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Identify the underlying causes of the 2008 Financial Crisis in the UK and the following recession Free essay! Download now

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Identify the underlying causes of the 2008 Financial Crisis in the UK and the following recession

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Identify the underlying causes of the 2008 Financial Crisis in the UK and the following recession essay previewIdentify the underlying causes of the 2008 Financial Crisis in the UK and the following recession essay previewIdentify the underlying causes of the 2008 Financial Crisis in the UK and the following recession essay preview

Description

Identify the underlying causes of the 2008 Financial Crisis in the UK and the following recession.
Disscuss whether, in your view, the UK Economy is now emerging from recession or not.

Preview


INTRODUCTION TO ECONOMICS

Identify the underlying causes of the 2008 Financial Crisis in the UK and the following recession.
Disscuss whether, in your view, the UK Economy is now emerging from recession or not.


Contents

INTRODUCTION 2
CAUSES OF GLOBAL AND UK FINANCIAL CRISIS 3
THE FOLLOWING RECESSION IN THE UK
RECCOMMENDATIONS FOR THE UK GOVERNMENT
CONCLUSION
APPENDICES
REFERENCES


Introduction
In April 2007, New Century Financial Corporation, the second largest subprime mortgage finance company in the U.S., filed for bankruptcy protection, which directly led the penetration of the financial crisis from the real estate market into the credit loan market, thereby making a serious impact on the banks and financial markets in various places around the world. This unexpected, single event was like uncontrollable bush fire that surprisingly developed into a global financial crisis.

After that the term financial crisis appears in high frequency during the past decades which brings serious impact around all over the world. The financial crisis means financial index (included short-term interest rates, monetary assets, securities, real estate, land price, the number of business bankruptcy and closure of financial institutions) of a country or several countries have deteriorated rapidly.

The general background of financial crisis
Base on the pessimistic future economic expectations, a succession of bad phenomenon will be arisen. Firstly, the currency of the region will face a condition of substantial devaluation. Secondly, the gross domestic product (GDP) of the state will drop directly. That is a heavy blow on economic grow. Large number of enterprises closed down, unemployment rate increase and the general economic depression occurred. Sometimes it may accompanied by social unrest or turmoil on the national political.
World capitalist GDP growth annual % change
1960-69
5.0%
1970-79
4.1%
1980-89
3.1%
1990-99
2.8%
2000-2006
4.5%
1951-59
4.4%
1960-69
5.2%
1970-79
4.2%
1980-89
3.0%
1990-99
5.0%
2000-2006
4.5%

In UK, there was the Secondary Banking Crisis held in 1973 to 1975. It leaded the downturn of housing price and stock market exacerbated. Come to 21 st century, the financial crisis happened in 2007 was extremely serious. It affected the global economic system . The destroy it bring have not totally solved even until today.

Some capitalist commentators agree the analysis that at the very least this is the worst economic crisis since the great depression of the 1930s and may not exceed it yet. In a sense, this crisis is potentially even worse than then. The extent of capitalist globalization which led to this crash is much wider and deeper than existed in the so-called ‘gilded age’ before 1929. For this reason, it is already the most internationalized, generalized economic crisis in history. The US, Western Europe, Japan, Eastern Europe, Russia, Asia, Australasia and Latin America; all have been caught up in the downward economic whirlpool. It has certainly developed at a speed and with a severity that exceeds even the initial phases of the 1930s depression.

Financial crisis can be divided into currency crises, debt crises, banking crisis, speculative bubbles and crashes, international financial crises, wider economic crises and other types. But the Financial crises show a form of mixed types in recent years.
Early from 19th century, financial crisis already existed. Then, financial crisis become more usual in 19th and 20th century. The Wall Street crash in 1929 was a famous case in the history. People called that day “Black Thursday”. This crisis ...

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