The Recent and Current Global Financial Crisis Essay - 1

The Recent and Current global Financial Crisis - Essay ExampleThis view has recently been confirmed by an IMF report (2011), that financial crises unremarkably follow credit or asset price bubbles (IMF, p. 6). Moshirian (2010) has found that the inability of national regulatory bodies to react adequately to a global market that has become increasingly interdependent has left these bodies unable to throw regulatory arbitrage and the international movement of toxic assets (p. 504). In a way of confirming these kick the bucket two perspectives Longstaff (2008) has found that lower movements in the ABX Index of credit-default swaps did cause financial contagion in separate financial markets. This report will show how in the US, deregulation did serve to encourage market liquid that could have advantaged banks and homeowners. The report will explain how the lack of appropriate regulation in the financial markets guide to both a accredited estate bubble and the global financial cr isis that reached the UK and world markets.Since the Great Depression, the American government has initiated programs that encouraged homeownership for the average citizen while at the same time promoting and ensuring savings, as assets in banking institutions, that could be used to pay for mortgages. Following World War II there occurred several rounds of deregulation polity expressed through the passage of US federal acts that eventually, though not intentionally, allowed banks to collateralize the assets and to use them, as investment banks, to participate directly in the secondary financial markets. Deregulation was originally intended to pay supply with more liquidity of resources in order to meet an increasing demand in the real estate market.