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建立人际资源圈全球金融危机的因素和对美国经济的影响--Essay代写范文
2016-12-26 来源: 51Due教员组 类别: Essay范文
留学生Essay代写范文:全球金融危机的因素和对美国经济的影响
本文主要讨论全球金融危机的主要因素及对美国经济的影响，还有这些影响将持续多久。
Before brought about severe influences on the whole world, the global financial crisis started to show its effects in the US in 2007, and then it continued to influence the United States economy till now. During this global financial crisis, large numbers of US financial institutions failed or came close to failure. In addition, a great deal of people lost their jobs. There are varieties of factors contributed to this situation. Whilst an excess of world saving can be considered to be a main cause of the global financial crisis, I intend to argue that US monetary policy and housing policy were in fact the main causes. In this essay, I will analyze the main reasons of the global financial crisis at first, then focus on the severe effects on the US economy, finally give a prediction of time of duration of these aftermaths.
World saving rate can be defined as the average saving percentage of global output. Bernanke’s (2005)”global saving glut” hypothesis stated that the world supply of saving which increased by diverse reasons, contributed to the relatively low level of interest rates in the world. On this condition, the cost of borrowing money was lower than before, which stimulated investment. For instance, the average data given by the International Monetary Fund (2011) of world saving between 2005 to 2007 is 23.6 percent, 1.8 percent more than the average data from 1997 to 2004. On account of this, the world interest rates are relatively low in those years. As a consequence, American investors had a large amount of money to invest, and finally triggered the global financial crisis. However, although it is admitted that an excess of world saving is a reason for low interest rates that allowed people invest rather than save, it can neither explain the reason that global financial crisis first happened in the US, rather than other countries, or explain why the crisis influenced the US so severely and deeply. In fact, US monetary policy and housing policy were the major causes made the global financial crisis to occur.
The US loose fitting monetary policy is one of the main reasons brought about this crisis. Monetary policy can be defined as the means to control the supply of money, by which the monetary authority of the country can achieve the goal promoting economic growth and stability. The US monetary policy was too loose from 2000 to the outbreak of the economic crisis. The Federal Reserve made decisions of the Federal Funds Rate (FFR), by that decided the actual interest rate indirectly. From 2000, in order to boost the economy, the US Federal Reserve System reduces the Federal Funds Rate for thirteen times. This low-rate-policy encouraged people to borrow money to invest.
For those people who had low income and poor credit, the real estate loan market, to be specific, the subprime mortgage market, gave money to them. After 2004, the housing market declined, people had no guarantee of their subprime mortgage, resulted in the subprime mortgage crisis; furthermore resulted in the global financial crisis.
US housing policy was one main reason responsible for the global financial crisis which produced an unprecedented number of subprime mortgages. Initially, the government gave authorities which equal to the government to Government Sponsored Enterprises (GSEs). Besides, in order to encourage people to buy house, the policy was put in place by the government that GSEs are required to buy “affordable” housing mortgage loan which including mortgage credit to low and very low income households. As a result, Wallison(2010) suggested that GSEs such as Fannie Mae and Freddie Mae which were set up buy loans from banks and mortgage brokers were involved into subprime mortgage market. Over time, these housing policies weakened the GSEs’ credit culture. When the housing price experienced a drop at 2006 and 2007, the Mortgage default rates increased sharply and the Mortgage-Backed Security(MBS) hold by these financial institutions lost a large proportion of their value. Finally, this led to tightened of credit in the US, and became a trigger of the global financial crisis.
As a result of the reasons analyzed above, the global financial crisis hurt the US economy thoroughly. Firstly, one significant consequence is financial institutions’ bankruptcy. It can be best illustrated by Lehman Brothers which was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA (behind Goldman Sachs, Morgan Stanley, and Merrill Lynch), doing business in investment banking, equity and fixed-income sales and trading (especially U.S. Treasury securities). In September 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The filing marked the largest bankruptcy in U.S. history, and is thought to have played a major role in the unfolding of the global financial crisis.
Secondly, it is noticeable that financial institutions’ bankruptcy and unemployment are two interactional impacts because the outflow of talent employees is one of the major reasons of insolvency. Meanwhile, insolvency brings about more unemployment.
On account of the global financial crisis, a great number of people suffered from unemployment. The unemployment rate has evidently increased in the US. This large scale of unemployment is not a short-term situation. On the contrary, the high rate has last for four years and it will go on affecting the Americans’ lives because there are not enough companies and industries providing job opportunities. As figure 1 shows, the data for US unemployment continued to grow after the global financial crisis, then peaked at 10% in 2009, and then it maintained at approximately 9.5% till now. This also shows the severity of global financial crisis.
Figure 1. United States Un employment Rate (trading economics, 2011)
In addition to financial institutions’ bankruptcy and unemployment, the US stock markets’ and housing markets’ decline also resulted from global financial crisis. The US stock market also experienced a drop. It peaked in October 2007, when the Dow Jones Industrial Average index exceeded 14,000 points. After the global financial crisis, it then entered a pronounced decline. By March 2009, the Dow Jones average reached a trough of around 6,600. Similarly, the housing market was still in bad condition and has no sign to recover soon. According to the statistics of housing price in twenty American cities in May 2011 given by Standard and Poor’s Corporation, the total price of the US cities has been to the lowest since the global financial crisis, which indicated the severe far-reaching influences created by the crisis.
According to the analysis above, the US current situation is severe, and the Americans are already in economic recession. To be specific, the unemployment rate now is much higher than that of 1970s, in which decades the US suffered an economic recession similarly and use at least 10 years to live through. It can be predicted that the recession is likely to continuously influence the US economy. As a consequence, the US government needs a long time to live through this recessionary period, may be longer than 10 years.
To conclude, US housing policy and monetary policy were the major causes forced the global financial crisis to occur. Owning to these causes, the US suffered severe bankruptcy, unemployment and stock markets’ and housing markets’ decline. Moreover, these effects will last for at least one decade. will promote the US economy to grow. Baily and Elliott(2009) suggested that new investments and new companies can promote the economy. To create full job opportunities to Americans, properly functional department of finance needs to take part in the restore project which encourages the US to recover.
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