FINANCIAL CRISIS
INTRODUCTION
In the resent few years no one expected the current financial crisis will happen as occurred .Increasing demand on banking productions such as mortgages, currency exchange and investment in financial market prompted banks to offer several services to increase their profits by encourage people to join this marketing with poor regulation and large volume of risk by loaned them a high quantity of money. People around the world have been becoming more interested about business news which attracted people to pay attention who they growth their wealth or to get own house rather than rent a house. according to the( Wikipedia for the 2008-2009 crisis)" The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value". The question is what are reasons for the present recession crisis? And how we can came up of this crisis? Therefore, this essay will explain some reasons of current financial crisis and give a suggestions to solve this problem.
What are the reasons of the current financial crisis?
To explain some of the underlying reasons for the causes of the present recession crisis. The essay is based on predominantly two schools of thought carried and conveyed by two respective scholars.
Firstly, According to the( kabalistic2009) views, the ego of narrow personal interest for pursuit of wealth duo to internal conflict .Knock on effect by infectious collapse when some element happen in financial institutions infect others which we need to fortify our understanding of future to prevent repercussions of inaccurate predictions for make balance and harmony between all element means of deal with nature systems not with artificial systems.
Capitalism gave every one right to attain the wealth by any possible way with out impose enough regulation to protect macroeconomic from individual greed. Weaknesses in the law and financial regulation in capitalist countries and the lack of control on financial transactions stimulated the workers of financial institutions and individuals to focus on the increasing of their profit with out considerable the risk that may result from these measures .
Secondly, according to (Siejel at Knowledge Wharton in 2009), U.S stock market lose more than third of its value. The fatal flaw when the government allow banks to creating bundling for supply more mortgages and government encourage people who in low and middle income to buying homes which hence increased home price rabidly .Intervene bailing out Lehman Brothers by government cause crisis of confidence .The massive failure by traders and CEO about homes prices would go in just one direction.
Inaccurate analysis of the general trend of the market by traders and business managers, and competition to achieve the highest profitability ratios ignoring the fact that a bounce is the opposite may occur at any time, most of them pumping their savings to catch the largest possible proportion of the profits because of the continuing rise in the price of real estate and financial market, unjustified with low distributions and returns on these investment.
Solutions:
According to (Jakabovies:25/09/2008) has proposal for government to buy mortgages from the homeowners which can not be able to pay their payments to local banks that will lead to a good result by creating new money in home market. People and bank in this solution will be able to pay their payment for creditors which allow them to start again land money. The economy will increase and government can sell these houses again in new markets in Wall Street.
Also (Jakabovies: 25/09/2008) suggestion for government to impose new law and regulations the homeowners will going to pay their mortgages.
This proposal will work just in short time but not forever because of, when the banks start to make profit they will not commitment in this role any more. They try to avoid encumber to achieve their target of profit. New generations do not new about previous financial crisis as existing just like some thing from history they should new about it not they must learn from it to prevent it happen in other time. The crisis will occur in next time by the economic cycle and home price start to increase and demand for mortgages by young workers will rising and banks creating bound to exploiting this opportunities to make bagger of profitable with ignoring all crisis which happen on the past.
(Siegel : January 21/2009) offering to government to set up new banks to be able land money to new consumer and investors rather than give money to old banks which they lose confidence from people, who want to save their money or to invest in low risk investment. Also he support government to reduce interest rate to be near zero to avoid any demand dose not have enough security to make sure they will be able to pay money back.
Conclusion
To sum up all these reasons and solutions to solve this problem we have study this crisis from the roots not from the top and treat it to lead us be able to prevent next crisis to happen with out take painkillers as (Kabalistic) views .
Bibliography
What Really Lies Behind the Financial Crisis?: Knowledge@Wharton
(http://knowledge.wharton.upenn.edu/article.cfm?articleid=2148_02/12/2009)
http://www.kabbalah.info/engkab/kabbalah-worldwide/ynetnews#a-kabbalistic-interpretation-of-the-economic-crisis_02/12/09
http://en.wikipedia.org/wiki/Financial_crisis
Real Solutions to the Financial Crisis
Andrew Jakabovics September 25, 2008
http://www.americanprogress.org/issues/2008/09/real_solutions.html_02/12/09
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