In this Unit, financial crisis’s take center stage. We can focus on the largest
ID: 1112883 • Letter: I
Question
In this Unit, financial crisis’s take center stage. We can focus on the largest of them all from recent memory that you in fact, have experienced; “The Great Recession of 2008”. Go to the web site supplied below and read the article titled “5 Lessons of the Great Recession” or the article as it is attached in the Unit materials. Which “lesson” rings most true to you and offers the best deterrent regarding avoiding the next financial crisis? Think now in terms of your personal financial well-being; same “lesson” still hold true. Try now to sway others to agree with you. Constructively please!
The web address is: http://www.csmonitor.com/Business/2013/0908/5-lessons-of-the-Great-Recession
Explanation / Answer
The 2008 crisis is the outcome of bubbling of the housing market, subprime lending, floating of high risk investment vehicles and some part of the inaction by the regulatory bodies. Though, it happened in the USA, but affected the whole world, albeit in different capacities. It means that anything does happen in the USA, spreads in the world. Hence, the lasson-4 is most important as the crisis of 2008 affected the economies in different part of the world. The USA is world’s largest economy and create a global demand that catered by the different exporting nations. Once, the aggregate demand came down in the USA, then the export orders from overseas nations were cancelled and many companies got closed in different countries in Europe, Asia and Latin America. It created lay-offs and brought slowdown in the economy. Hence, it affected me, my job opportunities and my earning potential through job or business. It means that it created a global crisis.
It is important to consider the lesson as the most important as it can help prevent such crisis in the future that affects the whole world. Here, the regulatory bodies should closely work together and devise the plan of action with support of data and knowledge sharing, recommendations on economic policies and credit distribution mechanism so that each nation benefit from such as global crisis. Since, most of the nation are involved in international trade and companies are expanding into the different overseas markets, it becomes mandatory to have a global economic surveillance system that can read the trend and take necessary actions to stop it before it explodes.