The global economic crisis is a phenomenon that is characterized by a sharp deterioration in all financial indicators. Such a state of the economic sector stirred the whole world in 2008. The scale that was covered by the crisis is comparable only to the times of the Great Depression. For the first time in the past seventy years, the value of the gross domestic product has reached a negative value. Some people still feel the consequences of this phenomenon. Nevertheless, inn ten years from the global crisis of 2008 the global economy recovered enough to state that there is no another global crisis coming in the next several years.
The crisis began to give the first signals two years before the whole world faced it. It all started with the fact that in the US there was a problem with non-payment of mortgage loans. In this regard, there was a destabilization of the real estate market and there was a drop in the number of real estate sales. A year later, similar processes in the US formed a whole crisis of high-risk mortgage loans and reached a serious level of development. This manifested itself in the emergence of problems even among reliable borrowers. Such destructive processes were transformed into the financial crisis of 2008 in the US.
But not for long the crisis was within the country and quickly spread around the world. For many, it was a shock that even major players in the banking sector were forced to declare themselves bankrupt. From this end, some financial organizations have been saved by national governments. Over the next two years there was a decline in quotations in the stock markets. Many companies, evaluating the placement of their securities, understood that obtaining capital was not always possible. These processes vividly characterize the world economy in 2008.
The crisis also affected the production sector. In this sector, there was a decline in production, a reduction in demand for goods and raw materials. This, of course, entailed a fall in the need for labor resources. In connection with the crisis, many people lost their job of because of retrenchment of workers.
Some experts single out one main reason for the economic destabilization of 2008. The crisis, in their opinion, was formed due to overproduction of the US dollar (Feldkircher, 2014, p. 14). The situation has grown to huge proportions, because the dollar is used as world currency. Until the seventy-first year of the twentieth century, the dollar was supported with a gold reserve of the United States. After such a link between currency and expensive metal ceased to exist, the dollar stopped printing in unlimited quantities.
It is important to highlight that the causes of the 2008 crisis are due to the explosion in the area of unsecured mortgages. The prices for housing were gradually increasing during previous years and it led to the fact that people began to worry about its further growth in value. Many understood that it was necessary to use the moment until it was too late. This situation led to the capitalization of money. This phenomenon contributed to the fact that a new proposal appeared in the banking sector. Financial institutions began offering loans to residents of the US, which were called subprime mortgage loans (Nisar et al., 2017, p. 23). This program was absolutely unreliable and caused a crisis.
Also, the financial crisis of 2008 was caused by cyclical processes of economic development. Just as in the previous case, this phenomenon was caused by credit expansion. This concept is characterized by the possibility of issuing funds from demand accounts as a loan. This violates the rules of law that fix the inability to use things that are stored. Development was always carried out according to the same scheme. The beginning was credit expansion, then it reached its peak and, in the end, collapsed.
The way out of the crisis of 2008 influenced started with the formation of a new way of the world economy. The economy has become more orderly and wise. The advantage of the crisis impact is in the improved value of labor in industrial countries that has increased, respectively, and monetary compensation, too. Economic recovery was noted in developing countries (Aizenman at al., 2015, p. 7). They have a unique opportunity to compete with other major players on the world stage. It is especially easy after the global crisis of 2008 for the countries that did not depend on stock exchanges and the exchange rate of the world currency. During this period, they directed all their energies to the development of internal potential.
There was an upturn in the industrial sector. The governments of many states have revised their activities and priorities in domestic and foreign policy. Now the economy began to be treated more responsibly, new approaches were applied. Since the financial sphere of some powers was without material support from outside, the authorities were forced to mobilize their own domestic resources.
Conclusion
For many countries, such a financial emergency situation only gave impetus for further development, as the authorities had to invest budget funds in domestic industries, which, of course, only benefited in the long term. The result of such situations was the improvement of the quality of life of the population and the independence of the economy. In my opinion, at the moment the global economic situation is stable enough to not face another global crisis in the nearest years.
References
Aizenman, J., Cheung, Y. W., " Ito, H. (2015). International reserves before and after the global crisis: Is there no end to hoarding? Journal of International Money and Finance, 52, 102-126.
Feldkircher, M. (2014). The determinants of vulnerability to the global financial crisis 2008 to 2009: Credit growth and other sources of risk. Journal of international Money and Finance, 43, 1-24.
Nisar, S., Peng, K., Wang, S., " Ahmed, J. (2017). Banking Sector Profitability, Before, During and After Global Financial Crisis: Evidence from a Developing Economy. International Journal of Finance " Banking Studies (2147-4486), 6(3), 22-38.
