The economy and financial markets crisis

Topics: Economics, Recession, Subprime mortgage crisis Pages: 8 (2133 words) Published: October 12, 2014
 The economy and financial markets crisis The financial markets crisis means markets and consumers are experienced difficult business environment during this period. Retailers will fall into economy crisis because many consumers tend to reduce their purchases of goods until the economic situation improves. There are many reasons implicating of this financial crisis for the global economy. Many countries also have experienced serious turmoil in their financial systems, such as the U.S. and China. The economy and financial market crisis will cause wider market disruptions and bring many terrible influences and affect everyone. At the different periods of time, different country will face different serious emerging economies challenges. One country’s financial crisis also will affect other countries, such as China. A number of emerging economies will have a lasting impact on their country. So every government needs to give some policies can do to help the financial system and support economic activity. First of all, emerging economies affect some countries and the turmoil in some emerging countries also impact on the Western world. Every country needs to distinguish the different various emerging economies. According to the author Henrik Böhme, “The problems faced by countries mired in political crisis, such as Turkey or Argentina, differ significantly from others, such as India or Brazil, which have high foreign currency reserves and are in a strong position to avert a crisis.” The key reason also is current turmoil in the financial markets. Henrik said, “That means capital will start to flow back to the US that previously flowed abroad for a number of years.” For example, Brazil and India, both of these two countries are rely heavily on protectionism. Protectionism causes their domestic industry inefficient and probably led to a political crisis. The USA also had great recession and the financial crisis in the year 2007 to 2009. This financial crisis reflected new economic structures and a number of employers have lost their jobs. According to the author Berch, “This contraction represented dramatic changes in the economic structure. The structure of the economy means the building blocks of which it is built and how they fit together.” The financial crisis also causes some large corporations close to bankruptcy. Even though, the financial crisis brings many bad influences, this crisis also as the whole USA economic structure slowly changed. According to the Berch, “Relying on money and credit institutions makes an economy susceptible to the booms and busts of the business cycle. Financial crises can stop the whole economy when industry becomes dominant and relies on credit.” This is because in the financial crisis, many people lose jobs and do not have enough money to purchase products and even necessities. In addition, in the economy and financial markets crisis, some countries’ issue is the slowdown and will be followed by a gradual recovery, but other countries ‘economy will be downturn deep and protracted. For example, in the year 2008, America was flirting with financial crisis. According to the First Deputy Managing Director, John Lipsky, “Policymakers' first priority in the affected economies must continue to be the restoration of market functioning, forestalling the spiraling crisis of confidence among financial market participants.” Even though, since the year 2009, USA’s economy problem is recovering from the financial crisis and the US economy has become stronger. Financial sector strains dampen the recovery's pace. At the same time, energy and some goods prices have receded, and inflation pressures also begin to ease. John also talks about that, “Moreover, non-financial corporate sectors in many key economies—especially outside the automotive and housing sectors—have entered this difficult period in a relatively strong financial position, and appear to be able to withstand a period of tight...

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