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Global Financial Crisis — Global Issues

The global financial crisis first began to show its effects in 2007 and 2008, with stock markets falling and large financial institutions collapsing or being bought out. This crisis was caused by a number of factors, including the collapse of the US sub-prime mortgage market and the reversal of the housing boom in other countries. Some financial products and instruments had become so complex and risky that trust in the whole system began to fail. Governments in wealthy nations had to come up with rescue packages to bail out their financial systems, but this has led to charges of hypocrisy due to the appearance of socializing costs while privatizing profits. Smaller businesses and poorer people rarely have such options for bail out and rescue when they find themselves in crisis. A credit crunch can ripple through the entire real economy very quickly, turning a global financial crisis into a global economic crisis.

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