The global crisis stroke most of the nations and the super powers. It started to show its effects in 2007 and 2008. The world stock market had drastically fallen with few profits. Nations such as United States had to come up with packages to rescue the situation. They had to assist the most disadvantaged nations by giving those finances that would sustain their nations (Shah, 2013). There was also loss of confidence by US investors after the global financial crisis. As a result, the US Federal Bank injected a large amount of cash in most of the financial sectors. There are various causes of global financial crisis and how it began.
The US Federal Bank created too much money that circulated into the economy. In 7 years, they doubled the amount of money circulating in the economy and lent money to a wide spectrum of the population resulting in the creation of huge debts (Davies, 2014). Additionally, very few of the money given to people by banks went into the business sector. That meant that more liabilities were created between 2000 and 2007. 31 percent of the cash went to residential property and 32 percent to some of the financial sector. Additionally, 20 percent to the commercial real estate, 8 percent went to personal loans and credit cards while 8 percent went to businesses outside the financial sector (Kirshner, 2014).
In the same year, President Barrack Obama proposed around 1 trillion to improve the economy of the nation. The cash would be used improve the state and all the aspects of the economy. At the same time, Australian nation proposed a huge sum of cash that would be used to cater for the long-term infrastructure projects. One of the proposals from Australia was $10.4 billion that would be used as payments to families, careers, and seniors. Payment of the loans and investment was the solution to the financial crisis.
References
Davies, J. (2014). Global Financial crisis. What caused it and how the world responded, 1-3.
Grant, W., & Wilson, G. K. (2012). The consequences of the global financial crisis: The rhetoric
of reform and regulation. Oxford, UK: Oxford University Press.
James, P. (20103). Global financial crisis. Financial crisis & Recessions , 8-12.
Kirshner, J. (2014). The Global Financial Crisis. A Turning Point , 4-6.
Kolb, R. W. (2010). Lessons from the financial crisis: Causes, consequences, and our economic
future. Hoboken, N.J: Wiley.
Shah, A. (2013). Global Financial Crisis. Global Issues, 4-14.
