Economics - Analysis

Economics - Analysis

Economics - Analysis

We observe very large and rapid declines in the policy rate (the very short-term rate) in late 2008 and early 2009. Considering the US, the UK, and Japan, did long-term rates fall as much around that time or less or more?

Answer # 1

Considering situation in era of 2008-2009, it relates to an era of global financial crisis and it led to the major downturn of the world economy during 3rd and 4th quarter of world economy which resulted into an unprecedented response on part of policymakers. This is an overview of previous crisis which led to different responses by policymakers:

The global economic crisis started from way back 2007. In the autumn of 2007, it was predicted its imminent attack. It was assumed that, for Russia it should open no later than 1.5-2 years because of not exhausted before the end of the internal resources of the market.

The global financial crisis is one of the biggest issues that concern humanity since last few years. This disaster has touched virtually every country. Reduced profits, loss of jobs, rising prices, delayed wages, stipends, pensions and unemployment. People are just in a panic. The word "crisis" sounds throughout the newspapers. The newspapers comprises of shocking notes that some businessman committed suicide because he could not feed his family. Unfortunately such cases are rare.

2008 financial crisis characterized by deterioration of the main economic indicators, in almost all countries of the world. The mortgage crisis in the United States appeared in 2006, which impact on the entire world countries. Then the reduction in the sale of real estate's (houses), along with this, issue has developed into a credit crisis in 2007.

Stock market crisis - only the first strong signal that the big crisis of the economy on the threshold. Its cause is not only the overproduction of commodities, but also a huge over-accumulation of capital. After the events of January 21-22, the stock markets have been increasingly subjected to sharp fluctuations in the "adjusted" rate securities downward. Exchange volatility, hour after hour will raise the curtain, revealing the state of the economy. It was soon discovered - to be announced - the massive problems in the marketing of products. Following this, the chain of crisis was transferred to the sphere of production. Then do not recognize it is not possible, so obviously he hit the majority of the population can afford.

The global economy has created a situation where market opportunities have been exhausted. Production is still possible to increase, this means corporations have enough but the profit is becoming more difficult. In 2007, we see a situation where, in many countries, especially in the U.S., the UK and the EU decreased income workers. However, when it became clear that people cannot even cover interest, the case of banks (not only Citigroup) went bad.

This shows that at that time of year 2008 and 2009, there has been an aggressive cut in world policy rates by Central ...