The Causes And Consequences Of The 2007 Financial Crisis

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The articles, “Ten years on; International banking”, “When the music stopped; A brief history of the crisis” and “The millennial problem; Recruitment” by The Economist, were all very insightful into the 2007 financial crisis. It’s crazy to think that over a decade has passed and the country still has not fully recovered. Prior to reading these articles, I knew very little about the financial crisis and all its consequences. I was aware the financial crisis was due to banks lending out loans to less qualified borrowers. As a result, these borrowers couldn’t pay back their loans to the banks causing a huge economic downturn and the closing of several multinational banks. I knew the downturn of 2007 was bad. However, I did not know today’s society …show more content…
One of the first bits of information I learned about the crisis, was our economic turmoil affected more than just the United States economy– It helped cause the closing of many French and British banks (The Economist, 2017). What I did not know was that the surplus of savings in China enhanced the economic disaster. Since there was an economic imbalance (with China holding much of the savings) this bore away at many American and European banks (The Economist, 2017). Before this moment, I had not thought about how one country could hold a large part of the currency and how it would affect the global economy. However, it's interesting to think that each country's economy is all interconnected and that changes within these economies truly do affect the globe. The most surprising piece of information I learned was how this economic crisis was resolved. It's intriguing how banks were able to absorb/acquire one another to stay afloat. This crash proves how important foreign relations are. For instance, if the United States were not on good terms with Europe, we may never have bounced back as quickly we …show more content…
First, the 2007 economic downfall hindered the financial market completely. It led to the loss of jobs and completely stopped all spending, thus causing a crash of the economy. Due to the loss of spending, other countries and business who depended on the U.S interactions were harmed. Furthermore, China’s overly stable financial market added to the United States’s market crash. This was due to the fact that China held a large portion of the global currency in their savings. Hence, each country's financial markets affect one another. If one financial market crashes, another will falter with it. If one has too strong of a financial market, it may harm the others. Thus, a balance is needed. As business students, it is important to be aware of and learn from past financial situation. By being knowledgeable of the past and conscious of the future, we can help to make our society more economically

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