Global Financial Crisis in Context Essay Example | Topics and Well Written Essays - 1500 words

Global Financial Crisis in Context - Essay ExampleThere is the general consensus crosswise the globe that the 2007-2010 global financial crisis (GFC) is the worst to have hit the conception economies ever since the famous salient Depression during the 1030s. To some this crisis has grown to be known as the Great Recession of the time. One of the illustrious effects of the recent global financial crisis was brought to the fore in terms of failure by the worlds key businesses, significant decline in the wealth among consumers, as well as broad financial commitments by the various governments. In the overall, the aforementioned effects culminated into significant reduction in the economical activities amongst nations. The said financial crisis has its cradle in the bursting of Americas housing bubble. In particular, this housing bubble experienced its peak during the 2005- 2006 period. Immediately afterwards, there was a general increase in the Adjustable ramble Mortgages (ARM) a nd subprime default rates. As it is put forward by Taylor and Akila, (2009), a resultant increase in incentives of loans for example, truthful easy terms as well as long-term trend of increasing prices of housing. As a result, borrowers had been motivated to take difficult mortgages with the hope of being able to quickly refinance them at easy terms. However, with the increasing interest rates, prices of housing began to drop although moderately during the 2006-2007 period in several parts of the coupled States of America. Consequently, refinancing became much more difficult. This provided the much needed impetus to the increase in foreclosures and defaults due to the expiry of the unreserved initial terms.