Paper Topic:

GLOBAL FINANCIAL CRISIS - RISK MANAGEMENT

The construction of houses declined to its lowest since the early 1990 's . This was followed by a biting credit crunch that dealt a blow to financial institutions that resulted in tighter credit by banks . The US Federal Reserve is projecting billions of losses in the sub prime mortgage market . This current financial crisis was characterized by a hiked dollar price of oil (Global Risk , 2008

Why the global financial crisis is an emerging crisis

The author critics the foundations and credibility of the current institutions and practices commonly called New

Financial Architecture (NFA ) as the main reason to blame for the emerging global financial crisis . He challenges the foundation of free markets as a system that undermines economic stability . If the banks are left to engage in excessive risk taking then trouble will be in the offing . If banks liquidity was subjected to tough governmental controls then the crisis will have been averted . These tighter state controls were successful enough after the Second World War and up to the 70 's that registered real growth in the period of Golden Age . The Glass Seagull Act was passed after the Great Depression that prohibited banks from engaging in investment activities , regulated their activities , interest rates barred them from risky investment . This Glass-Seagull system seemed to have worked very well but was later to face major challenges that gave way to the modern capitalist free system . The developed nations had a choice either to institute regulations that restrain financial institutions from huge risk taking or turn and liberalize the markets . As a result the markets were liberalized without any strong political resistance in defense regularization . This eventually spread all over the world after the successful Thatcher and Regan Revolutions . Under the Glass Seagull regulations , commercial banks were not allowed to finance...

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