2008 Financial Crisis: Cause, Consequence & Response

Abstract

The US real estate bubble's deflation marked the beginning of the financial crisis in 2008. On September 15, 2008, the investment bank Lehman Brothers went bankrupt, sparking a widespread global banking crisis. With several financial institutions failing and financial assets sharply declining, the crisis swiftly extended to the whole financial system. The US financial crisis quickly turned into a global economic disaster that affected Europe and the rest of the globe. The global financial crisis was directly brought on by the American subprime crisis. Beneath the credit crisis, the US financial crisis was brought on by a buildup of long-term excessive spending, an abundance of loans without an economic foundation, exorbitant salaries paid to bank white-collar staff, a severe shortage of developing businesses, an imbalance in fintech, the absence of financial regulation, and other ingrained causes. By analyzing the causes of the financial crisis, people can prepare for a rainy day. However, the investors should not be too optimistic. It also realizes that there are still a lot of unfinished business. Investors need to seize the favorable opportunity, in the favorable time is easier to solve these problems.