Summa summarum the Financial Crisis was like a test of faith, namely this is what remains when the complex and complicated formulas of finance are decoded. The acceleration of different methods like the housing policy creation has to be taken into account due to the fact that the space for growth is still accessible – however if peaks tend to point to the limitations of the system a possible crash is immanent. The big question is when and how finiteness will be reached.
Table of Contents
1 Foreword
1.1 Introduction
1.2 History in a nutshell
1.3 Aftermath in numbers
2 Pre-Analysis
2.1 Finance Industry in raw facts
2.2 Regulation of the Financial Markets
2.3 Lobbying in the USA and Europe
3 In-depth Analysis and Measurement
3.1 Subprime Loans - Regulatory Failure
3.2 The Banks shift of focus
3.3 The U.S Dollar as a vehicle to chaos
3.3.1 Fiat Money
3.3.2 Zero interest policy
3.4 Aggregation of markets, its effect on the Sharpe Ratio and portfolios
3.5 The necessity of continuous growth through interest
3.6 Save yourself through saving?
4 Conclusions and Projections
4.1 Collapse of the system
4.2 Rebalancing through neutralization
4.3 Nationalizing the Banks
4.4 Recap
Thesis Objective and Focus Areas
This thesis aims to provide a critical overview of financial markets, their underlying structures, and the systemic mechanisms that contributed to the 2008 Financial Crisis, while questioning the sustainability of current economic paradigms like exponential growth.
- The role of regulatory failure in the subprime mortgage market.
- The impact of fiat money and zero-interest policies on systemic instability.
- The consequences of market aggregation and the limitations of portfolio diversification.
- The inherent contradiction between exponential financial growth and finite physical resources.
Excerpt from the Thesis
3.1 Subprime Loans - Regulatory Failure
It is surprising how little the worth of the subprime loans really was which collapsed. An assumption outside of the methodology of research would normally be that this was a vast part of the financial damage, though actually the role of these overused “profit” makers was a so called domino.
The losses of the U.S. subprime mortgage market have been around 1,000 billion U.S. Dollars according to an estimation of the International Monetary Fund in November of 2008. Even if that is more than a considerable or an alarming sum - to be precise these losses were approximately around 4% of the market capitalization of the New York Stock Exchange of the end of 2006.13
So the progressing cascade effect was the loss of trust and the withdrawal of great amounts of formerly bound money.
Summary of Chapters
1 Foreword: Defines the scientific approach required to analyze the Financial Crisis of 2008 in contrast to the often misleading reports in mainstream media.
2 Pre-Analysis: Examines the structural environment of the financial industry, including market types, regulatory challenges, and the influence of lobbying.
3 In-depth Analysis and Measurement: Analyzes the core systemic flaws, including subprime loans, the shift in banking focus, the impact of fiat money, and the inherent risks of unsustainable growth models.
4 Conclusions and Projections: Evaluates the prospects of the current system, discussing the risks of systemic collapse and potential measures like nationalization to regain stability.
Keywords
Financial Crisis 2008, Subprime Loans, Fiat Money, Zero Interest Policy, Exponential Growth, Sharpe Ratio, Systemic Collapse, Regulatory Failure, Banking Sector, Financial Leverage, Resource Depletion, Monetary Policy, Debt, Market Stability, Nationalization.
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis explores the underlying causes of the 2008 Financial Crisis, focusing on structural failures in the financial system rather than just the surface-level narratives.
What central themes are addressed?
The core themes include the impact of regulatory oversight, the nature of money creation (fiat money), the contradictions of zero-interest policies, and the physical limits to economic growth.
What is the research objective?
The goal is to provide a solid overview of financial market mechanisms and identify why the system is prone to recurring crises due to unsustainable growth.
Which methodology is applied?
The work employs a critical analysis of economic data, logical reasoning, and mathematical models to evaluate systemic flaws in finance and market behavior.
What is covered in the main section of the paper?
The main section investigates specific drivers of the crisis: regulatory failures regarding subprime loans, the evolution of banking strategies, money creation, and the inherent risks of exponential growth in a finite world.
What are the characterizing keywords?
The thesis is characterized by terms like Financial Crisis 2008, Fiat Money, Systemic Collapse, Regulatory Failure, and Exponential Growth.
How does the author view the role of credit rating agencies?
The author argues that credit rating agencies were a significant contributor to the crisis due to conflicts of interest and flawed mathematical models that failed to reflect the true risk of assets.
What does the thesis conclude about exponential growth?
It concludes that exponential growth cannot be sustained indefinitely within a system limited by physical resources, making future collapses inevitable if the current paradigm remains unchanged.
- Citation du texte
- MSc Marc-Joel Fortelny (Auteur), 2013, Unavowed aspects of the Financial Crisis and its aftermath, Munich, GRIN Verlag, https://www.grin.com/document/264059
