MARKET MELTDOWN

The 2008 Market Meltdown



The 2008 Market Meltdown

Introduction

The global financial and economic crisis is the collapse of the U.S. residential housing market, which lead to a critical condition for not only United States but entire globe. Despite trillions of dollars in public debt utilized as a backstop for the mortgage industry and gimmicks like tax credits for new home purchasers, the stream of date shows that the overarching trend in the United States is continuing home price deflation, as a rising proportion of outstanding mortgages are under water, in addition to this, the American mortgages were under water that means balance of mortgage exceeds market value of home.

The 2007 recession posed a new set of challenges for the conduct of monetary, fiscal and ethical policies. Both the U.S. Treasury and the Fed were called on to deal with a banking crisis that was much larger than the S&L crisis but not as severe as during the depression. The apartment bazaar in the United States suffered as humans who took out home loans apparent they could not pay them and their anguish up getting endless foreclosures. Homeowners were abrogating in their mortgages and anguish up accepting to absence in their loans, causing problems for the banks that were affected to yield the backdrop aback at beneath of a amount than what they originally awash them for. By the end of 2008, the U.S. mortgage market had $14.6 trillion outstanding of which $7.6 trillion was mortgage-backed securities, including $5 trillion held or guaranteed by Fannie May and Freddie Mac, and $2.6 trillion in held by private entities. An additional $5 trillion was held as individual mortgages by commercial banks, thrifts and life insurance companies.

The international financial crisis is not a purely economic problem; it has its origin in the lack of ethics of senior officials at all costs to make big profits. They dragged the world into a spiral of unemployment and uncertainty. The financial crisis has shown major flaws in the neoclassical assumptions when considering their proposals, effective means of macroeconomic stability, as did so for two decades and not without social costs. Beyond the crisis is that ethics, honesty and honor for these gentlemen mean obstacles, litter or noise that are easily hidden under the carpet, where transparency and moments ago had been buried.

Discussion

The 2008 financial meltdown is a crisis of confidence, since banks do not trust each other, and do not lend money among them. The financial system crisis has led to the crisis in the real economy. The market economy was exploited and manipulated selfishly. It has not failed capitalist system. It Failed due to the absence of adequate regulatory mechanisms of market failures. Some powerful economic actors, grossly unethical or immoral, they have violated their own benefit, market rules, abusing the economic and social freedom.

The causes of the recent financial crisis and global economic recession that followed have become clearer, with the passage of time. One of these causes, often pointed, is an ethical one: the ...