Credit Crisis Visualized

High School ・Business ・MLA ・2 Sources

The monetary crisis was essentially brought about by landlords and investors through their plan to offer loans with high interests to customers. Furthermore, the global fiscal disaster is significantly affected by collateralized borrowing and frozen credit markets. The effects of credit emergency were felt worldwide, and the disappointment is significant as it influenced the property holders and advance organizations as well as the worldwide economy completely (Jarvis n.p).

When Allen Greenspan, the administrator of Federal Reserve set the interest rate to be 1% that is when the emergency began. At the diminished rate, banks were permitted to get assets from China, Japan, and the Middle East which empowered them to get cheap credit and subsequently make a profit through leverage (Jarvis n.p). The investors were motivated by the huge returns and were therefore connected with homeowners through the Wall Street. The impact of the focus on the profit was that no party paid attention to the risk involved when lending funds to the clients. Consequently, the bankers, homeowners, and investors all became bankrupt (Longstaff 440).

Bankruptcy of the banks and other lenders has unfavorable impacts on the actions of most companies in the economy hence impeding their activities. Notably, businesses form an integral part of the society and thus any a factor that negatively affects their operations ultimately impact adversely on the general public. For instance, poor funding to the food industry results in deprived health in the society. Thus, it is evident that the credit crisis adversely affects the entire community (Longstaff 448).

Governments of most companies have developed and implemented strategies aimed at reducing the effects of the financial crisis. Notably, the policies have reduced the effects to a greater extent; however, some consequences of the crisis are prevalent in the contemporary economy as evident by the unstable prices of the securities in the financial markets and the fluctuating exchange rates globally.

Works Cited

Jarvis, Jonathan. The Crisis Of Credit Visualized - HD. 2011. Web. 28 Jan. 2017,

Longstaff, Francis A. "The subprime credit crisis and contagion in financial markets." Journal of financial economics 97.3 (2010): 436-450.

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