The Global Financial Crisis Essay -- subprime mortgages, Great Recessi

1.Introduction1.1.BackgroundThe Financial crisis was triggered in 2006 when US lodgement market began to crumble as the housing price reached their highest point after long time of speculative price increase many house owners defaulted on their loans, particularly subprime owers (Archarya et al., 2009). Starting in mid-2007, the outburst of US housing bubble in the subprime mortgage leads to the global financial crisis that has been often so called big(p) Recession (Verick and Islam, 2010).Archarya et al. (2009) states that it is widely agreed that the fundamental cause of this global financial crisis was the accredit boom and the housing bubble. While Poole (2010) argued that it is a mistake to only take subprime mortgage issue as a unique reason of the crisis. With regard to the root causes behind the subprime mortgage issue, Verick and Isalam (2010) suggested below four factors that are low interest rate vacates banks to search for high yield investment with high risk such a s subprime mortgage (Crouhy et al. 2008) global imbalances between US the excessive consumption by depict and China the excessive saving by surplus fuelled the housing bubble and credit boom, it is closely connected with financial crisis (Obstfeld and Rogoff, 2009) misperception the risk of the subprime mortgage defaults loose financial regulation that failed to control the standards in the mortgage market, and this point is supported by Crotty (2009) that regulators allow banks to hold assets off balance sheet without capital requirement to support them.After this introductory section, section 2 discusses the impact of recession on guest behaviour section 3 presents an analysis on how does the recession affect the companies profitabilit... ...une. Available at http//www.tradewindsnews.com/weekly/w2009-06-26/article200083.ece5 (Assessed on 30 November 2013)Vaitilingam, R., (2009). Recession Britain Findings from Economic and accessible Research. Online Available at http//www.esrc .ac.uk/_images/Recession_Britain_tcm8-4598.pdf (Assessed on 24 November 2013)UNCTAD, (2010). Review of World Maritime Transport 2010. Online Available at http//unctad.org/en/docs/rmt2010ch3_en.pdf (Assessed on 5 December 2013)Verick, S. and Islam, I., (2010). The Great Recession of 2008-2009 Causes, Consequences and Policy Responses. Online Available at http//papers.ssrn.com/sol3/papers.cfm?abstract_id=1631069 (Assessed on 21 November 2013) Yang, D., Liu, M.J. and Shi, X.N., (2011). Verifying Liner Shipping Alliances Stability by Applying Core hypothesis. Research in Transportation Economics, 32(1), pp. 15-24.