Steps Toward A Recovery Of The Global Financial Crisis

Alex Gelinas Professor Garcia Eng M01A 12-13-12 Steps Toward a Recovery of the Global Financial Crisis The world is facing the worst financial disaster since the Great Depression. Millions all over the world have lost a countless number of jobs, seen cuts in their hours, wages, and benefits. In 2008, banks and financial institutions became bankrupt because of the unaffordable loans they lent out. Many lost their homes to foreclosures because of they could not pay off their loans. Those who invested in the stock market lost an abundant amount of money. The impact has been detrimental to Western Nations, but the financial disaster has had an effect globally. The global financial crisis has crucially affected the globe and slowed economies†¦show more content†¦This not only occurred in the U.S., in many countries real estate was rising. Before 1996, credit expansion in financial systems created bubbles in real estate and stocks. In advanced economies, household debt-to-income ratios began rising vastly. The U.K. experienced high house prices and supply booms similar to the U.S. Leverage, known as gearing in the U.K. was being built up in many countries and a large number of account deficits were rising. By late 2005, homes sales reached a peak. In 2006, construction spending and housing prices rose. Due to the amount of homes being sold, financial products that were based on mortgages were sold around the world and made way for the global financial crisis. Any crisis in the U.S. will have a global effect because their financial assets count for about 31% of global financial assets. Considering the monetary stance the U.S. was in, bundled with credit distortions, the lethal blend made the U.S. the center of the global financial crisis. Global imbalances due to a currency crisis started in 2004 and impacted the start of this financial crisis. The Asian currency crisis began in 1997. It started with Thailand s currency, the baht against the U.S. dollar. This crisis spread to other Asian countries, with Ja pan being hit the hardest, weaknesses became apparent in Asian banks.The International Monetary Fund (IMF) was turned to for support. The Japanese economy was in a