Financial Crisis
Understanding the causes of 2007-09 ‘financial crisis’…and the UK government’s response- An essay by Shirumisha Kwayu
Posted on 18/04/2013 by Aikande Kwayu
Note to the reader: This is the first entry that is not written by me (i.e. Aikande Kwayu). The blog is now inviting entries by interested people…if you think you may have something to share please feel free to email me. And now…let’s learn a bit about the recent financial crisis and how the UK government responded. It’s important to understand the UK’s reaction as it has been one of the forefront countries in dealing with the issue… remember how Gordon Brown worked very closely with U.S.A, I.M.F, E.U, etc…proposing bailing out banks etc…so here we go!!!!
The period between 2007 and mid-2009 experienced the worst global financial crisis since the great depression of 1930’s. The crisis was mainly notable for its impact on the banking sector. In the UK, a bank run that was never seen since 1866 at Overend Gurney bank was seen at Northern Rock in September 2007 (Shin, 2009). Some scholars such as Eduardo Pol (2012) argue that the 2007-09 crisis should be specifically termed as banking crisis instead of financial crisis. The rationale being that the crisis inflamed financial shock that hit directly on the banking sector. The period was characterised with failure of large banks such as Northern Rock, Lehman brothers, Bear Stearns and others across the US, UK and Europe. The failure subjected some banks to takeovers as well as prompting government intervention in order to rescue the whole financial system.
The failure of these banks and the crisis in general was a result of major developments that took place in both micro economic level (within the banking industry) and macroeconomic level (within the economy). This essay will discuss: (a) the causes of the 2007-09 banking crisis; (b) and critically assess steps that were taken by the UK government to resolve the problem. The essay ends with a conclusion.
Posted on 18/04/2013 by Aikande Kwayu
Note to the reader: This is the first entry that is not written by me (i.e. Aikande Kwayu). The blog is now inviting entries by interested people…if you think you may have something to share please feel free to email me. And now…let’s learn a bit about the recent financial crisis and how the UK government responded. It’s important to understand the UK’s reaction as it has been one of the forefront countries in dealing with the issue… remember how Gordon Brown worked very closely with U.S.A, I.M.F, E.U, etc…proposing bailing out banks etc…so here we go!!!!
The period between 2007 and mid-2009 experienced the worst global financial crisis since the great depression of 1930’s. The crisis was mainly notable for its impact on the banking sector. In the UK, a bank run that was never seen since 1866 at Overend Gurney bank was seen at Northern Rock in September 2007 (Shin, 2009). Some scholars such as Eduardo Pol (2012) argue that the 2007-09 crisis should be specifically termed as banking crisis instead of financial crisis. The rationale being that the crisis inflamed financial shock that hit directly on the banking sector. The period was characterised with failure of large banks such as Northern Rock, Lehman brothers, Bear Stearns and others across the US, UK and Europe. The failure subjected some banks to takeovers as well as prompting government intervention in order to rescue the whole financial system.
The failure of these banks and the crisis in general was a result of major developments that took place in both micro economic level (within the banking industry) and macroeconomic level (within the economy). This essay will discuss: (a) the causes of the 2007-09 banking crisis; (b) and critically assess steps that were taken by the UK government to resolve the problem. The essay ends with a conclusion.