The financial crisis of 2008. Reasons and ways for overcoming it

Essay from the year 2017 in the subject Economics - Finance, grade: 5.50, Anglia Ruskin University, language: English, abstract: The financial crisis, which began in the USA loan market in 2007, has caused significant turmoil and uncertainty in the global financial system; the banks granted mortgage loans, as the properties they bought were participants in the price bubble - so they granted loans and in return received guarantees with real price lower than the value of the loan. As Buckley (2011) states, that led to three major consequences: a bubble in the house prices in the USA, in the UK and all over the world, an increased debt and an increased spending. As a lot of money were present into the economics (the lending on part of the banks was easier) they had enough resources to sell. The weakness of the American currency was also regarded as a potential source of the 2008 recession. In brief, the latter made the American financial sector highly exposed to the currency-hedge instruments that ultimately led to the crisis.