Could Western Nations have avoided the Financial Crisis in 2008?

Akademische Arbeit , 2017 , 5 Seiten , Note: 5.50

VWL - Finanzwissenschaft

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.

Inhaltsverzeichnis (Table of Contents)

• Could western nations have avoided the 2008 financial crisis?
  • Causes and inevitability of the crisis
  • Impact of low interest rates, easy loan approvals and dollar evaluation
• Potential causes of the crisis
  • Weak American currency and exposure to currency-hedge instruments
  • Easy loan approvals as a manifestation of dollar devaluation
  • Destabilizing forces within the US economy
• The low interest rates and its consequences
  • Low interest rates, cheap money and deflation
  • Government mistakes in economic procedures
  • Loose mortgage bank appraisals, new lending models and scams
  • Unacceptable debt levels in banking and non-financial businesses
• Government intervention and the crisis cycle
  • Conservative economic policy and prudent national finances
  • Government reactions: Money injection, low interest rates and nationalization
  • Instability of the capitalist economy and the pursuit of liberal economic doctrines
• The devaluation of the dollar and its impact
  • Currency-hedge instruments and the root cause of the crisis
  • The need for a fixed exchange rate system
• Domestic sections of the US economy and global financial markets
  • Destabilizing forces within the US economy and crucial hurdles to global financial markets
  • Limited internal and external demand, lack of economic growth, declining employment and low incomes
• Birthrate and its impact on the financial crisis
  • Decreasing birthrate, fewer young people occupying job vacancies and burden on the working class
  • Unemployed young people disrupting the cycle of savings accumulation
  • Role of banks in aggravating the crisis
  • Need to reduce debt in governments, households, financial institutions and corporations
  • Vicious circle of production and accumulation of savings due to lack of newborns
• Summary of reasons for the 2008 financial crisis
  • Business cycle, deregulation, imbalances, polarization
  • Wrong policy for getting out of the crisis: Saving corporations instead of working people
  • Defects of capitalism as an economic system
  • Lack of newborns and the vicious circle of production and accumulation of savings

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This work explores the potential causes of the 2008 financial crisis and assesses whether it was inevitable. It investigates whether the financial markets of today would have been different if the crisis’s key contributing factors had been avoided, such as low interest rates, easy loan approvals, and the major devaluation of the US dollar.

• The role of the weak American currency and its impact on the financial sector
• The consequences of low interest rates, easy credit and the effect on the global economy
• The impact of destabilizing forces within the US economy on global financial markets
• The interplay between government intervention and the capitalist system
• The influence of demographic trends, specifically birthrates, on economic stability

Zusammenfassung der Kapitel (Chapter Summaries)

The text analyzes the potential causes of the 2008 financial crisis, exploring the role of factors such as the weak US dollar, low interest rates, easy loan approvals, and destabilizing forces within the US economy. It examines the impact of these factors on the global financial system and discusses whether these elements were unavoidable. The text further explores the role of government intervention and the implications of demographic trends, specifically birthrates, on economic stability.

Schlüsselwörter (Keywords)

The text focuses on the 2008 financial crisis, exploring its potential causes and exploring the role of factors like the weak US dollar, low interest rates, easy loan approvals, and destabilizing forces within the US economy. It examines the impact of government intervention and the influence of demographic trends, particularly birthrates, on economic stability.

• Hochschule: Anglia Ruskin University
• Note: 5.50
• Autor: Silvia Stamenova (Autor:in)
• Erscheinungsjahr: 2017
• Seiten: 5
• Katalognummer: V426767
• ISBN (eBook): 9783668707429
• ISBN (Buch): 9783668707436
• Sprache: Englisch
• Schlagworte: 2008 recession weak US dollar, easy loan approval, domestic sectors