The financial crisis that occurred in 2008 affected all economies in the world leading to increased hyperinflation on a large scale. This lead to the loss of homes, millions of jobs and a loss of up to twenty trillion dollars in the global economy making it the next largest financial crisis since the great depression(Rudd, 2009). There were unexpected consequences in that period. Large financial institutions that were thought to be safe from any such crisis were vulnerable to the pointy that they collapsed and others being bailed out by the $1.4 trillion rescue package signed by George Bush but it still wasn’t enough to shield them from the crisis (Ferguson &Heffes,2010).
The documentary “the inside job” was an eye opener on future financial proceedings to my career, I felt pity for the victims since they lost their jobs and homes by being vulnerable to the greed of scrupulous executives (Rudd, 2009). The most annoying and surprising thing is that many CEOs and key decision makers who were responsible for the crisis ended up profiting or escaping any prosecution leaving the victims helpless, that was not fair at all. A good example is Joseph Cassano; head of the AIG financial product division did not face the consequences of losing $11 billion but rather kept as a consultant with lucrative salaries and allowances (Shah, 2009).
The question of who is to blame for the financial crisis is simple but way deeper in the early 80s; I blame the government as the primary cause of this crisis. The deregulation of economic co-operations like banks and insurance companies gave them a power play in the financial market where they could look after their interest in the most lucrative way without considering any consequences (Keen,2009). The Reagan administration made it worse since banks were given a go ahead in making risky investment with public saving deposits which made a loss of tax payer’s money with over $100 billion.
These financial institutions merged in larger firms where they influenced the markets. They considered them key players, and they already had politicians in their pockets manipulating the government to turn a blind eye. The issuing of the sublime mortgages was a farfetched risky investment that the government overlooked. Anyone was qualified for a mortgage in the eyes of the lender and bankers, disregarding the strict qualifications not enforced by the government which considered these institutions in good administrators of the financial markets but that was not the case (Rudd, 2009). As the saying goes “history likes to repeat itself,” regardless of the 2008 financial crisis, the government still hasn’t learned its lesson. The economy in America is weaker than the recession; there’s increased the unemployment rate, an increase in inflation. Many industries have relocated to foreign countries where the market environment is conducive than the country which has hostile reforms. The gap between the rich and the poor has increased since the Obama administration did not change the economic reforms as initially promised; this means that the country is using the fundamental reforms that were in place when the financial crisis occurred. The debt crisis in America is far more disturbing in that it could lead to a hyperinflation causing another severe crisis shortly (Ferguson &Heffes, 2010).
This global crisis has not received Justice, its worse when the culprits are still walking around and consulting in the country’s economic matters. When I look back at the previous crisis, the people received justice. In 1929 the head of the new York exchange landed in prison, the 1980s savings and loans scandal over a thousand people went to jail for it but in the 2008 crisis only one individual who went to prison for his part in the crisis, how about the others? That remains alarming. Policy makers have a simple but crucial task of learning from past mistakes (Keen,2009).The economic reforms that were to be made by the Obama administration should be transparent and straightforward enough for the public to understand and avoid any such incidences experienced. Creation of financial products should be scrutiny to avoid investments that would lead to a bubble causing another crisis (Shah, 2009).
The 2008 financial crisis caused by just the deregulation which leads to financial institutions having freedom of playing their games for their personal gains. The government turned a blind eye trusting them with the financial markets only to realize when it was too late. I recommend that powerful reform and policies to be introduced to the financial industry which will prevent another crisis (Rudd, 2009).
Ferguson, C.Heffes,A,$Marrs,D.(2010).Inside job.Culver City, Calif: Sony Pictures Home Entertainment
Rudd, K.(2009).The global financial crisis; Monthly, The feb2009 (2009):20
Keen, S(2009).The global financial crisis credit crunches and deleveraging. Journal of Australian Political EconomyP.22”
Shah, A.(2009)Global financial crisis.Global Issues 25.
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