Global Economic Collapse 2008 And 2014: Reasons And Solutions

Introduction The Great Recession (also referred to as the Second Great Depression, Lesser Depression, the Long Recession, or the global recession of 2009) was a global economic decline in the late 2000s decade. The effects of this economic downturn are having a continued influence into 2014. The Great Recession affected the entire world economy, with greater detriment to some countries than others, but overall to a degree which made it the worst global recession since World War II. It was a major global recession characterized by various systemic imbalances, and was sparked by the outbreak of the U.S.subprime mortgage crisis and financial crisis of 2007–08. The economic side effects of the European sovereign debt crisis, austerity, high levels of household debt, trade imbalances, high unemployment, and limited prospects for global growth in 2014,continue to provide obstacles for many countries to achieve a full recovery from the recession

Vocabulary Austerity: Sternness or severity of manner or attitude. Obstacles: A thing that blocks one's way or prevents or hinders progress. Radically: Relating to or affecting the fundamental nature of something; far-reaching or thorough. Miserable: (of a person) wretchedly unhappy or uncomfortable.(Wretched refers to a condition of extreme affliction or distress) Escaping: Break free from confinement or control. Redundancies: The state of being not or no longer needed or useful.

Cause of the crises The global financial crisis (GFC) or global economic crisis is commonly believed to have begun in July 2007 with the credit crunch, when a loss of confidence by US investors in the value of sub-prime mortgages caused a liquidity crisis. This, in turn, resulted in the US Federal Bank injecting a large amount of capital into financial markets.

By September 2008, the crisis had worsened as stock markets around the globe crashed and became highly volatile. Consumer confidence hit rock bottom as everyone tightened their belts in fear of what could lie ahead.

Impact of financial crises Currency rates

Solution of financial crises As long as banks are able to create money, we will have financial crisis after financial crisis. Unless we change the system very radically right now, the next 20-30 years will be very miserable for everyone. The solution is remarkably simple – so simple that most economists overlook it. We need to: a) make it illegal (and impossible) for the banks to create money, and b) give the responsibility for creating money back to the state (through the Bank of England, under strict controls to prevent abuse) Doing this – and doing it soon – is the key to escaping from this recession without further tax hikes, further redundancies, further bankruptcies, and further unnecessary misery.

Conversation 1) Describe the topic in brief. 2) What are the main factors explaining financial crises? 3) How to prevent financial crises? 4) Conclude the topic Home Assignment. Give synonym: Obstacle 2) Give antonym: Prevent 3) Give meaning : a) Hike b) Redundancy c) Misery d) Rates 4) Make a sentence using below word: a) Bankrupt b) Capital c) Miserable

Reviewed By Reviewed On Comments / Changes Made Jinal 21.09.2015 N/A