“Global Financial Crisis 2007-2012
Report on
“Global Financial Crisis 2007-2012”
Introduction
Global Financial Crisis 2007--2012 also known as the Global Financial Crisis (GFC), is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. A ripple effect around the world is resulted due to the collapse of the US sub-prime mortgage market and the reversal of industrialized economies which further, affects the global financial system.
Within the short span of time, GDP growth falls, and the manufacturing sector has gone into a tailspin; the best-known Indian firms are making losses and cancelling planned investments; the share market has crashed; foreign acquisitions proved to be a burden on many corporate firms. The Indian economy has started facing a downfall from a historically developed domestic demand. Due to the increased inflows of foreign capital for its growth, it has proved to be systemically weak and in danger. In 1990-91, the flow of foreign capital dried up. In order to get fresh loans it was forced to undergo IMF-directed ‘structural adjustment’. A flood of foreign speculative capital entered India through various routes, with net capital inflows rising to a peak of $108 billion in 2007-08. These inflows resulted in a steep rise in bank lending to middle and upper class consumers for houses and automobiles. The crisis resulted from a combination of complex factors, including easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real-estate bubbles that have since burst; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.
“Global Financial Crisis 2007-2012”
Introduction
Global Financial Crisis 2007--2012 also known as the Global Financial Crisis (GFC), is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. A ripple effect around the world is resulted due to the collapse of the US sub-prime mortgage market and the reversal of industrialized economies which further, affects the global financial system.
Within the short span of time, GDP growth falls, and the manufacturing sector has gone into a tailspin; the best-known Indian firms are making losses and cancelling planned investments; the share market has crashed; foreign acquisitions proved to be a burden on many corporate firms. The Indian economy has started facing a downfall from a historically developed domestic demand. Due to the increased inflows of foreign capital for its growth, it has proved to be systemically weak and in danger. In 1990-91, the flow of foreign capital dried up. In order to get fresh loans it was forced to undergo IMF-directed ‘structural adjustment’. A flood of foreign speculative capital entered India through various routes, with net capital inflows rising to a peak of $108 billion in 2007-08. These inflows resulted in a steep rise in bank lending to middle and upper class consumers for houses and automobiles. The crisis resulted from a combination of complex factors, including easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real-estate bubbles that have since burst; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.