The global financial crisis that occurred
The global financial crisis that occurred
between years 2007 to 2008 was a reminiscence of what happened in 1929. The
crisis saw the wobbling of more economically developed countries like the
U.S.A, Iceland, France, Germany, Canada, United Kingdom, China, Greece and
Spain. The largest bankruptcy in U.S history was witnessed in this period by
Lehman brothers that had been in existence for over a century. Clients were on
the verge of losing their pensions and savings due to the bankruptcy. There was
unrest in London, Paris and Beijing as people demonstrated while governments
blamed the United States.
In Wall Street New York City, Bear Stearns, one of the oldest and
biggest banks was waffled by the crisis. Bear Stearns was the fifth largest
investment bank in the United States at Morgan. The U.S also witnessed the
collapse of the world’s biggest insurance company; American international group
which was bailed out of misery by the government.
In the state of California, the economic depression led to the loss of
jobs and millions of foreclosures. The rate of forceful evictions by sheriffs
increased from 1 to 2 a month to between 20 and 30 in a week. Homeowners fell
into despair and resolved to live in tents, streets, and cars. Some committed suicide
as a result of frustrations. Women shelters in the state were filled to
capacity with single mothers and 1.5 million children left homeless.
The global financial collapse was also great in Los Angeles where over
100,00 military veterans were rendered homeless. Victims suffered from
post-traumatic stresses and other mental illnesses two years after the
meltdown. This resulted to L.A correctional facility housing the greatest
collection of mental illnesses in the country.
In London, the Anglo-American Financial Systems began to tremble in
September 2007. Northern Rock, Britain’s mortgage lenders began applying for
financial support from the bank of England.
In Paris, BNP Paribas bank, a giant French bank discovered United
States’ toxic securities in August 2007. They quickly reacted by stopping
withdrawals and shutting down accounts which drew attention from the country’s
ministry of economic affairs. European governments stumbled to the turmoil when
banks and mortgage lenders in Britain, Germany and France started collapsing as
at October 2008.
Iceland crashed harder than any other country. Prior privatizations of
its banks and opening operations in London that made British citizens deposit
money in high-interest Icelandic accounts contributed to a crisis. The then
British Prime Minister Gordon Brown froze Icelandic companies in the United
Kingdom and listed them as terrorists.
The crisis led to an epidemic of unemployment which led to
demonstrations around the world. Textile and toy companies in China filed for
bankruptcy and had no cash reserves to pay its employees. 15 million unemployed
workers resulted in violent protests. Workers who lost their jobs from major
companies in France like Caterpillar, Molex and continental held their bosses
captive to demand answers. General motors and Chrysler companies in Canada also
The financial crisis inquiry commission formed in 2010 attributed the
meltdown to the American real estate bubble. Mortgages were given to everyone
including teenagers and the poor who couldn’t pay thus foreclosure. The
Securities and Exchange Commission, as well as the treasury, was liable. Market
fundamentalism, greed, corruption, negligence and unethical behavior such as
fraud were also contributing factors.
Free market economies like Iceland and Laissez-faire in France paid
dearly during the meltdown. President Sarkozy later abolished Laissez Faire in
France. Many Real estate developers were dubbed Con artists in Spain after
gaining wealthy from the boom by bribing mayors.
Several crisis meetings were held by leaders in Washington to curb the
crisis. Billions of taxpayers’ money was to be used as well as funding from the
World Bank and IMF. There was a quest for new international financial
The world might have recovered from the global financial meltdown of
2008 but scars still exist. It’s inevitable to control another crisis from
occurring again evident by cities like shanghai, New York, and London that
thrive to be the financial capital of the world. We still have a role to play
so as to prevent the next global meltdown from occurring.