Causes and Consequences of Global Financial Crisis

Global Financial Crisis Causes and Consequences An Analysis of the Causes and Consequences of the Financial Crisis of 2007-2009 as well as the role Information Asymmetries Played in these Events Introduction Although the roots and after effects of the global financial crisis were undoubtedly set before 2007 and continue long after 2009, it was the period between these years that the crisis was in full effect. Since the economy as a whole is a vastly complicated and dynamic arrangement, it is difficult to pinpoint an exact first cause. Many of the variables that were in play and at least partially responsible for the rapidly deteriorating state of the economy are deeply intertwined with a plethora of other factors that work in tandem and often feed off of each other. It is difficult, even with the advantage of hindsight, to isolate a specific, demonstrable factor that is to blame. In fact, economists are still debating these issues to this day. With the complexities of analyzing the financial crisis being stated clearly, there are many factors that are argued to be among the causes of the crisis. Many argue that the trend of financial deregulation was the first factor that set others in motion. Beyond deregulation, more immediate factors often include the housing bubble and the sub-prime lending catastrophe. These factors are also related to the securitization of assets as well as the invention of the derivative market. 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