How to Prevent Current Financial Crisis

How to prevent the next financial Crisis

This essay will be examined the problems facing the world financial system, particular with discussing recent financial crisis. It analyses causes of recent financial crisis and the steps taken to prevent from public financial sectors, or government, which are responsible for it. Broadly speaking, this essay starts to analysis the background and current situations resulting from financial crisis, then, with putting more emphasis on discussing causes and approaches to solve this financial problem, all issues are interrelated. The world is suffering through the worst financial crisis since 1930s, an incredible crisis that led to a sharp downturn in the global economy. People so far, from all over the world, have faced a new challenge continually from the recent financial crisis since 2008, and it caused a bad financial phenomenon on employment rates, transactions on housing sales, foreign exchange market, to make it more serious that crime rates also increased during financial crisis. The first and urgent is to analysis the subprime crisis as to limit the bubble economy in housing mortgages, and then this is turn into potential problem of global imbalances. After that, banks and financial instruments, as the financial innovation sector, will be put to identify the reasons to expand risks of financial crisis into a global problem. All these issues intimately connected in order to discover final solutions of recent financial crisis.

With discuss these issues, it can not be defined the causes of financial crisis without the global imbalances from the historic impacts on global business transactions (Huang Xiao Long, 2007). To specifically, the global economic structures have changed in a rapidly way in 1929, one of the most powerful economic center transfers from UK to American and European countries, especially American, the economy is developing fast in an incredible way lasting to now. Some countries are currently with surplus accounts while some countries hold large deficits accounts, thus, some surplus countries are more likely to play a role in accumulating claims for deficits countries. Domino effect has been linked to the lots of countries resulting from interrelations. Moreover, the trend of regional economic integrations increases in business trades, import and export, economic coordination and capital flows (Huang Xiao Long, 2007). Regional economic imbalances occur from that. For example, more developed countries are more attractive to absorb products and capital, while less developed countries is more likely to invest product and capital. On one hand, it is a good way to balance the world capital to meet nations' all types of requirements, on the other, the risk of flows will be increased because of domino effect expanding. From what has show clearly above, the background of the recent financial crisis has been critically pointed out with