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nt financial crises started eventually in 2001 with the busting of U.S housing bubble and reached its peak in 2005.Basically it is said when there is a rapid increase in real estate prises until it touches its peak and reaches unsustainable level.

The bubble in the houses was identified in 2006 after the market correction. Former chairman of Federal Reserve Board, Alan Greenspan said in 2007 that they had bubble in housing but it was very late until they realized in 2005 and 2006 (Bianco, 2008)

 

Many economists believe that the main reason behind housing bubble was caused by low interest rate set up by the Federal bank. The interest rates were reduced to 1% from 6.5%, this made people to mortgage their property against the loan. The banks in return encouraged everyone to obtain loan against their mortgages because real estate prices were at its peak. [business.cch.com] When inflation began in 2004, US federal withdrew monetary accommodation, they started increasing the interest rate and mortgages payment also started rising apparently. Tight money policy came into play and there was a great demand of money and therefore house prices fell. Banks and other financial institutions financed at very low rate, and when interest rates started raising there were heavy chance of default by the subprime borrowers thus default by such borrowers led to losses. Though the loans were secured and were sold to special institutional vehicles (SIV's) the losses were still bourn by banks and other institutions (Mohan, 2009)

 

Deregulation of financial system gave rise to tradable instruments through securitization. Securitization means turning an asset or credit card debt into tradable instrument. This system made household to become both investors and issuers of securities. Thus trading in different form of capital emerged which was unstable and did not last for long which caused the financial crises (Davis, 2009). https://www.51lunwen.org/mgjingji/ Apparently US government failed to manage their trade deficit. The housing bubble was mainly caused by cheap credit and low interest rate rates. The main reason for cheap credit was there was a lot Chinese capital in U.S. And that is because US imports most of the products from china and sells it at a cheap rate to its consumers (Weismann, 2008)

 

Global Macro Economy Imbalance: According to Portes (2009) global macro economy was one of the major underlying reasons of the financial crises. This is because of saving investments and huge cross border capital flow made a lot of pressure on financial intermediation process, these imbalances with flaw in the financial market and instrument together became one of the specific features of crises (Mohan, 2009).

In view of the current crisis, the UK Government can initiate the following actions to prevent another crisis:

 

Looking at the long term , we think of what should be done in order to avoid danger of future crises, it is clear that macro economy imbalance was one of the major underlying reason, so it is better UK government try to find the problems which lie at the interface between macro economy policy and financial system regulation.英语论文网，代写英语论文，留学生作业

Few more things that government should consider are they should make sure that they protect the needs of ordinary people when the information is costly to acquire. Next measure is the government should make sure that internalises 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。