Who was to blame for the banking crisis Essay Example | Topics and Well Written Essays - 2500 words

Who was to blame for the banking crisis - Essay Example After the Great Depression of 1930 the world economy faced a dangerous financial crisis. It all began when sky rocket property prices in the United States started decreasing and this impact soon spread all over the financial sector. The Global Financial Crisis initiated in July 2007 with the credit crunch when US investors lost confidence in the investment of mortgage property. This all compelled US investors to inject a large portion of capital into the financial market. By September 2008 the crisis got worse and hit all stock markets globally and made the market volatile. The consumers started losing confidence in properties and the stock market and were in a position of fear what could be lying ahead of them (Broman, 2012). The banking industry has seen many fiscal crises in the past, the notable one of them being the one that started in the 1930. Since then many countries have seen ups and downs when it comes to their banking industry. The most recent one of them being that in 2007; which changed the perspective of many investors and regulators. It all took one Lehman Brothers to go bankrupt for the Wall Street crisis panic to spread worldwide and affect other countries, developing or developed. The causes were smaller in person and unimportant but together, they caused huge economies to collapse and endure great loss. The reasons were as followed: On a general note, the global financial crisis began developed its roots in 2007, July, when the US investors started to lose confidence in the values of subprime mortgages, resulting in a liquidity crisis. This lead to the US federal bank adding a notable sum of capital into the financial market but nevertheless, the issue persisted such that by 2008, the stock markets around the world became seriously volatile and subsequently crashed. The Global market braced them for they feared the impending doom that approached them. Questions pertaining to the liquidity of banks, a fall in the availability of