The global character of the ongoing financial crisis

Reserve requirement and excess balances held by the Federal Reserve System.

The global financial crisis of 2008–2009 is an ongoing major financial crisis. It became prominently visible in September 2008 with the failure, merger or conservatorship of several large United States-based financial firms. The underlying causes leading to the crisis had been reported in business journals for many months before September, with commentary about the financial stability of leading U.S. and European investment banks, insurance firms and mortgage banks consequent to the subprime mortgage crisis.

Beginning with failures of large financial institutions in the United States, it rapidly evolved into a global credit crisis, deflation and sharp reductions in shipping resulting in a number of European bank failures and declines in various stock indexes, and large reductions in the market value of equities (stock) and commodities worldwide. The credit crisis was exacerbated by Section 128 of the Emergency Economic Stabilization Act of 2008 which allowed the Federal Reserve System to pay interest on excess reserve requirement balances held on deposit from banks, removing the longstanding incentive for banks to extend credit instead of hoard cash on deposit with the Fed. The crisis led to a liquidity problem and the de-leveraging of financial institutions especially in the United States and Europe, which further accelerated the liquidity crisis, and a decrease in international shipping and commerce. World political leaders and national ministers of finance and central bank directors have coordinated their efforts to reduce fears but the crisis is ongoing and continues to change, evolving at the close of October into a currency crisis with investors transferring vast capital resources into stronger currencies such as the yen, the dollar and the Swiss franc, leading many emergent economies to seek aid from the International Monetary Fund. The crisis was triggered by the subprime mortgage crisis and is an acute phase of the financial crisis of 2007–2008.

Further reading

• C.Albert Global financial crisis, stock markets, jobs cut downs and the pharmaceutical industry Pharmaceutical Manufacturing News.
• Andrews, Edmund L. "Tracking the Bailout" Good summary of U.S. bailout efforts, The New York Times November 25, 2008
• Bing Zhang Chinese pharmaceutical exporters to benefit from latest tax rebates increases Asia Manufacturing Pharma.
• Baldwin, Richard, and Barry Eichengreen, eds., 2008. Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis. VoxEU.org e-book.
• Brau, Eduard, and McDonald, Ian, eds., 2009. Successes of the International Monetary Fund: Untold stories of cooperation at work. Palgrave Macmillan. ISBN 0230203132
• Carney, Richard, ed., 2009. Lessons from the Asian financial crisis. Routledge. ISBN 0415481902
• Funnell, Warwick N., Jupe, R., and Andrew, J., 2009. In government we trust : market failure and the delusions of privatisation. Sydney: University of New South Wales Press. ISBN 9780868409665
• García, José, James Lardner, and Cindy Zeldin, 2008. 1975- Up to our eyeballs : how shady lenders and failed economic policies are drowning Americans in debt. With assistance from Myra Batchelder and Jennifer Wheary. New York: The New Press. Distributed by W.W. Norton. ISBN 9781595582119 (hbk.) ISBN 1595582118 (hbk.) 2563707
• Norris, Floyd, "Looking to Washington Amid Turmoil, So Far in Vain." The New York Times, November 20, 2008.
• Read, Colin, c2009. 1959- Global financial meltdown : how we can avoid the next economic crisis. New York: Palgrave Macmillan. ISBN 9780230222182
• Robertson, Justin, 2008. 1972- US-Asia economic relations : a political economy of crisis and the rise of new business actors. Routledge. ISBN 9780415469517 (hbk.) ISBN 9780203890523 (ebook)
• Smick, David, " The World Is Curved: Hidden Dangers to the Global Economy." 90 minute book-TV presentation by author.
• Soros, George, 2008. The New Paradigm for Financial Markets - The Credit Crisis of 2008 and What it Means, New York: PublicAffairs. ISBN 9781586486839
• United States Congress, 2008. Working families in financial crisis : medical debt and bankruptcy. Hearing before the Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary, 110th Congress, first session, July 17, 2007. Washington: U.S. G.P.O. : For sale by the Supt. of Docs., U.S. G.P.O.. ISBN 016081376X
• Low, Albert, 2008. "Conflict and Creativity at Work: Human Roots of Corporate Life, Sussex Academic Press. ISBN 9781845192723
• "2008 Financial Crisis" on Wikinvest

Links

• World Socialist Web Site - World Economy Coverage
• Stern on Finance - Understanding the Financial Crisis (follow link to research blog run by Stern faculty members)
• The World Economic Crisis: A Marxist Analysis - A lecture by Nick Beams Part 1 Part 2 Part 3 Part 4 Part 5 Single PDF
• "How This Bear Market Compares" Multimedia The New York Times
• Global Economic Crisis
• RGE Monitor
• Market Watch, Philippine Stock Exchange
• Op-Ed statement by Henry Paulson in The New York Times, November 17, 2008
• "Wall Street lays another egg" Historical perspective of the financial crisis by Nial Ferguson, set as a cumulative de-phasing of Planet Finance with Planet Earth starting decades ago. December 2008.
• Wide Angle – How nations around the globe are responding to the crisis
• Special dossier by Radio France Internationale's English-language service]

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

Video: Niall Ferguson: The Global Financial Crisis