What Caused The Global Financial Crisis?
Trying to identify the factors that caused the global financial crisis is a debate which has been raging over the last few years, with some people pointing to one area, and others looking at other culprits for what has been one of the most devastating and groundbreaking events of the economy in recent memory.
The global financial crisis might make it sound like something that hasn't affected regular people, but this certainly isn't the case, as regular workers in some of the massive companies that have been bankrupted have become unemployed, and cities and towns across the United States have been decimated if a major employer in the area has gone out of business.
There are a number of factors which are generally pointed to when looking at the reasons that triggered the global financial crisis, and this is documented extremely well in the financialcrisis.biz website, which is a very good resource for those looking for information on all aspects of the crisis.
One of the main culprits that is often pointed to as one of the main triggers of the global financial crisis are the mortgage derivative products, where risky mortgages were packaged with more traditionally secure mortgages and sold to corporate investors and other banks as secure investment products. This packaging of mortgages is generally accepted to have masked the real risks that were linked with such a product, which gradually grew as lending criteria were loosened in the first five or six years of the twenty first century.
These products were created by one group of people who have been vilified more than any other industry over recent years, which are the bankers. The investigations that have been carried out by politicians and government in the aftermath are still proceeding, but there is no doubt that some of the blame for the crisis has to lie with them, and the way in which they packaged and sold the mortgage derivative products.
Another area which has been blamed for the crisis is widespread selling of mortgages across the United States and the world to people who weren't really able to afford the repayments for the borrowing. As more people started to default on their mortgages, property prices slumped, causing even bigger problems as more people found the level of borrowing was above the value of their home, and more people started to default on their mortgages.
There have also been many people who have blamed government regulation of the financial industry as one of the main reasons for the global financial crisis, and it is certainly the case that if there was a more proactive regulation of the financial industry, and especially how the mortgages were verified, then it may have prevented the crisis from becoming as wide ranging as it was.
Countries and governments are still trying to recover from the repercussions of the crisis, and the levels of national debt has been increasing both in the US and worldwide, but by dealing with this debt, and with better regulation, then industries will start to recover from the devastating effects of the defining event of this century so far.