Could Western Nations have avoided the Financial Crisis in 2008?

Abstract or Introduction

What would happen to the financial markets of today if the potential causes of the crisis of 2008 were evitable? What the result would be if the low interest rates, the easy loan approvals and the major dollar evaluations were not present? The 2008 recession would not have happened. As Domitrovic states the weak dollar is a core reason for the stagnation of 2008. Why is this so and what the potential causes of this crisis are a question that deserves exploration. As potential causes for the crisis are highlighted the following; first, the weak American currency can be blamed for the exposure of the financial sector to the currency-hedge instruments, especially to those in lands that was not merely a symptom, but a root cause of the crisis. Second, the markets for easy loan approvals and all the rest of the fundamentals of the crisis were only a manifestation of the major dollar devaluation that made the causes of the stagnation inevitable. In other words, the potential of the main financial players was overestimated and that led to social, financial instability and poverty increase. Moreover, the domestic sections of the economy of the United States of America were regarded as having destabilizing forces within the financial world, an opinion backed by the crucial hurdles to the operation of the financial markets at global level. Though different authors have contrasting opinions and put the blame for the crisis in the financial markets on various factors, the truth is that those factors were unavoidable.