The Roots of the global financial crisis (2007-?), effects of the crisis, partial exit from the crisis and current state

Abstract

The most important fact which has caused global financial crisis that has started to show effects fromthe second half of 2007 is subprime credit crisis which has boomed in United States of America. Volume ofsubprime mortgage loans has started to increase because of suitable economic conditions, those subprimemortgage loan receivables have been intensively securitized and risky high-volume securities backed by thosemortgages have been issued. With the start of subprime home loan debtors failure to repay, the values ofmortgage backed securities issued in consequence of securitization of receivables that has arose from subprimecredits have started to decrease. The banks that have taken into consideration possible losses in future havestopped giving loan to one another with rising distrust and all of credit market has started to shrink. Thepresence of investors from all over the world in high volume collateralized debt obligation market has carriedthe crisis to other countries. The crisis seen firstly in USA housing market has started to affect all countries economies in many ways in a short time and turned to global financial crisis. With these events, economies ofmany countries have shrunk and serious economical and social problems have appeared.