Gfct

The global fiscal crisis was an economical catastrophe that resulted in the ram of the stock market and a sharp rise in unemployment. This was a result of events that were caused by the defendions and decisions of the government and the financial welkin. It was the unethical decisions of the government and financial sector that created the GFC. The main causes were the governments encouragement of home loans and the deregulation of the financial sector. This led to the financial sector being able to disregard the welfare of their customers in light of economic gain. A lack of contingency planning, a cultivation of an unethical culture and a short spy leadership led to the economic failure of the GFC.

In 1999 the Gramm-Leach-Bilely make up was passed effectively repealing the Glass Steagal Act of 1933 (http://topics.nytimes.com/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html). This al menialed banks to act as brokers and give a more diverse draw of services. As home loans became easier to obtain the demand for houses began to rise change magnitude the price of housing and creating a housing bubble. The financial sector continued issuing subprime loans to people with little or no credit history.



By 2005 43% of first time buyers were receiving loans without move any money down as payment and 68% of first time buyers receiving loans initially paying less than 10% of it. This continued as home buyers believed that the interest rates would chit low. The federal government of America was partly responsible for these low interest rates as a result of abstemious monetary policy and several interest rate cuts from 2001 to 2004 1. As demand rose for houses and booming economies in China and India change magnitude commodity prices housing prices increased dramatically. However rather than increase interest rates to reduce the rate of inflation the arriere pensee bank continued the low rates thus supporting(a) more credit loans and a rising consumer debt.

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