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Financial Crisis

In: Business and Management

Submitted By shaynesmith
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In the years leading up to the crisis, high consumption and low savings rates in the U.S. contributed to significant amounts of foreign money flowing into the U.S. from fast-growing economies in Asia and oil-producing countries. This inflow of funds combined with low U.S. interest rates from 2002-2004 resulted in easy credit conditions, which fueled both housing and credit bubbles. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load. As part of the housing and credit booms, the amount of financial agreements called mortgage-backed securities (MBS), which derive their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U.S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses are estimated in the trillions of U.S. dollars globally.

While the housing and credit bubbles built, a series of factors caused the financial system to become increasingly fragile. Policymakers did not recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system. Some experts believe these institutions had become as important as commercial (depository) banks in providing credit to the U.S. economy, but they were not subject to the same regulations. These institutions as well as certain regulated banks had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses. These losses impacted the ability of financial institutions to lend, slowing economic activity. Concerns regarding the stability of key financial institutions drove central banks to take action to provide funds to encourage lending and to restore faith in the commercial paper markets, which are integral to funding business operations. Governments also bailed out key financial institutions, assuming significant additional financial commitments.

Cause Of The Financial Crisis

Various causes have been proposed for the crisis, with experts placing different weights upon particular issues. The proximate cause of the crisis was the turn of the housing cycle in the United States and the associated rise in delinquencies on subprime mortgages, which imposed substantial losses on many financial institutions and shook investor confidence in credit markets. However, although the subprime debacle triggered the crisis, the developments in the U.S. mortgage market were only one aspect of a much larger and more encompassing credit boom whose impact transcended the mortgage market to affect many other forms of credit. Aspects of this broader credit boom included widespread declines in underwriting standards, breakdowns in lending oversight by investors and rating agencies, increased reliance on complex and opaque credit instruments that proved fragile under stress, and unusually low compensation for risk-taking. The abrupt end of the credit boom has had widespread financial and economic ramifications. Financial institutions have seen their capital depleted by losses and write downs and their balance sheets clogged by complex credit products and other illiquid assets of uncertain value. Rising credit risks and intense risk aversion have pushed credit spreads to unprecedented levels, and markets for securitized assets, except for mortgage securities with government guarantees, have shut down. Heightened systemic risks, falling asset values, and tightening credit have in turn taken a heavy toll on business and consumer confidence and precipitated a sharp slowing in global economic activity. The damage, in terms of lost output, lost jobs, and lost wealth, is already substantial.

Beginning with failures caused by misapplication of risk controls for bad debts, collateralization of debt insurance and fraud, large financial institutions in the United States and Europe faced a credit crisis and a slowdown in economic activity. The crisis rapidly developed and spread into a global economic shock, resulting in a number of European bank failures, declines in various stock indexes, and large reductions in the market value of equities and commodities. Moreover, the de-leveraging of financial institutions further accelerated the liquidity crisis and caused a decrease in international trade. World political leaders, national ministers of finance and central bank directors coordinated their efforts to reduce fears, but the crisis continued. At the end of October a currency crisis developed, with investors transferring vast capital resources into stronger currencies such as the yen, the dollar and the Swiss franc, leading many emergent economies to seek aid from the International Monetary Fund.

Ultimately, looking for a cause of the current financial crisis, it is critical to remember that organizations failed to do a number of things:

Truly adopt an enterprise risk management culture.
Embrace and demonstrate appropriate enterprise risk management behaviors, or attributes.
Develop and reward internal risk management competencies, and
Use enterprise risk management to inform management decision-making in both taking and avoiding risks.
Enterprise risk management to be effective must fundamentally change the way organizations think about risk. When enterprise risk management becomes part of the DNA of a company's culture, the warning signs of a market gone astray cannot go unseen so easily. When every employee is part of a larger risk management process, companies can be much more resilient in the face of risks. It is an important lesson to learn now, before the cycle renews itself and businesses find themselves facing the next cycle of business failures, lapses in risk management and shortcomings in governance. The cycle does not have to repeat itself as it always has in the past. Enterprise risk management is an important key to preventing it. Enterprise risk management, when designed and implemented comprehensively and systemically, can change future outcomes. When it is practiced fully, enterprise risk management does not just help protect businesses from setbacks, it enables better overall business performance.

Effects Of The Financial Crisis

Economic Effects And Projections

Global Aspects

A number of commentators have suggested that if the liquidity crisis continues, there could be an extended recession or worse. The continuing development of the crisis prompted fears of a global economic collapse. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates.

Regulatory Proposals And Long-Term Solutions

A variety of regulatory changes have been proposed by economists, politicians, journalists, and business leaders to minimize the impact of the current crisis and prevent recurrence. However, as of April 2009, many of the proposed solutions have not yet been implemented. These include:

Ben Bernanke: Establish resolution procedures for closing troubled financial institutions in the shadow banking system, such as investment banks and hedge funds.
Joseph Stiglitz: Restrict the leverage that financial institutions can assume. Require executive compensation to be more related to long-term performance. Re-instate the separation of commercial (depository) and investment banking established by the Glass-Steagall Act in 1933 and repealed in 1999 by the Gramm-Leach-Bliley Act.
Simon Johnson: Break-up institutions that are "too big to fail" to limit systemic risk.
Paul Krugman: Regulate institutions that "act like banks " similarly to banks.
Alan Greenspan: Banks should have a stronger capital cushion, with graduated regulatory capital requirements (i.e., capital ratios that increase with bank size), to "discourage them from becoming too big and to offset their competitive advantage."
Warren Buffett: Require minimum down payments for home mortgages of at least 10% and income verification.
Eric Dinallo: Ensure any financial institution has the necessary capital to support its financial commitments. Regulate credit derivatives and ensure they are traded on well-capitalized exchanges to limit counterparty risk.
Raghuram Rajan: Require financial institutions to maintain sufficient "contingent capital" (i.e., pay insurance premiums to the government during boom periods, in exchange for payments during a downturn.)
A. Michael Spence and Gordon Brown: Establish an early-warning system to help detect systemic risk.
Niall Ferguson and Jeffrey Sachs: Impose haircuts on bondholders and counterparties prior to using taxpayer money in bailouts.
Nouriel Roubini: Nationalize insolvent banks. Reduce mortgage balances to assist homeowners, giving the lender a share in any future home appreciation.
Timeline Of Events

Predecessors

Mar-2000 Dot-com bubble peak
Jan-2001 First Cut in Fed Funds rate for this cycle (from 6.5% to 6.00%)
Stock market downturn of 2002
Jun-2003 Lowest Fed Funds rate for this cycle (1%)
Late 2003 Lowest 3mo T-bill rate for this cycle (0.88%)
2003-2004 Prolonged period of low Fed Funds and positively sloped yield curve
Jun-2004 First increase in Fed Funds rate for this cycle (from 1% to 1.25%)
2003-2005 Period of maximum inflation of the United States housing bubble
2004-2006 Slow rise in Fed Funds rate with positively sloped but narrowing yield curve
Feb-2005 Greenspan calls long-term interest rate behavior a “conundrum”
Jun-2006 Fed Funds reach peak for this cycle of 5.25%
Oct-2006 Yield curve is flat
Events Of 2007

March, 2007 Yield curve maximum inversion for this cycle
August, 2007: Liquidity crisis emerges
September, 2007: Northern Rock seeks and receives a liquidity support facility from the Bank of England
October, 2007: Record high U.S. stock market October 9, 2007 Dow Jones Industrial Average (DJIA) 14,164
Events Of 2008

January, 2008: Stock Market Volatility
February, 2008: Nationalisation of Northern Rock
March, 2008: Collapse of Bear Stearns
June 27, 2008: Bear Market of 2008 declared
July 1, 2008: Bank of America buys Countrywide Financial
July, 2008: Oil prices peak at $147 per barrel as money flees housing and stock assets toward commodities
September, 2008: Emergency Economic Stabilization Act of 2008
September, 2008: Troubled Assets Relief Program
September, 2008: Bankruptcy of Lehman Brothers
September, 2008: Federal takeover of Fannie Mae and Freddie Mac
September, 2008: American International Group#Federal Reserve bailout
September, 2008: Merrill Lynch sold to Bank of America Corporation
September, 2008: Morgan Stanley and Goldman Sachs confirmed that they would become traditional bank holding companies
September, 2008: partial nationalization of Fortis holding
October, 2008: Large losses in financial markets world wide throughout September and October
October, 2008: Passage of EESA of 2008
October, 2008: Iceland's major banks nationalized
November, 2008: China creates a stimulus plan
November, 2008: Dow Jones Industrial Average (DJIA) touches recent low point of 7,507 points
December, 2008: The Australian Government injects 'economic stimulus package' to avoid the country going into recession, December, 2008
December, 2008: Madoff Ponzi scheme scandal erupts
December, 2008: Belgium government resigns as a result of Fortis nationalization
Events Of 2009

January 2009: Blue Monday Crash 2009
January 2009: U.S. President Barack Obama proposes federal spending bill approaching $1 trillion in value in an attempt to remedy financial crisis
January 2009: Lawmakers propose massive bailout of failing U.S. banks
January 2009: the U.S. House of Representatives passes the aforementioned spending bill.
January 2009: Government of Iceland collapses.
February 2009: Canada's Parliament passes an early budget with a $40 billion stimulus package.
February 2009: JPMorgan Chase and Citigroup formally announce a temporary moratorium on residential foreclosures. The moratoriums will remain in effect until March 6 for JPMorgan and March 12 for Citigroup.
February 2009: U.S. President Barack Obama signs the $787 billion American Recovery and Reinvestment Act of 2009 into law.
February 2009: The Australian Government seeks to enact another "economic stimulus package".
February 2009: 2009 Eastern European financial crisis arises.
February 2009: The Bank of Antigua is taken over by the Eastern Caribbean Central Bank after Sir Allen Stanford is accused by U.S. financial authorities of involvement in an $8bn (£5.6bn) investment fraud. Peru, Venezuela, and Ecuador, had earlier suspended operations at banks owned by the group.
February 23, 2009: The Dow Jones Industrial Average and the S&P 500 indexes stumbled to lows not seen since 1997.
February 27, 2009: The S&P index closes at a level not seen since December 1996, and also closes the two month period beginning January 1 with the worst two month opening to a year in its history with a loss in value of 18.62%
March 2, 2009: The S&P index finishes the first trading day of March with a drop of 4.7%, the worst opening to a March in NYSE history.
March 6, 2009: The UK Government takes a controlling interest in Lloyds Banking Group by insuring their debt.
March 8, 2009: United States bear market of 2007-2009 declared
March 18, 2009: The Federal Reserve announced that it will purchase $1.15 trillion in U.S. assets ($750 billion in mortgage backed securities, $300 billion in Treasuries, $100 billion in Agencies) in a bid to prop up liquidity and lending to spur economic growth. The markets initially rallied on the news, however concerns began to grow regarding long term devaluation of the U.S. dollar and subsequent inflation.
March 23, 2009: In the United States, the FDIC, the Federal Reserve, and the Treasury Department jointly announce the Public-Private Investment Program to leverage $75-$100 billion of TARP funds with private capital to purchase $500 billion of Legacy Assets (a.k.a. toxic assets).
June 3, 2009: The Australian Government announces that the Australian economy did not show negative growth for two consecutive quarters, and thus has not officially entered recession.
Literature Review

The financial crisis motivates the below literatures to express their views from different angles, the below section highlights the main points for each:

1. José De Gregorio: Inflation targeting and financial crises ; Governor of the Central Bank of Chile, Colombia, Bogota, 28 May 2009.

Financial stability must be preserved with an adequate regulatory system. Agencies must analyze the strength of institutions, while central banks must evaluate the system's overall stability. Regulators and central banks must closely cooperate and work in the effort of maintaining the integrity of the financial system.

Regulating specific institutions is not enough, because interconnections exist that could derive in a systemic crisis. The current crisis proves that the regulatory scope must encompass every agent with a systemic importance. So a proper macro-prudential regulatory system is needed.

A first set of instruments has to do with capital adequacy. However, this is not enough, and it is no trivial to judge the soundness of the financial system by its capital and leverage levels. Higher levels of capital will certainly have to be required in the future, particularly as banks gradually assume higher levels of risk.

Central banks must strengthen and perfect the models with which they carry out their stress tests. They should take into account the interconnections within the financial system and detect vulnerabilities opportunely.

It is important to allow securitization, but establishing incentives for both credit screening and monitoring of payments to remain at the banks and that the process of transferring credit risk away from individual institutions' balance sheets does not escape the authority's eye. The current crisis should not become a hindrance to financial development, but a sign of alert in favor of prudence and rigor when assessing the innovations.

2. George Provopoulos: Reflections on the economic and financial crisis; Athens, 18 May 2009.

The key priority among policy makers is to bring back economic growth and help bring about prosperity for everyone. The policy response should also be of a dual nature, one part of which involves a short-run response and the second part of which involves a medium-term response. In the short run, whatever is feasible should be done to support economic recovery. In the medium term, is the preparation to pursue a credible exit strategy from the extraordinary policy interventions while developing an effective framework for financial supervision. The short-term, response will help pave the way to recovery. The second, medium-term, response will help ensure that organizations do not experience a similar crisis in the future.

3. Rakesh Mohan: Global financial crisis - causes, impact, policy responses and lessons , London, 23 April 2009.

The ongoing global financial crisis can be largely attributed to extended periods of excessively loose monetary policy over the period 2002-04. Very low interest rates during this period encouraged an aggressive search for yield and a substantial compression of risk-premia globally. Abundant liquidity in the advanced economies generated by the loose monetary policy found its way in the form of large capital flows to the emerging market economies. All these factors boosted asset and commodity prices, including oil, across the spectrum providing a boost to consumption and investment. The ongoing deleveraging in the advanced economies and the plunging consumer and business confidence has led to recession in the major advanced economies.

4. Jean-Claude Trichet: The global dimension of the crisis:

Japan, Tokyo, 18 April 2009.

The current crisis has shown that there is a need for more rigorous regulation of the global financial system. Such regulation needs to meet two fundamental requirements. First, it needs to prevent the excessive risk taking that we have been observing in financial markets over the past years and that led to the creation of asset price bubbles and large imbalances in the global economy. At the same time, it needs to create an environment that is conducive to sustainable growth for economies in the long run.

The international community has swiftly reacted to the need for greater coordination of policies and regulation of international financial markets

National governments have in addition undertaken an unprecedented concerted fiscal expansion to stimulate demand and foster confidence in economies. Governments have also decided on a broad set of measures to support the banking sector and strengthen the stability of the international financial system. These measures include the injection of new capital, guarantees on bank debt and deposits, as well as large-scale schemes that aim at coping with the issue of impaired assets.

5. Ben S Bernanke: Four questions about the financial crisis

Atlanta, Georgia, 14 April 2009.

The current crisis has been one of the most difficult financial and economic episodes in modern history. There are tentative signs that the sharp decline in economic activity may be slowing. A leveling out of economic activity is the first step toward recovery.

6. Philipp Hildebrand: Developments in the current financial crisis, Berne, 2 April 2009.

The financial market turbulence, which began some 20 months ago, has grown into the largest and most complex crisis since the 1930s. The real world economy is now feeling the full force of this financial crisis; it's a very difficult period, although there are a few signs that the global economy could possibly be close to the cyclical trough. However, the route to recovery is unlikely to be straightforward, and the downside risks to growth remain considerable.

Lucas Papademos: How to deal with the global financial crisis and promote the economy's recovery and sustained growth, Brussels, 26 March 2009.
The severity and duration of the current economic and financial crisis is partly a consequence of the reduced confidence in the prospects of the economy and the soundness of the financial system. The recovery of the economy also hinges on the restoration of consumer and business confidence that can contribute to the revival of spending and investment, and the return to normality in financial markets and the banking system. The rebuilding of trust will depend on ability to appropriately combine the policy actions needed to address the immediate challenges with the necessary reforms for establishing an economic, financial and institutional environment that is conducive to sustainable long-term growth.

8. Jean-Claude Trichet: What lessons can be learned from the economic and financial crisis?; Paris, 17 March 2009.

The global economy was hit in mid-September 2008 by an unprecedented abrupt loss of confidence. It was perhaps the first time in economic history that a single negative event was able, within a few days, to have a simultaneous and negative effect on all private economic agents in every economy, industrialized and emerging.

Public authorities, executive branches, and central banks must do all they can to regain, preserve and foster confidence among households and corporations to pave the way for sustainable prosperity. This calls for actions to be measured.

Confidence of households and corporations today depends crucially on their trust in the capacity of authorities to preserve the soundness and sustainability of fiscal positions in the years to come. Confidence of economic agents today depends equally on their trust in the determination of central banks to preserve price stability.

It is essential to achieve this balance between the measured audacity of today's non-conventional decisions and the credible determination to ensure a path that is sustainable in the medium and long term. Exaggerated swings without perspective would delay the return of sustainable prosperity, because they would undermine confidence, which is the most precious ingredient in the present circumstances.

9. Lucas Papademos: Tackling the financial crisis - policies for stability and recovery ; London, 11 February 2009.

To presume better regulation, more effective supervision and longer-term stability-oriented macroeconomic policy would suffice to eliminate the cyclical features of the financial system and the build-up of financial imbalances in the future. Market participants have an important role to play - and self-interest - in addressing some of the revealed weakness in the financial system, and in strengthening market discipline. What policy-makers can do, and should aim at, is to ensure that the macroeconomic policies and the regulatory framework designated do not exacerbate cyclical fluctuations, and that, when financial imbalances and market excesses emerge and are identified, the appropriate tools to address them in an effective manner should be used.

10. Hervé Hannoun: Long-term sustainability versus short-term stimulus: is there a trade-off? , Kuala Lumpur, 7 February 2009.

There are two stylised types of policy response to the global crisis: stabilization and stimulation. A measured stabilisation policy accepts the fact that the adjustment is inescapable while it endeavours to mitigate the pain and promote an orderly adjustment. In contrast, stimulation policies, pushed to the extreme, seek a stimulus that would be large enough to, so to speak, eliminate the adjustment period - a goal that would obviously be illusory.

It is a legitimate goal of policy to mitigate the macroeconomic recession and slow the spin of the negative feedback loop. However, expansionary policies that fail to take the crisis of confidence sufficiently into account run the risk of becoming ineffective beyond the very short term. To restore confidence in a sustainable way, policy actions should be embedded in a credible longer-term perspective and pay due attention to their effects on the expectations of economic agents. The crucial actions are to develop consistent medium-term policy frameworks, plan sufficiently in advance for how current policies will be unwound when normal conditions return, and develop a consistent approach to macro financial stability. Together, these measures would ensure that short-term policy actions do not sow the seeds of tomorrow's boom and bust episodes.

11. Philipp Hildebrand: The global financial crisis - analysis and outlook, Zurich, 5 February 2009.

Only a careful investigation of the responsibilities is likely to point to ways in which financial system, and ultimately economy, can be made more resilient once this crisis has been overcome. Financial markets react to incentives, and these incentives were misplaced in the past. It is in power to start lobbying for clearly defined and risk-limiting conditions.

12. Jean-Claude Trichet: Remarks on the financial turmoil

Brussels, 8 December 2008.

Measures to address the challenges posed by the current conditions in the financial markets. In addition avoiding the reoccurrence of a similar crisis in the future. However, measures taken by public authorities can only go so far. The banking sector needs to also do its part by committing to reactivating the interbank market, resuming their intermediation role and implementing the necessary reforms aimed at strengthening the resilience of the financial system in the long term.

13. Jose Manuel Gonzalez-Paramo: The financial market crisis, uncertainty and policy responses , Madrid, 21 November 2008.

Uncertainty translated into a severe under-appreciation of the risks associated with certain classes of financial instruments and institutions. More recently, with the intensification and broadening of the market turmoil, uncertainty has further increased and developed into a pervasive phenomenon affecting a wide range of markets, assets and financial sectors.

Systemic uncertainty may potentially undermine the foundations of our financial systems, which are in turn essential for the orderly functioning of economies.

14. Christian Noyer: Some thoughts on the financial crisis

Tokyo, 18 November 2008.

Economic and financial forces are at play and recent events are the consequences of such forces. Policy makers, have a very critical role to play to try and ensure that such qualitative remain aligned with facts and reality.

15. Lars Nyberg: Challenges following the current crisis

Santiago, 6 November 2008.

The crisis will most likely redraw the global financial landscape in various ways. And even if the recent measures taken by governments and central banks have improved market conditions somewhat, it is far from certain that the crisis will be over any time soon. What will come out at the other end of the crisis is also still much too early to tell.

The financial industry and the responsible authorities have to make certain that the costs of the prevailing financial turbulence are kept as low as possible.

16. Christian Noyer: A review of the financial crisis

Paris, 7 October 2008 (updated 15 October 2008).

To address all the questions and challenges that this crisis has raised: these include the role of credit ratings agencies, the management of risk, market infrastructures, the scope of financial regulation and the question of remuneration.. Pay structures should not encourage short-termism or, as was the case, excessive risk taking.

17. Lorenzo Bini Smaghi: Some thoughts on the international financial crisis , Milan, 20 October 2008.

There are some time-honoured lines of action which relate to the prevention of crises, namely better regulation and supervision, in particular at the international level, and more effective crisis resolution mechanisms.

One new point for consideration that has emerged from this crisis relates equally to ethical, social and political aspects. This should be solved both by governments, so that decision-making mechanisms can be adopted which allow the abovementioned problems to be overcome in a crisis, and also by the financial sector itself, which must clearly draw some lessons from recent events.

In a market economy, maximizing profits and shareholders' interests are a priority for management. They permit the efficient allocation of resources within the economy. However, when a sector such as the financial sector is of systemic importance to the functioning of the economy and is prone to instability, the objective function must be broader. It is a problem of rules, incentives and individual responsibility.

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...Journal of Contemporary Eastern Asia ISSN 2383-9449 Fumitaka Furuoka, Beatrice Lim, Catherine Jikunan and Lo May Chiun (2012) Economics Crisis and Response: Case Study of Malaysia’s Responses to Asian Financial Crisis Journal of Contemporary Eastern Asia Vol. 11, No. 1: 43-56 Journal abbreviation: J. Contemp. East. Asia Stable URL: http://eastasia.yu.ac.kr/documents/Fumitaka_11_1.pdf www.JCEA-Online.net Open Access Publication Creative Commons License Deed Attribution-No Derivative Works 3.0 Journal of Contemporary Eastern Asia, Volume 11, No.1: 43-56 http://dx.doi.org/10.17477/jcea.2012.11.1.043 Economics Crisis and Response: Case Study of Malaysia’s Responses to Asian Financial Crisis Fumitaka Furuoka, Beatrice Lim, Catherine Jikunan and Lo May Chiun The paper chooses the “Asian Financial Crisis” as a case study to examine its impact on Malaysian economy and describes how Malaysian government responded to the crisis. It also focuses on the Asian financial crisis’ impact on the employment of banking sector in Malaysia. In the finance, insurance, real estate and business service sector, a number of 6,596 workers were retrenched. Banks were forced into mergers and acquisition as well as downsizing, trim lean, organizational changes and introduction of new technologies. Excess workers were offered a “voluntary separation scheme.” These retrenched workers became the urban poor facing high cost of living and no opportunity for jobs as there is no safety net provided. 1.......

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Financial Crisis

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Financial Crisis

...we often hear about the term financial crisis. Every day on the news we can hear about the financial crisis in some countries and how they are trying to prevent it or to get out of it. Especially about the financial crisis in Greece. So what exactly is financial crisis? There have been a lot of definition of what financial crisis is, but they all agree in one thing financial crisis appears when some institution or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crisis include stock market crashes and the bursting of other financial bubbles, currency crises and sovereign defaults. There a lot of types of financial crisis: banking crisis, speculative bubbles and crushes, wilder economic crisis and other crisis. But from all of them, today the most frequent financial crisis is the banking crisis. This happens when a lot of the depositors withdraw their deposits from the bank, causing the bank to bankrupt. This kind of crisis happened in 2007-2008,also known as the global financial crisis and 2008 financial crisis. This crisis is considered by many economists to be the worst financial crisis since the Great Depression. This crisis was called the worst because it was spreading really quickly all around the world. But what causes this kind of crisis to happen? There a lot......

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