Money and banking Essay Example | Topics and Well Written Essays - 750 words

M aney and brinking - Essay ExampleMany securities that were attached to the US berth prices fell drastically as well which caused problems in pecuniary institutions globosely. The initial reason why throng started buying as government encouraged ownership of homes and gave people better and easier access to loans and they over cute the bundled mortgages because they perceived that the prices of property would continue to rise. Trade practices on the open market were conducted that seemed underhand and questionable and in that location was a lack of capital in insurance companies and banks. As a result, bank solvency on the global market fell as well and securities held by foreign banks excessively suffered. A credit alter policy and a decrease in imports was noticed. Governments tried to boost the economy by injecting money in the economy and bailout packages. The US managed to get out by 2009 however places like UK due to their strict measures of increase taxes actually sl id further into this recession. The crisis could also have occurred due to the presence of a wide base of financial products that were risky to acquire and hold. Also there were interest rate conflicts, and lack of regulators in credit pass judgment agencies. A failure to retrace the ownership or provenance or properties and stocks etc. was also one of the reasons the recession occurred and then was so hard to get out of. Some believe that the recession was a phenomenon that arose when the Maastricht Treaty was signed. The debt of the public was agreed about less than equal to 3% of the GDP but it didnt hold. The euro was to be doomed as soon as it got started or stock-still before because Greece and Italy helped the euro classify as the currency for the euro zone. The decision making at that point were the worst. France has been under debt since 2008 and the situation has worsened over the long time and one of their banks along with their criminal reputation is also under massive debt issues and still asked to fund coterminous countries however it cannot help the bankrupt countries since it is in a fix of its own. Germany fell under a connatural situation. Sovereign banks are wrongly being separated from bank debt when the government clearly controls everything a bank does and dictates to them what is to be done. The euro zone is at s homecoming. Credit default swaps also rose in all regions and in 2011 were being traded at 180 when they were being traded at 80 in 2008. In Brazil as well they went up to 152 from 35, and this was because of the crisis that started in Europe. UK as well was cutting loans to its business by 30%. (Gupta, 2009) Banks were also pooling in their loans and giving risky loans to others. Securitization came about in the 20th century as well because loans would take ages being stuck in banks. Rating agencies were paid for giving replete(p) rating so people bought products even though they were not good. Initiated in Wall Street ban ks and other financial institutions were adopting measures that they were not necessarily good at. Banks were borrowing more and more money to give out loans and bad loans were incurred. Lehman brothers got into the mortgage market, buying mortgages so that they could sell them after securitizing them. Banks also started running out of people who would take loans