PLEASE

Explanation / Answer

The great depression of 2008-2009 has been one of the most hard hit phenomenon in global financial market. The stock market fell and financial market collapsed with various economies falling into heavy debt crisis , financail breakdown had certainly affected the asset prices and livelihood of the people , the US sub prime mortgage had a major ripple effect around the world . The financial market became complex and people lost trust in the financial system .Banks could not securitise their asstes well turning all the loans into risky funds which could not be recovered .Major investment like lehman brothers crashed ,banks bought securities from others , collateralized debt obligations increased the risk and complexities in financial market to hide the bad loans .The problem aggravated further due to which large capital reserves went out and governent helped in bailing out various banks and investment firms .Such fluctuations reduced confidence of the investors in the financial market and people could not obtain funds easily calling it a asset price bubble . Securitisation has been a good mechanism to mitigate risk , hedge funds helped restoring confidence , derivatives , future credits weree reasons of hike in inlfation .Hedge funds and credit default swaps have been helpfful in reducing risk and managing it .However derivatives cause interlinkage of risks but market cconfidence will be rebuilt only when secure financial assets will be readily available in the market .However countries have become more vigilent and started to focus on their debt management and ensuring to secure foreign reserves to protect future financial crisis .

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