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1. Introduction

The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. The root of the American credit crisis is - as profits pile up during economic expansions, investors eventually find it difficult to find investments that generate large returns, so they send their money after riskier prospects. In the expansion that just ended, the most important of those questionable investments was subprime mortgages, culminating in mortgage loans that required minimal to nonexistent credit checks, down payments or even proof of income. In total, some $550 billion of subprime loans (and a separate $725 billion of Alt-A loans — the next quality step up from subprime) are currently outstanding (Stratfore, 2008). It caused many bad effects, such as some of the largest and most venerable banks, investment houses, and insurance companies have either declared bankruptcy or have had to be rescued financially. The credit flows froze, lender confidence dropped, and one after another the economies of countries around the world dipped toward recession. The crisis exposed fundamental weaknesses in financial systems worldwide, and despite coordinated easing of monetary policy by governments and trillions of dollars in intervention by governments and the International Monetary Fund, the crisis continues.
 
Firstly the financial crisis cause around the world stock markets have fallen, for example December 5, 2008, The Associated Press reported that stock purchased by the federal government as part of the bank bailout has lost nearly one‐third of its value in the last month. Under the plan, the government negotiated options to purchase up to 1.3 billion shares of common bank stock that was valued at $27 billion. Now, the value of that common stock is worth about $19 billion (The Mintel report, 2009).
 
Secondly financial crisis cause the unemployed rate was increased quickly, according to the U.S. Department of Labour, jobless claims actually declined by 14,000 for the week ending November 22. However, the four‐week moving average of claims rose to 518,000 from 507,000, which is the highest it has been since early 1983 and the U.S. Labor Department reports that the unemployment rate reached a 15‐year high in November. According to the report, 533,000 jobs were cut in November and the unemployment rate rose from 6.5% to 6.7%. As of November, 10.3 million people were unemployed, an increase of 2.7 million since December 2007. Employment rates declined in almost every industry, with most losses occurring in the professional and business services sectors. In contrast, the health care industry added 34,000 jobs in November 2008 (The Mintel report, 2009), and the high unemployed rate cause the decrease of the consumers spending, the U.S. Department of Commerce is reporting that consumer spending is down. In October, personal consumer spending dropped 1 percent compared to the previous month, the largest decline since September 2001. Orders for durable goods also declined for the third month in a row by a total of 6.2%. Excluding transit‐related durables, orders decreased 4.4%. Orders for commercial airlines were down 4.7 percent, while demand for automobiles decreased by 4.5% (The Mintel report, 2009).
 
Finally many large financial institutions have effect of the financial crisis, they have collapsed or been 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。