StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

2008-2009 US Economic Crisis and Its Rescue - Research Paper Example

Cite this document
Summary
The paper "2008-2009 US Economic Crisis and Its Rescue" focuses on the critical analysis of the several causes of the tremendously obnoxious recession encountered by the world, especially the USA in 2008-2009 and subsequent governments’ endeavor to cope with the same…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.2% of users find it useful
2008-2009 US Economic Crisis and Its Rescue
Read Text Preview

Extract of sample "2008-2009 US Economic Crisis and Its Rescue"

U. S economic crisis of 2008-2009 and its rescue The paper focuses on several causes of the tremendously obnoxious recession encountered bythe world, especially the United States of America (USA) in 2008-2009 and subsequent governments’ endeavor to cope up with the same. Initially, the factors that led to the global economic crisis are mentioned. Then the focus is shifted towards the factors affecting the US economy. The next segment deals with the steps taken by the US administration. Special focus has been provided on the role of President, Congress, Secretary of the State, and Treasury Secretary to curb down the evil effects of the recession from the US economy. The last part undertakes the critical evaluation of the policies undertaken and suggests optimal policy ramifications. The launch pad for the flight of the worst recession in the past six decades around the globe was unleashed in the mid of 2007 and continued over almost two years. The entire global economy remained shivering owing to its evil affects. Moreover this recession jeopardized the roots of the formidable US economy. The dark sides began to erupt with global job crisis and crisis-induced credit crunch that lead to trade collapse. Again high rate of unemployment in the OECD countries devastated millions of the civilians of the poorer countries sweeping them deep down into acute poverty (Verick & Islam, 2010, p.v ). The absolute damage to the financial sector was prolific. The entire globe moved into a shock as the stock markets crashed and the giant financial institutions collapsed or went bankrupted. Even the governments in the wealthiest nations came up with rescue packages to save their financial systems from further worsening. It was soon felt that this global financial meltdown would affect the livelihoods of almost everyone around the world in an increasingly inter-connected world (Shah, 2010). The paper will highlight on various factors of global economic crisis of 2008-2009 with major focus on the US economy and how far the key actors of the American government are successful in curbing the evil effects of the crisis on the US economy. Primal causes and the US economy The world economic crisis of 2008- 2009 can be attributed mainly to the combination of world macroeconomic imbalances and serious weaknesses in the U.S. and the western financial structure. The US exports in 1975, exceeded the foreign imports by an amount of $12, 400 million. But that was the last trade surplus the United States saw in the 20th century. By 1987, the American trade deficit  swelled to $153,300 million. The deficit diminished a little bit in the next year but it reached to an optimum level in 1990 (History of the U.S. Trade Deficit, n.d.). Since the mid 1990s the global economic growth involved major macroeconomic imbalances between two different groups of countries including the then United States suffering from negative trade balances along with Great Britain on one hand and other Asian countries like China, South Korea, and Taiwan, which were referred as the trade surplus countries. The US saved less share of its GDP as compared to the trade surplus countries and focused more on the consumption. At the expense of their domestic demand, the trade surplus economies emphasized largely on the production of exportable and there was huge inflow of foreign exchange especially in terms of US dollars. The imbalances between the US and these countries became much more exposed. The US ran into huge negative trade balances as compared with the huge positive trade balances of these trade surplus countries. The surplus countries in turn, lent the US a large share of their accumulated foreign exchange reserves by majorly buying US treasury Bills. A reverse capital flow in the US market helped US to finance its trade deficits and at the same time checked the currencies of the trade surplus countries from rising in value against the US dollar. The inflow of capital lowered the interest rates and enhanced business investment boosting consumption and hence imports. The inflow of capital also exaggerated the financing on the investment in equities and properties. As a result an asset price boom generated with increased consumer wealth. This increase in wealth further stimulated the US consumption spending and imports and it was found that huge expenditure in the imports again surcharged the trade deficit of the US economy (Shane et al, n.d. p. 5). This can be understood from a simple comparative static analysis from the GDP identity. The GDP identity is as follows Where, Y= Aggregate income, GDP C= Consumption Expenditure I=Investment Expenditure G= Government Expenditure X= Expenditure on Exports M= Expenditure on Imports (X-M) = Trade Balance Now if (X-M)>0 then there is a trade surplus and if (X-M) Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“American Government Research Paper Example | Topics and Well Written Essays - 2000 words”, n.d.)
American Government Research Paper Example | Topics and Well Written Essays - 2000 words. Retrieved from https://studentshare.org/miscellaneous/1597571-american-government
(American Government Research Paper Example | Topics and Well Written Essays - 2000 Words)
American Government Research Paper Example | Topics and Well Written Essays - 2000 Words. https://studentshare.org/miscellaneous/1597571-american-government.
“American Government Research Paper Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/miscellaneous/1597571-american-government.
  • Cited: 0 times

CHECK THESE SAMPLES OF 2008-2009 US Economic Crisis and Its Rescue

Credit Crunch between 2007 - 2009

The paper 'Credit Crunch between 2007 - 2009' aims to illustrate the economic impact on the US that has taken place due to the credit crunch, economic crisis and to reassess the measures that have been taken by the authorities to address the crucial issues that have generated those events.... The financial crisis of 2007 initiated in the subprime mortgage industry in the United States.... It is also vital to recognize the global financial crisis that took place in the year 2007 and thus generate standards such as short-term and long-term crisis management standards so that a flexible financial system can be generated (Adrian & Shin, 2010)....
11 Pages (2750 words) Essay

2008-2009 Economic Crisis and the Policies Implemented

2008-2009 economic crisis.... Causes of the 2008-2009 economic crisis There were numerous revealing factors that should have set off alarm bells warning of an upcoming economic recession.... In 2007, a worldwide economic predicament spread its gloom on the financial outcomes of several nations (Simon, 2001).... its source that originated from the sub-prime segment of the United State real estate field as an isolated turmoil matured into a complete recession in 2007....
6 Pages (1500 words) Research Paper

Economic Crisis of 2008-2009

But the world economy was shattered with the launch of the economic crisis and the crisis shook down the roots of the formidable US economy (Verick & Islam, 2010, p.... The juncture before the crisis was infested with widening global imbalances but owing to the virtue of the world's largest capital markets and its stable financial regulation and political stability, they saw the global imbalances with sustainability angle.... The paper "economic crisis of 2008-2009 " focuses on the root causes of the loathsome economic crisis encountered by the world, especially the USA in 2008-2009 along with the rigorous steps employed by the US government to uplift the economy's condition from the devastating financial boogie trap....
8 Pages (2000 words) Research Paper

Whether Global Financial Crisis Was Caused by a Failure of Risk Management

According to the findings of the paper "Whether Global Financial crisis Was Caused by a Failure of Risk Management", it can be said that Bear Stearns an upper-tier US investment bank was only rescued from the crises by the Federal Reserve Bank.... Major Banks in the United States and Europe have recently suffered significant losses as a result of the recent credit crisis.... he first part of the paper provides an overview of the current financial crisis stressing what caused the crisis....
15 Pages (3750 words) Research Paper

The Economic Development of China

The paper states that although China has lost one-fifth of its agricultural land due to environmental degradation and economic development since 1957, still the government has taken the initiative to rectify these damages through reforestation and other methods.... The author of the paper will evaluate and present the economic development of China as one of the oldest civilizations in human history.... According to many economists, financial reforms have long term effect on economic development in China affecting markets and the financial intermediaries....
18 Pages (4500 words) Coursework

Financial Crisis in the UK

The term 'financial crisis' is applied broadly to a variety of situations in which financial institutions lose their value.... The paper "Financial crisis in the UK" will provide a clear explanation of the key events in the financial crisis as it has affected the UK beginning from the start of 2007.... The financial crisis is an economic situation where there is a widespread systematic loss of monetary wealth.... The wake of the global financial crisis saw titans of the financial markets fall on their own weight....
8 Pages (2000 words) Research Paper

2008-2009 Economic Crisis

The paper "2008-2009 economic crisis" will research on the causes of the 2008-2009 economic predicament and the policies executed by various key people liable for saving the U.... n 2007, a worldwide economic predicament spread its gloom on the financial outcomes of several nations (Simon, 2001).... its source that originated from the sub-prime segment of the United State real estate field as an isolated turmoil matured into a complete recession in 2007....
8 Pages (2000 words) Essay

Analysis of Tanzanias Economy - The Effects of the Global Financial Crisis in 2007-2009

The paper 'Analysis of Tanzania's Economy - The Effects of the Global Financial crisis in 2007-2009' is a thrilling example of a macro & microeconomics report.... The paper 'Analysis of Tanzania's Economy - The Effects of the Global Financial crisis in 2007-2009' is a thrilling example of a macro & microeconomics report.... The paper 'Analysis of Tanzania's Economy - The Effects of the Global Financial crisis in 2007-2009' is a thrilling example of a macro & microeconomics report....
13 Pages (3250 words)
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us