The Impact of the Present Financial Crisis on the General Environmental Factors of International Business, Its Causes and Ramifications
5/3/2009
“The impact of the present financial crisis on the general environmental factors of international business, its causes and ramifications”
The world wide financial crisis has been identified to have several different causes, with the problems originating from the US causing shockwaves around the World, sending the World economy into a crisis. The impact of the financial crisis has been dramatic to the general business environment due to the increased uncertainty and risk that investments at this time bring with them and the failure of central financial institutions. The crisis has left many economies, businesses and people in the world in trouble and fighting for their existence. Stock markets are down by more than 40% from a year ago, with immense losses for everyone involved, including workers who are being let go. Many investment banks have collapsed, with more in trouble and in need of rescue packages that the governments have started putting together. These rescue packages, aimed at helping out companies in trouble, total over 1 trillion Euros but are linked with strong guidelines which the companies have to follow. Many leading economies around the World have cut their interest rates in order to stimulate the economy and force off the nearly inevitable World-wide recession. But what were the causes for this world-wide crisis?
Origins of the Financial Crisis:
The financial crisis was caused by many factors but it is widely understood that the financial crisis started with the Subprime Mortgage Crisis in the US in the summer of 2007. Americans could no longer afford their adjustable rate mortgages due to a shortage of new lines of credit. This caused loan defaults and foreclosures with many people losing their homes. This houses were nearly all over-priced due to the ‘housing bubble’ in the US. These loans were usually repackaged and sold as low-risk investments to banks and financial investors. These became sources of capital for
“The impact of the present financial crisis on the general environmental factors of international business, its causes and ramifications”
The world wide financial crisis has been identified to have several different causes, with the problems originating from the US causing shockwaves around the World, sending the World economy into a crisis. The impact of the financial crisis has been dramatic to the general business environment due to the increased uncertainty and risk that investments at this time bring with them and the failure of central financial institutions. The crisis has left many economies, businesses and people in the world in trouble and fighting for their existence. Stock markets are down by more than 40% from a year ago, with immense losses for everyone involved, including workers who are being let go. Many investment banks have collapsed, with more in trouble and in need of rescue packages that the governments have started putting together. These rescue packages, aimed at helping out companies in trouble, total over 1 trillion Euros but are linked with strong guidelines which the companies have to follow. Many leading economies around the World have cut their interest rates in order to stimulate the economy and force off the nearly inevitable World-wide recession. But what were the causes for this world-wide crisis?
Origins of the Financial Crisis:
The financial crisis was caused by many factors but it is widely understood that the financial crisis started with the Subprime Mortgage Crisis in the US in the summer of 2007. Americans could no longer afford their adjustable rate mortgages due to a shortage of new lines of credit. This caused loan defaults and foreclosures with many people losing their homes. This houses were nearly all over-priced due to the ‘housing bubble’ in the US. These loans were usually repackaged and sold as low-risk investments to banks and financial investors. These became sources of capital for
References: -online.wsj.com -www.financialtimes.com -www.economist.com -www.nytimes.com -www.spiegel.de -www.focus.de -www.amazines.com -www.imf.org -www.sueddeutsche.de -www.globalresearch.ca