Financial Crisis in the Great Recession

Introduction

The main purpose of this paper is to talk about the great recession of financial crisis. This paper discusses the different aspects like the credit crunch, shadow banking system, default on mortgage backed securities and Fed's rescue.

What happened in the financial system?

Timeline of the financial crisis

The timeline of great recession of financial crisis is from 2007-2008.

What caused the financial crisis?

The fall in property prices in United States led to a drop in prices for mortgage securities. Mortgage crisis has turned into Finance. The financial crisis, in turn, turned into a real economic crisis. Companies could not finance their activities and; therefore, reduced production and staff (or went bankrupt) (Augar, 67). This argument is the transfer of financial crisis historical sector in financial theory is based on the multiplier, one of the founders which was Ben Bernanke, current chairman of the Federal Reserve System (FRS) the USA.

Data evidence and its implication

Talk about what the Great Recession (now known as the crisis 2007-2009.) will lead to new ideas in macroeconomics, beginning to the first results. In particular (As in the case of the Great Depression), it is about analyzing the causes and mechanism of the crisis.

Credit Crunch

What is credit crunch and how to detect it?

The first signs of an impending credit crunch occurred as at the beginning of 2007. In the recent past, the phrase "credit crunch" characterized the reduction of credit supply in response to a decrease in the value of bank assets and the establishment of more stringent controls of capital requirements of banks (Parekh, 749). However, the extent and consequences of this crisis is much different from those crises that occurred in the past. According to differing estimates, the losses and losses from the current crisis may reach 1-1.6 trillion U.S. dollars.

Does credit ...