Global finacial crisis Research Paper Example | Topics and Well Written Essays - 2500 words

Global finacial crisis - Research Paper ExampleLiquidity rate is the process of transforming self-coloured assets into actual money. It is an indication of insufficient flow of finances. This work focuses on the global fiscal crisis with regards to its causes, effects and remedies among other aspects. This crisis was caused by several factors more so in the developed world. One of the major causes was the collapse of the real commonwealth sector in 2006. This occurred when the sector lost its securities (pricing). The majority of major financial institutions had to close nigh operations since majority of them depend on the real estate. This happened when the U.S among other developed nations like United Kingdom established some policies that enabled citizens to own homes by creating a general platform for easy access of housing loans and owes. This was a predicament that the move would provide adequate capital to the banks through safe interests. This caused housing prices to d isgrace from 2006 to 2012. Several real estate agencies or companies reported the greatest losses in the entire history of the sector. This could be indicated in the regional and international stock certificate markets. The policy enables the majority to own their own homes, hence very few people were left to rent or purchase housing facilities from the real estate sector or agencies. ... Most of these companies are funded by institutional investors as well as foreign banks. This compelled President George W. Bush to declare insufficient bailout to the majority of the homeowners who could not repay their mortgage debts or loans. In short, the crisis was a result of policies that enabled citizens acquires loans to build their private residential structures, only for the majority of them to fail to pay their mortgage debts. The government had to offer some bail out, even though at some point, the president declared that were limited resources to offer such bailouts. Depreciation of firm prices increased to an extent that such values were far much below the mortgages. This created a kind of foreclosure in the financial sector. From 2006, there was a kind of financial drain from the consumers as a result, this weakened financial stability among the banking institutions. There was a huge pool of loan defaulters, which compromised the housing market and the national deliverance as a whole. The loss was estimated to be trillions of U.S Dollars on a global scale. Much blame for the crisis is placed on the U.S government to establish some policies that boost direct deals between the citizens and the global or major financial institutions. History indicates that before 1970, United States ventured on a certain business or providence strategy where vital economic issues were enclosed to the government and not the public. During that period, there were limited deals between the governmental or global financial institutions and private developers, or else the governm ent recognized corporations, companies or partners. Any party wishing to get some loans was to