AN ANALYSIS OF THE FINANCIAL CRISIS OF 2008: Causes and Solutions
نویسنده
چکیده
The financial crisis in 2008 is of such epic proportions that even astronomical amounts spent to address the problem have so far been insufficient to resolve it. Besides the wellpublicized $700 billion approved by Congress in the autumn of the year, the Federal Reserve had already attempted to bail out institutions and markets with about $1.3 trillion in investments in various risky assets, including loans to otherwise bankrupt institutions and collateralized debt obligations like those backed by subprime mortgages that are defaulting at rapid rates (Morris, 2008). A further $900 billion was already being proposed in lending to large corporations in the fall of 2008 (Aversa, 2008), making a total of about $3 trillion in bailout money by that time, without even counting the massive sum of corporate debts already guaranteed by the U.S. government by then. An analysis of the fundamental causes of this “colossal failure” that has put “the entire financial system . . . at risk” (Woellert and Kopecki, 2008) is warranted in order to both solve the problem and avoid such events in the future.
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