Answer to Question #308561 in Management for Dee Park

Question

Discuss the main causes of the financial crisis in 2008? Identify the main risks that contributed to the crisis!

Use references.

At least 6-8 pages (100 marks)

Answer 1

The financial crisis of 2008 sparked the worst economic recession since the Great Depression of 1929. At the root of this crisis, which broke out in the United States, were significant changes in the financial system. the main reasons for the U.S. financial crisis of 2008 include high commodity prices mostly oil, a global food crisis, the threat of a recession in the world, and a credit crisis which was followed by a banking crisis. Due to the financial collapse, investors worldwide simply stopped trusting the stock markets.

The major risk was financial stresses peaked following the failure of the US financial firm Lehman Brothers in September 2008. Together with the failure or near failure of a range of other financial firms around that time, this triggered a panic in financial markets globally.