The Financial Crisis Of 2008 - 1946 Words

The world before the financial crisis of 2008 had stability. Iceland in 2000 was viewed as the perfect place to live and have your family grow. Iceland had clean energy, high standard of living, jobs, and low government debt. Iceland was a place were children played and parents laughed and enjoyed their life. Everyone lived well; Iceland was the role model of finance, until it all melted away. Iceland let giant corporations come into its territory and exploit its geothermal and hydroelectric resources and its banks became so large to where their banks became larger than their economy, impossible to bail out. The banks became unruly where the people even supposed to regulate the bank one third of them worked for the bank. The cause of the†¦show more content†¦This created a toxic situation where people took out a mortgage loan, with a high rate, could not pay it back creating a bubble to where the investment banks had no one else to lend to, and needed to be bailed out. Banks became rich and borrowed heavily to create more loans to create more short term money that became the big investment banks bonuses. This created a global panzi scheme. The problem is deregulation. The definition of deregulation is the elimination of government power with in an industry. In this case banks and financial institutions of the world. Deregulation could be seen as greed, big corporations, monopolies, where the rich get richer. Deregulation is the cause of the financial crisis of 2008. Deregulation means no one is watching over the banks and CEO is saying no and stopping the gambling of people’s savings. The 2008 economy got to the point of a financial crisis due to speculation of savings, investor banks went public and in turn turned Wall Street became rich. Financial deregulation made for risky investments and looting companies. An example of this is the merger of two big insurance companies Travelers and Citigroup in the 1990 has violated the Glass Stele Act, but was ignored for a whole year by the SEC. The SEC is the Securities and Exchange Commission ho are supposed to be monitoring and making sure big corporations like this d o not monopolize. The Gramm Leach Bliley Act cleared the merger and the way for future large corporations to