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Global Financial Crisis of 2008-2009

Essay by   •  January 23, 2013  •  Research Paper  •  959 Words (4 Pages)  •  2,165 Views

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This is very interesting subject to discuss because it's very recent crisis where many of us had experienced and may be suffered from! , Let us have a quick flash back on the financial world activities before the 2008-2009 crises where it was like a rolling snow ball started form the US and hit the whole world.

The best practice of exploiting the growing credit returns is to finance tangible projects which are expected for expansion and profit, Instead such credit returns where misused by financing dreams, fake expectations and weak speculation, Therefore the 2008-2009 crisis was similar to the previous crisis 1994 in Mexico , 1997 in SEA & 1998 in Russia.

Many investors were the victims of fake speculation bubbles in many sensitive sectors such as real estate and financial sectors in particular the foreign exchange markets.

Many people had different opinions about the reasons of this crisis, where most of the blame was on the financial sector namely bankers and the lenient financial policies, Shenkar, O. & Luo,Y. (2007, p. 267) had commented on this by saying " The causes of the crisis fall into three broad perspectives Financial, Political/Institutional and managerial"

The impact of the global financial crisis of 2008-2009 on the economies of industrialized:

The crisis started when one of the main financial institution which successfully survived from the 1929 great depression namely Lehman Brothers had announced a preventive bankruptcy on 15 Sep. 2008, in a span of only 03 months 19 other American-based banks were bankrupted.

It's worth mentioning that the lenient US rules and regulations on giving mortgage loans even for any applicants even of those who had a bad finical history were one of the main reason since most of those applicants could not pay back their loans to the banks.

The financial markets around the world wear directly effected and many of the main stock markets index drown to unexpected numbers, here in Saudi Arabia the TASI index had lost 1.09% of its value in one day and trading in TASI were the transactions were suspended for 03 days on 18 Sep. 2008.

The impact of this dominos problem had swept the world with global economical slowdown which was in parallel with a deep sink in the real-estate prices in the US and the inability of many Americans to pay their credit card outstandings. Countries with a pegged currency with USD were devaluated accordingly. Many jobs were lost and job security was the obsession of many employees around the world.

In such as situation; Some industries countries especially the weapon-makers had thought of solving their problem by milking some rich nations money by creating unneeded wars to be able to sell their weapons, That was the reasons for many political tensions in the Arab Gulf area in particular and Middle East in general since that time.

Beside the evident impact on the financial market there are some other impacts such as many governments reduce or hold the governmental investments locally and internationally, The fuel prices were lowered.

The impact of the global financial crisis of 2008-2009 on the economies of emerging market:

As mentioned above the whole world was impacted but there are some emerging markets such as the GCC (Gulf Council Countries) which consist of six states (Saudi Arabia, Kuwait, Qatar, Bahrain, UAE & Oman) were effected too, because most of these countries currencies were pegged with the US Dollar and

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