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Global Financial Crisis

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I've identified a selection of financial crisis that I wish to examine. Can you help me by briefly explaining each crisis below, what each crisis was about, what caused them, how each were resolved and what lessons can be learned from them?

A. Debt Crisis:
1. Russia - 1997
2. Iceland - 2008
3. Greece -2012

B. Foreign Exchange Crisis:
1. Mexico
2. Asian Crisis

C. Banking Crisis:
1. Japan - 1990s
2. USA Suprime-2008
3. Spain - 2012

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Solution Summary

The answer to this problem explains Global Financial Crisis. The references related to the answer are also included.

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A. Debt Crisis:
The cause of the Russian 1997 debt crisis was low productivity, the cost of war in Chechnya, high fixed exchange rate, and high fiscal deficit. The crisis was resolved when foreign exchange rate was lowered, the Ruble debt was restructured, and a 90-day moratorium was imposed on bank obligations. The lessons learned were that a high government deficit, cost of war, and high foreign exchange rate can ruin the economy.

The causes of the 2008 Iceland debt crisis was the deregulation of banks leading to indiscipline, overvalued currency, inflation, and excessive loans to households. The crisis was resolved when three new banks were set up by the Icelandic government with amounts that were 30% of Iceland's GDP. The lessons learned are that deregulation must be followed by close monitoring of the banking system, overvaluing of the currency should be avoided, and inflation should be controlled.

The causes of Greece crisis in 2012 are that the GDP growth rate was low, the government ran up a large deficit, and the government debt level was very high. The crisis was resolved when austerity measures were imposed and bailout loans were provided by EU. The debt rescue plan set by ...

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Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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