thesis introduction

INTRODUCTION

Financial literacy is the possession of knowledge and understanding financial matters. Financial literacy often entails the knowledge of properly making decisions pertaining to certain personal finance areas like real estate, insurance, investing and saving. It also involves intimate knowledge of financial concepts like financial planning and the value of money.
(www.investopedia.com/definiton-of-finacial-literacy)
The United States of America is the biggest economy in the world. It has created dollar as a planetary currency this position gives it leverage to stir other economies in the world. In late nineties, the U.S. banks and financial instruments of the government became depositories of the surpluses accrued from petroleum producing countries.
(www.oikumene.org)
Although United States led the way, the emerge of the shadow banking system, the proliferation of Collateralized Debt Obligations (CDOs) and prime lending affected those economies that were directly linked to the US. The UK and many countries in Europe were affected because of the complex network of financial institutions that were transacting with toxic asset. As pointed out by Harisson, the management of debts got out of control and affected others. The regulatory authorities lost track of this debt mountain, because it was quickly repackaged in new financial instruments and sold to institution. Mortgages were wrapped into collateralized debt obligations (CDOs) and sold to others to spread the risk. Reckless lenders mixed poor quality loans (to borrowers who purchased houses built on sand in Florida,for example) with secure mortgages on properties in high value locations in New England. They then off-loaded the packages and pocketed the proceeds. Instead of a clean-out of the debt, the excesses were conceald in opaque accounting practices and laundered through the world’s financial markets The crisis has produced or exacerbated serious, wide-ranging yet differentiated