The effects of the economic crisis on V4 countries|
Alina Cioată - ERASMUS|
Macroeconomic issues in V4 countries
It is enough just to turn on the TV or to read a newspaper to be able to know which is one of world’s major problems nowadays. It might be call economic crisis or financial crisis or recession but all these names cover a single situation: the impossiblity of living decently in many of the countries in the European Union or worldwide.
As we know the global recession has been going on for quite some time at this point. But what was the cause of this global crisis? The answer is very simple at the beginning: it started when people could not pay their mortgage rate anymore in the United States. Somehow this problem could have been avoided if people would not have ignored the warnings from financial experts and scholars. With all the warnings, the situation was quite a big surprise because the effects were bigger than everyone had expected. But there are some reasons behind the scene that led to the big issue of mortgage rates. Among the main traditional causes of the economic and financial crisis are: the credit boom to excessive large scale; the sharp rise in asset prices, particularly in the housing market; lending over the exposures limits to economic agents or persons less solvent or even non-solvent (the sub-prime mortgage debtors); the failure in market discipline; the distortion of risk information and asset pricing. Regarding the non-traditional causes, especially the ones related to the financial crisis, we can mention, first of all, the extent and depth of the sub-prime crisis concerning: the uncontrolled growth of origin-and-distribute model; an inordinate appetite for profit that has fuelled the growth in demand for high risk assets; the ex-ante ignorance and ex-post uncertainty regarding the...