Factors leading to financial crisis

Factors leading to financial crisis

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Financial crisis has greatly affected the whole world whereby many nations have had sudden loss of their minimal value. There are many factors that are the main cause of financial crisis. Politics are becoming major factors affecting investment institutions. Government interventions in the year 2008, greatly affected the housing sector whereby this lead to crisis. There was inflation on housing bubble whereby many individual rose to question the government leading to crisis. In addition, many greed politicians were out to take advantage of house owners in order to enjoy personal gains. Some politicians are out to benefit their own desires but not the common man. The government too intervened too heavily on some areas such that development was limited. Financial institutions need more strict rules and regulations to take control of the financial institutions because it seems the government is taking full control of these institutions (Baker, 2010).

Conclusively, laws have been enacted in order to control politics not to affect financial institutions in the future. The commodity futures Trading commission has issued itself to take control of the financial institutions to protect future financial crisis from occurring. The commission has issued a 489 pages plan to govern the financial institutions which has really created impacts to the economy. The law breakers are really facing the consequences of the plan. This has really affected even the economist whereby they are also paying for the consequences of the broken law. The government has then allowed the commission to take control of the financial institutions so that no blame should be put on it (Baker, 2010).

References

Baker, A. (2010). Restraining regulatory capture? Anglo‐America, crisis politics and trajectories of change in global financial governance. International Affairs, 86(3), 647-663.