Table Of Contents
Global Financial Crisis Basics
Cashing In On Precious Metals
Supply Information On Defeating Credit
Supply Information On Budgeting
Learn How To Stay On Top Of Your Own
There has since been an expected cumulative loss of $4,700 billion in
world output associated with the crisis. The loss in world output
represents a figure that is close to twenty times greater than the loss
experienced in the collapsed subprime market.
Though this loss is considerable, the impact on the decrease in stock
market capitalization from July 2007 until November 2008 alone was
calculated to have been $26,400 billion which was one hundred times
greater than the loss on the subprime market in the United States
where the crisis actually began.
Two questions have to be asked. How was it possible for the
subprime crisis in the United States to occur and how was it possible
for such a relatively limited and localized crisis to have been able to
cause a crisis of such magnitude to world earnings?
The basics would indicate that there were fundamental flaws existing
in the scrutinizing of the subprime market. Very importantly, the risk
of the assets was understated and the balance sheets of the derived
securities were not transparent to those buying into the risk.
When the crisis began there were two amplifying mechanisms behind
the crisis which accelerated the rate of collapse, firstly there began the
sale of assets to satisfy liquidity and this was followed by the rapid
sale of even more assets to re establish capital ratios.
The fact that the crisis rapidly spread globally was the result of the
interconnectedness between banking institutions both nationally and
internationally and the high levels of leveraging of the financial
system as a whole.