Economic Crisis
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Economic Crisis
The global financial crisis is another name for financial crisis which began between 2007 -2008.most economist consider this crisis to be very savior after 1930 Great Depression .With depression subprime mortgage in 2007 ,the economic crisis began in the United State and went trough to internal banking crisis following collapse of Lehman Brothers in 2008. The 2020 stock market crash began in 20 February 2020 following global stock crash. The crisis came following the outbreak of corona virus .The market became highly volatile with contradictions in the global markets as at early March .most experts argue that it is accelerated due to covid-19 rather than a sole core reason. This essay therefore compares and contrast the 2008 and 2020 financial crises
Comparison
In both crisis, the unique aspect is seen in sheer decline to the market crisis. In high market ,the 2008 dropped by 30% from the high market in a year and the current financial has dropped by 30 % in a month. Uncertainty due risk which cannot be quantifiable and be traced to know its probability of occurrence and the impact is not easy to measure (William 2010). This is evident to both crises.
Both crises have led to collapse of the global markets a effecting stock exchanges globally. Global Systematic Important Banks was the reaction following the financial crisis of the 2008 while COVID -19 Crisis revealing the dependence of mature economies pegged on some inputs to produced some nations is seen as interfering with the independence of sovereignty
Contrast
With current economic crisis being exogenous affecting supply of production from China across the globe due the spread of the virus hurting financial sector demand leading to a shock in demand due to contagion of psychology, while the 2008 was a endogenous shock from US. The current shock of economy of leftward shift of supply curve followed by huge demand while the 2008 goes by leftward shift of demand curve followed by production anemia. Due to full or partial lockdowns the global economy stopped temporarily to stop the spread of the virus while in 2008 ,activities were focused ensuring that the economy does not fall caused by luck of funs in lending institutions
The current crisis according to experts, probably will take shorter period making recession within this year following current measures to curb the spread of the virus. The 2008 crisis of economy rebound was delayed and bit by bit, it recovered progressively. In 2008 ,economic in financial sectors, triggered by cheap loans given to households became the epicenter of the crisis. Housing did not have enough capital to counter the shock of the crisis especially in countries like US,UK Spain and countries like Ireland .it forced the bank to pay for subprime mortgage. This because the global financial was very fragile In 2020 crisis ,most bank closed and are boosting interest at ultra –low interest environment (Oliver ,2020). With collapse of the US lender fueled economic downturn. Severe recession for the sustained contracted global 1.8% and lost of job .The 2020 crisis ,according to experts, will hurt global economy up to $2 trillion according to estimates.
The 2008 financial crisis was seen as endogenous in system of economy due to stronger capital stock distortion in other nations and over-indebtedness while the 2020 crisis interrupts production structures leading to (Stefan kooths).corona virus has led to economic meltdown in production but recession will not be as severe as the 2008. With corona virus spreading globally, the aviation and oil industries .Due to temporary ban on travel ,shutting of factories which could outstrip the 2008 crisis. The 2008 had a demand crisis oil industries while 2020 crisis possibilities of a bigger impact due to crisis of demand and supply and uncertainty issues (DW 2020).
Reference
DW, (2020) .Corona Virus Shock and Global Financial Crisis: Retrieved from: htth/dw.com.en.coronavirus-shock-vs-global-financial-crisis-worse-economic-disaster/a
Oliver, M. (2020).Comparison of COVID-19 and 2008 ECONOMIC CRISES. retrieved from:htth//atalanticcouncil.org/blogs/new/atlantic/can-we-compare-the-covid-19-and-2008-crise
William, M (2010)Uncontrolled Risk .McGraw-Hill Education .Retrieved from: htth//Wikipedia.org./wiki/financial_crisis_of_2007