The Cause of the Global Financial Crisis
Introduction
Noticeably, the recent Global Financial Crisis of 2008 was one of the worse financial crises the world has seen since the Great Depression during the 1930s. The recent crisis has led to stock market collapses around the world, large financial institutions have collapsed or have been bought out whilst unemployment has increased, people fell into deep credit problems which left many households encountering financial difficulties. Whilst the impacts of the crisis remains severe and still has a major impact on society today and the causes of the crisis are explicit, the question of who to blame for the recent crisis remains a matter of dispute. Braithwaite believes that during the recent crisis, we were living under a system of Regulatory Capitalism and thus, flawed regulatory procedures is the main cause of the recent GFC. However in recent years, there have also being compelling evidence that suggest we were living under a Neoliberalism Capitalism society during the recent GFC and thus, the blame should be placed on the deregulation process. This paper will be in light of Braithwaite’s argument and will thus argue that flawed regulatory decisions and procedures are to blame for the recent crisis. Although the recent GFC was caused by actions that are considered typical of an unregulated Capitalist society, the economy only has become severely deregulated during the recent years because of weak regulations and policies, failure of regulatory agencies to monitor and govern financial institutions in a considerable manner, lack of regulatory response and most importantly, regulators favour the interests of financial institutions for personal reasons. While the opposing argument that deregulation is to blame for the crisis will also be critically analysed, the essay will demonstrate how such deregulation is a result of flawed regulatory procedures during the past 30 years and thus, the blame will bounce back to regulatory failure. This essay will commence by
Noticeably, the recent Global Financial Crisis of 2008 was one of the worse financial crises the world has seen since the Great Depression during the 1930s. The recent crisis has led to stock market collapses around the world, large financial institutions have collapsed or have been bought out whilst unemployment has increased, people fell into deep credit problems which left many households encountering financial difficulties. Whilst the impacts of the crisis remains severe and still has a major impact on society today and the causes of the crisis are explicit, the question of who to blame for the recent crisis remains a matter of dispute. Braithwaite believes that during the recent crisis, we were living under a system of Regulatory Capitalism and thus, flawed regulatory procedures is the main cause of the recent GFC. However in recent years, there have also being compelling evidence that suggest we were living under a Neoliberalism Capitalism society during the recent GFC and thus, the blame should be placed on the deregulation process. This paper will be in light of Braithwaite’s argument and will thus argue that flawed regulatory decisions and procedures are to blame for the recent crisis. Although the recent GFC was caused by actions that are considered typical of an unregulated Capitalist society, the economy only has become severely deregulated during the recent years because of weak regulations and policies, failure of regulatory agencies to monitor and govern financial institutions in a considerable manner, lack of regulatory response and most importantly, regulators favour the interests of financial institutions for personal reasons. While the opposing argument that deregulation is to blame for the crisis will also be critically analysed, the essay will demonstrate how such deregulation is a result of flawed regulatory procedures during the past 30 years and thus, the blame will bounce back to regulatory failure. This essay will commence by
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