當(dāng)前經(jīng)濟(jì)危機(jī)的paper代寫(xiě)
The present economic crisis

什么導(dǎo)致了目前的經(jīng)濟(jì)危機(jī)，特別強(qiáng)調(diào)美國(guó)的經(jīng)濟(jì)政策和美國(guó)銀行的貸款政策

"What has caused the present economic crisis with special emphasis on US economic policy and US banks' loan policy used before the crisis?

Abstract 摘要

本文對(duì)貨幣銀行學(xué)課程由克拉科夫經(jīng)濟(jì)學(xué)院的首席財(cái)務(wù)官I(mǎi)gor Styn先生的回應(yīng)。
它的唯一目的是投機(jī)，對(duì)某些金融政策的使用相結(jié)合的評(píng)價(jià)，其他情況和問(wèn)題在當(dāng)時(shí)引起當(dāng)前經(jīng)濟(jì)危機(jī)大蕭條。

This paper was written as a response to the Money and Banking course taught by Mr. Igor Styn, chief of finance of the Krakow University of Economics.
Its sole purpose is to speculate, argumentate and evaluate on how the combination of the usage of certain banking policies, other circumstances and problems at the time caused the present economic crisis often compared to the Great Depression.

Introduction 簡(jiǎn)介

“危機(jī)”這個(gè)詞已經(jīng)在各種媒體上重復(fù)了很多次，，人們不再給它太多的意義了。然而，大多數(shù)人甚至不完全明白它的意思和實(shí)際發(fā)生的事。人群已經(jīng)準(zhǔn)備好要責(zé)怪任何人，甚至認(rèn)為恐慌只是一個(gè)騙局。

The word “crisis” has already been repeated so many times in all kinds of media that people do not give much significance to it anymore. Nevertheless, most people do not even fully understand what it means and what is actually going on. Crowds are ready to blame everyone and even believe that the panic is all just a scam.
In this short paper, we will try to describe every aspect of the causes of and the events that might have led to the present financial crisis and explain how the policies the US government used prior to the crisis facilitated its creation. We will try to do this through defining the basic principles we will focus on, identifying and analyzing the factors that had the most impact on the creation of the crisis, walking through the history of events and putting back together the pieces of the broken puzzle of the financial system.
Everybody's absolute favorite question regarding the crisis is “Whose fault is it?” The only possible answer that could be given to this question is “Everyone and no one”. However, the situation is much more complex than that. Even though a lot of people tend to blame the financial crisis and the present world recession on giant commercial banks and their greed, it is pretty clear what had a great influence in causing the biggest recession of the modern history and before accusing anyone, all possible causes must be considered.
First of all, we need to define the main concepts we will be using in this analysis. In the world of students, banks are just buildings where we open our accounts and store money that we later spend through our bank account. I this paper we need to make a clear distinction between commercial banks, such as JP Morgan Chase and central banks, such as the Federal Reserves.
The role of commercial banks is to “accept deposits, make business loans, and offer related services.” Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit. Theseinstitutions are run to make a profit and owned by a group of individuals, yet some may be members of the Federal Reserve System. While commercial banks offer services to individuals, they are primarily concerned with receiving deposits and lending to businesses.
The central bank, on the other hand, is “a country's primary monetary authority”. It usually has responsibility for issuing currency, administering monetary policy, holding member banks' deposits, and facilitating the nation's banking industry.
In the US, there are many commercial banks and only one central bank called the Federal Reserves. The participants in the financial market also include households and companies that invest their money into the market in the form of deposits, securities, bond and so on, but also borrow money from banks in form of loans and mortgages.
The actions of market participants are different indeed, from the exchange of assets, services, information to the activities connected with financial markets. Undeniably, actions of all the participants supposed to be are aimed towards achievement of the economic goals.
As the base of the problem created in America, we can consider the popularity of consumerism and the concept of “the American Dream”. All people in the world need to consume to survive. Nevertheless the American Dream leads one to believe that he has the freedom to consume anything he wants, whenever he wants, even if the product will serve no specific purpose. This may be used as an explanation of why people were not scared to buy things that they could not afford in the US.

Causes 原因

The present economic crisis finds its roots in the American credit market, and is also often referred to as the “subprime crisis”. In order to understand the roots and connect them to the present we need to understand what the word “subprime” means. The subprime crisis primarily refers to the problems in America's subprime mortgage market, which consists of loans to individuals with weak credit histories (which often leads to a higher risk of default).
In other words, subprime loans were regarded as risky credits that were given by the banks to clients without any reliable evidence that those clients were able to pay them back. There were two institutions that played the crucial part in this process: the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, or simply Fannie Mae and Freddie Mac.
Fannie Mae was established in 1938 in order to help families with low-incomes in getting a loan and then 30 years later the Congress decided to privatize it. Two years after that, as a competition to Fannie Mae, the U.S. government established Freddie Mac. Over the years, under a pressure of different governments, those two institutions started to give all kinds of different credits to less and less credible borrowers, i.e. with lower credit rating.

First Problem: Politics 第一個(gè)問(wèn)題：政治

However, nothing was even close to the pressure of the Bill Clinton's administration. In that time, the whole world was characterized with improvement and development. Nevertheless, something had to be done concerning the social injustice as the social differences were considered huge and hardly bearable. Hispanic and Afro-American people were still behind other Caucasian Americans concerning the number of real properties. Ultimately, Clinton's administration forced Fannie Mae and Freddie Mac on giving even more subprime credits. However, it cannot be said that Clinton's administration purposely pushed low-income families to this no-way-out situation.

Second Problem: The Housing Bubble 第二個(gè)問(wèn)題：住房泡沫

A term that is often used in the connection to the crisis is the “housing bubble”. What this refers to is the rapid increase of the prices of houses. It is a run-up in housing prices fueled by demand, speculation and the belief that recent history is an infallible forecast of the future. Housing bubbles usually start with an increase in demand (a shift to the right in the demand curve), in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, believing that profits can be made through short-term buying and selling. This further drives demand. At some point, demand decreases (a shift to the left in the demand curve), or stagnates at the same time supply increases, resulting in a sharp drop in prices - and the bubble bursts.

This increase in prices can be seen on the diagram below:
Diagram 1 - The Housing Bubble
Housing bubble can have a tendency to happen in all housing markets worldwide. When they have fully grown, it is very likely to happen that a lot of landowners may experience that their mortgage debt they have exceeds the value of their property.
It is hard to understand the background of the housing bubble without a chronological analysis of the main events that contributed to its creation.

History:歷史：

Housing bubble has its roots already in the early 30's. Great Depression had a huge impact on the U.S. economy. As a result, a new set of laws was created in order to help U.S. economy to recover; The New Deal.
The government made housing and home mortgages more affordable, and also as we have mentioned previously, established Fannie Mae (stockholder-owned corporation that purchases and securitizes mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers). It was later turned into a GSE that trades mortgages in order to be able to provide an inflow of liquidity into the primary mortgage market, when needed.
In addition to Fannie Mae, Freddie Mac was created in 1970 as a GSE, but it concentrated on the secondary mortgage market. It used the mortgage-backed securities by selling them to various financiers on the open market.
Another important point to mention is the creation of the Community Reinvestment Act. This act was written in order to enable people with lower incomes or those that have small companies to get credit from various banks and loan givers. It was enacted in 1977. In the period between 1970 and 1995 more Acts were created in order to encourage people to invest even more in homes and investment properties.
It is interesting to mention that nowadays, conservatives blame the housing crisis on the 1977 law that helps people with a low-income to get mortgages.
Already since 1997, the costs of homes increased rapidly. Beginning of the year 2000 brought a stock-crisis. In addition, The Federal Reserve Board continued to cut interest rates, which allowed banks to give mortgage credits with adjustable rate mortgages. Even Alan Greenspan said that adjustable mortgage rates might be better than the fix rate mortgages. These adjustable mortgage rates are criticized because they enable lower interest rates on mortgage loans in the beginning but bring the risk of them rising and households are helpless if this happens.

The existence of low interest rates facilitated the sudden increase in prices in the real estate market that in return offered safety for the homebuyers due to the fact that their houses were worth more than their credit, so they could refinance their credits by getting new credits or even new house mortgages.

Third Problem: The Bursting Of The Housing Bubble 第三個(gè)問(wèn)題：房地產(chǎn)泡沫破滅

People used a very similar logic in Croatia when they were buying overpriced houses as they did in America. By explaining to themselves in their minds that it shouldn't be a problem to get a loan that creates a monthly expense of more than a half of their monthly income both Croatians and Americans made bad decisions. In addition, people were not scared of raising loans with adjustable interest rates, so they did. That is how the bubble was created. The United States were not the only place were this had ever happened, this phenomena tends to appear all over the globe. The problems started to appear when the Fed decided to increase interest rates from 2004 until 2006. All of a sudden, an enormous amount of people were facing an increase in interest rate but the value of their houses became less than the loans, due to the fact that the level of prices of houses started to decline in 2006. Soon enough, the phenomena of the bursting bubble spread to other countries in the world.
The exposure of credit to the housing bubble reason may be considered as an impact on the crisis. As the bubble grew in size, commercial banks were using the funds from loans to create financial instruments such as Mortgage-backed securities and Credit-default swaps.
A mortgage backed security (MBS) is a “securitized interest in a pool of mortgages; a bond”. Instead of paying investors fixed coupons and principal, it pays out the cash flows from the pool of mortgages. The simplest form of mortgage-backed security is a mortgage pass-through. With this structure, all principal and interest payments (less a servicing fee) from the pool of mortgages are passed directly to investors each month.
Credit default swap is defined as “a specific kind of counterparty agreement which allows the transfer of third party credit risk from one party to the other.” One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments (essentially an insurance premium). If the third party defaults, the party providing insurance will have to purchase from the insured party the defaulted asset. In turn, the insurer pays the insured the remaining interest on the debt, as well as the principal.
Those two instruments enabled a multiple increase of assets, but the banks simultaneously exposed them to an enormous risk. All financial institutions became involved in speculations about the credibility and the reliability of the American housing market. One of the biggest markets in the world had become one of the riskiest ones.
The consequences of the dot com internet bubble which burst in the beginning of the 21st century were still being fixed and in order to overcome them and diminish them the interest rated were lowered.
The risk present on credit markets was seen more vividly in October 2008. The value of American bonds, the safest and the most reliable type of investment in the world, started decreasing rapidly, endangering the whole American Credit Rating. Simultaneously, the value of credit-default swaps of the rare survivors and also already bankrupt investment banks was seriously endangered. The danger was created in the fact that the CDS market had reached a value of 62 trillion dollars, and any risky changes would put the mortgage crisis to shame. There was no implosion, even though October and November made everyone very nervous.

CRISIS : A Chain Reaction 危機(jī)：連鎖反應(yīng)

By the end of 2006 and the beginning of 2007, it was clear that something bad was on the way. Slowly, the commercial banks that had given out all those mortgage loans were going bankrupt, but the level of legal enforcement and the resentment to pay interest increased dramatically. Around March 2007, the subprime market finally collapsed. By the end of the year, much many more banks had declared bankruptcy and it turned out that an enormous number of financial institutions all across the world were exposed to the mortgage crisis. A limited liquidity was one of the main problems that the financial institutions were facing in the period when people had started losing trust in the market. However, the central banks did not react aggressively. In 2008 it became clear that the situation would not get better. An investment bank JP Morgan Chase took over the Bear Stearns bank in March with the help of the government for a bargained price. In September 2008, the American government announced to take over Fannie Mae and Freddie Mac, which at that specific moment guaranteed a half of the mortgage. A few days later, another huge investment bank Lehman Brothers declared bankruptcy.
Almost at the same time, financial markets started to panic. Market indexes all over the world started decreasing rapidly with the number of bankruptcies and failed banks rising at the same time. The world was hit by a crisis that it has not heard of in a long time. A month after that, the American government decided to present its scheme of financial aid, but it failed to give immediate results. Only in march did the financial markets slowly enter a visible recovery.
Due to the lost of trust in the financial sector, banks could no more reflect the situation in the real sector, that of production and consumption as well as savings and investment.
The decrease of the volume of loans and credits in the real sector had a direct effect on the decrease in consumption and trade and consequently a decrease in production and investment. That ultimately ended in a world recession in the last six months of 2008.
The deepest end of the recession could be seen in the first two quarters of the year 2009. Even though the recession has still not vanished and there are only mere speculations about how the world will develop further economically, a period of stabilization and recovery in 2010 is expected under the condition that there are no more collapses in the financial system. When you hit rock bottom, it is only up from there.
Consequences - an overview of how this crisis affected the US and the whole world in general
Across countries and over the centuries, economic crises of all types follow a similar pattern. An innovation emerges.
U already say some cons so I believe if u change little bit the format of the paper must be ok …..

Consequences 后果

The economic crisis of 2008 is the biggest global crisis after 1929. If we realize that despite the fact that almost 80 years have passed and everyone still remembers it and never forget about this crisis of 1929. This is because of the tough consequences in the world economy that I that period effected the peoples life so much that the 1929 crisis stick in the heart of the people as something almost similar as war. Cause the war's consequences are almost the same in the daily life of people.
The biggest hit from the crisis has accepted Iceland, with high exposure of banks to toxic bonds. Despite the large financial stocks Britain followed the American model and was among the first countries hit by the crisis. Many banks were nationalized and other were resaled . France had also adopted such products and rearrangements observed in Belgium, Italy, Luxembourg and the Netherlands. Greek banks say that they had managed to invest particularly in CDOs, but pass on the high interbank rates in traditional products. Analysts interpret, however, some movement as a precursor of upheaval and exploitation opportunities in the banking sector of the Greek or the European market. In a radio interview, the governor of the Bank of Greece. The conservatism of Greek banks and warned even with a court order against those who were dependent on its speculation about the risk of loss reserves by private deposit accounts for competitive reasons. In addition, Europe has witnessed a huge demand in the market and move safes to deposit gold bars or coins.
The financial institutions most affected by the crisis were real estate , without missing problems in banking or insurance services. The real problems of the crisis became clear in the Greek economy, with rising interest rates and the conservatism of the financial system to affect borrowers, Small-Medium Enterprises, the purchasing behavior of consumers and other aspects of the market with a direct impact on the economy. So after the global crisis we observe that beceuse of the customers not to consume it starts a bigger crisis in the economic circle that effects also all tha financial resaults in the market.
After the failure of the model of production and distribution of loans, there was a move to a financial system with a focus on capital markets. It was obvious moves to a more stringent statutory and market intervention, a phenomenon often described as "over-regulation". The conditions of the capital towards the securitization of mortgage but had a direct impact on interest rates on the interbank market.
Changes observed in the role and behavior of institutional investors. Demand for high yields under liquidity affected the supply of new products since 2003 because of low returns on bonds T-bills of public credit expansion.
An important and proved the role of central banks to maintain financial stability. Monitoring and assessment of the situation to maintain stability has always been key areas of monetary policy. Providing liquidity in financial markets and intermediaries always require the immediate attention of central banks to prevent flooding and widespread damage, extending the side effects in areas such as regulation of a system, key financial measures and long-term financing strategies. However, at the latest developments emerged an abomination of American public opinion, and European authorities, in the "xelaspoma" (means take the dirty mad of them) against those who are responsible for Many things that we know , for many things that we dont know , but for many things that effect our small economies, in that small word.in simple logic we realised that sometimes crisis is predicted long time ago but for some reasons maybie political didnt prevented Several conferences were held in Greece in the first half of 2008, after an initial assessment of the crisis and its causes, were filed proposals to manage the problem. It highlighted the need for a common monetary policy at the international level to promote financial stability. The difficulty lies in coordinating project synchronized conducting medium-term monetary policy for the protection of price stability and other macroeconomic targets. At the same time, stressed the need for international coordination of the financial system. The exchange of information between the authorities supervising the financial sector was considered adequate for the control of financial institutions and individual actions.

Conclusion - summary of the topic, speculations of what should have been done or not, and a short reflection of the current state of the crisis.

本文編號(hào)：119172