The root of the economic global crisis is subprime owe crisis (2005-2008) in the US. The impacts were the pick of RBS and Northern Rock in UK, collapse of Merryl Lync, Pimco, BOA, HP AIG AND Merryls Lynch and Lehman brothers in US, and entirely financial institutions about the world got affected due to globalization made them co-ordinated and created cascading effect to non financial institutions.
It started from the US president bush-league from country party (capitalist economy) replaced Clinton from democrat party (socialism) in the end of 2000. Bush was emphasis on the free market and deregulation by reducing the interest rate, reduce the credit requirement and modify the low income and no credit history to borrow nones to get own house, it called subprime mortgage. It is really risk of infectiony and those shifted the risk to all people by shifting the subprime mortgage to owe Backed Security (MBS), sold to the secondary market and unusual and local investors bought it since it is guaranteed by Fannie Mae and Freddie Mac which are established by US Government.
The problem came when the interest increased (in 2005-2006) and the subprime borrowers default and it lead to increase in house price since low guide and many supply (no liquidation) and it harmed all the investors (local and foreign financial institutions) all around the world until right now since US does not have regulation system to control the subprime mortgage crisis. USs citizen is the most consumptive and the least saving in the world and it leaded to high rate in acquire (same habit like other countries).
At the glance, it seemed the failure of capitalism but it was not since the subprime mortgage was to create distribution of wealth (humanism) and the existence of central bank and Fannie Mae and Freddie Mac also the indorse of the socialism. One of the solution is to implement shariah economy system (investment in real sectors , sharing profit and loss) which...If you want to get a full essay, order it on our website: Orderessay
If you want to get a full essay, wisit our page: write my essay .
No comments:
Post a Comment