Financial Crisis In The Year 2008 Essay Example | Topics and Well Written Essays - 1500 words

Financial Crisis In The Year 2008 - Essay Example In the mid-1990s the US embraced financial globalization as the touchstone for the grand strategy in the post-cold war period. In those periods it was common to talk about the decline of the US economy. However, the unexpected collapse of the Soviet Union and the stool of the Japan as an economic superpower brought the American economy to the center stage in the world order of business. The financial crisis of the year 2008 had multiple reasons behind its occurrence. The most important are perhaps the financers themselves. The financers claimed that they had found a way to banish the risks although, in reality, they had actually lost the track of the same. The central bankers and the regulators tolerated and let these things continue under their very noses for years. The macroeconomic environment too played an important role in the build-up to the crisis. The great moderation which was characterized by years of low inflation and stable rate of growth had fuelled risk-taking desires i n individuals. People became complacent and this increased their risk-taking ability and desires. The glut in savings in the Asia turned interested rates down. Even European banks which greedily borrowed from the American banks before the financial crisis used the funds so as to purchase dodgy securities. ConclusionThe above essay finds that there were several factors that led to the financial crisis in the year 2008. Some of the reasons behind the crisis were related to the economic policies pursued over the years.