How The Financial Crisis Has Effected Our Lives Finance Essay - Free Essay Example

In economies, the financial institutions take an important place. And try to be the most profitable corporations. They have plans, budgets and programs in order to be well organized and much better than any other institutions and have the right to be one of the worlds strongest economies. In my project I will discuss the global financial crisis and how did it affect the worlds economy. The financial crisis is a sudden breakdown in the world economy because of some mistakes in the workflow like using inefficient systems in the workplace and not having enough experience and information about the work of financial institutions. This can lead to many bad results and direct the world to a series financial problem like financial loss, price increase and lots of debts. It could lead to some diseases and attacks and sometimes to social crimes. However, global financial crisis took a big place in the world media. Everyone and every channel were talking about the crisis that the whole world faced. And each one stated his own opinion about it and what they think about that will happen to the world in the future. I hope my project to be well done and I hope that I used the best drafting techniques. Global financial crisis: what is a financial crisis? Its a crisis that is caused by a financial error and a decline in the banking system. It started in the United States in the middle of 2007 and reached to a high level in the last quarter of 2008. The global financial crisis caused a huge collapse in the financial institutions such as banks and stock companies. The government had to push the banks to stay alive and complete their activities to benefit other people and complete the work programs. The stock companies faced a large destroy in the cost of stocks and the rate of profits. The financial crisis is a decline in everything in the world that affected everyone in the whole world especially the ones who had stocks in the stock market and were depending on stocks to live and have a family. It could affect every single corporation and every business in the whole world. The financial crisis is a global problem that made many people to reconsider their lives again and sometimes have a new lifestyle and new rules of budgeting. What are the main causes of the global financial crisis? There were many direct and indirect reasons caused the financial crisis. It started with the mortgage crisis of real estates in the USA. And after that many other reasons affected the completeness of the crisis like: Political competing between countries, states and corporations. Some economic and organizational interests was mentioned that they were a hand in the happen of the financial crisis. Raw and inefficient financial systems. Including complicated financial securities. One of the causes is that some people were depending on the short term financial markets and go to invest there. It was wrong because the short time is not affective and will lead to a financial loss. Instability in the international trade that might cause a loss in the bad times although it might cause a benefit in the good times. The loss can be losing everything. Many other reasons like a rise in the number of debts for the financial institutions, setting some ineffective controls that makes the work more difficult and not easy to deal with which makes the success percentage lower and the profits less. What are the main effects of financial crisis? The crisis has affected many things in the whole world and caused many losses and problems to many institutions like banks. Banks had to lend people and companies money in order to get back to the market and stay standing. This money was given to the people and companies as loans. And this had affected the bank itself. No one is returning the money because they dont have profits they dont have enough money. All the money they have they were spending it on getting back into the market. So that banks faced a big problem that might cause a financial loss to the banks. The second result that is affected by the global financial crisis is that the prices of fossil fuel increased in a very high percentage. This can reduce the amount of production and let people try to look for alternatives like nature resources to make nature production. This might cause a financial loss to the fuel companies. Everything was affected in a very bad way from the financial crisis that is harming the world since 2007 tell this day. Many of the milliners lost more than 40 million dollars. Some people lost their homes, money, cars and everything they had. Managers announced their bankruptcy and closed their companies. The loss from the stock market reached to %46 of the whole budget. It was so bad that some people stayed without homes, their children couldnt go to schools any more. The global financial crisis has affected the whole world in a really bad way. There was a study that have made on the Nigerian economy about the effects of the financial crisis and they said that nothing stayed constant. Everything has changed even the prices of goods and services everywhere. The amount of export and import reduced. The quantity of production declined. Even the prices of transportation rose up. Nothing was good, nothing was suitable. Everything was going against people. So that every government was trying to intervene in order to solve the problem. And try to prevent the rise of every price for everything. It didnt reach to its goals %100 but still trying to maintain an appropriate environment for each layer of people. What are my opinion and other peoples opinions about the global financial crisis? What I do think so about the financial crisis, I feel that its the peoples mistake. Because they werent focusing well, and werent training well. They were just buying and selling without knowing how they have to do this. Some of them were giving the authority to the stock broker in order to buy and sell the stocks for him. My sister was working in a brokerage and securities firm. I asked her about the people who were coming to them for trading. She told me that the client just comes to the company and ask us to maximize his money. No matter what the way is. We just call him and tell him you will gain this, he says ok sell it. Most of our clients do this. They are not educated with the brokerage system at all. Some of them come without any experience. While others come to you and work by themselves, they show you that they are well known with the brokerage system. But unfortunately, the upper number of uneducated people disturbs the work of others and prevents them to trade in the original method. I searched the internet to find out some opinions of people about the financial crisis and what their expectations are what is going to happen in the global. Some of them said that they expect the world to maintain its success in the next 5 years, While others said that the worlds economy is about to fall in the whole and will not go out at all. As crystal, one of people who posted his own opinion about the crisis and said that you dont have to count your chickens before they are hatched. Others were defending the loss that happened and hoping that the world will be back. I visited my sisters company in Al Ain city and talked to MR Alaa Al zoubi the supervisor of Al Ain branch of Al Ramz securities. I asked him few questions about the financial crisis and what was their opinion and what were their clients opinions. He said that from the first time they knew that there will be a bad wind coming to the brokerage firms. So they backed- up in order to know how to deal with that wind. The most important thing they were focusing on and trying to deal with professionally was how to explain that to their clients. Of course some of them understood and made their plans while others didnt want to discuss anything which made a huge problem in the company at the end. After all, they could deal with the crisis with some losses but not disasters. Methodology: As an individual project, I used the internet to search for the definition of global financial crisis. Then I searched for the causes and effects of financial crisis. Then I posted my own opinion and what I found out in websites about peoples opinions. After that I talked about the interview that I did with some head of a brokerage firms. And after all concluded my project with discussing what expectations I feel that will happen in the future. Conclusion: Based on my research and sources I can say that Global financial crisis is a very big problem that the western and eastern world faced during the three years from 2007 tells 2010. Everything in the world was affected by the global crisis. Even people who are sitting in home and not working in any of the financial institutions. The increase in everything prices affected them in a very clear way, and still they are trying to face and overcome the problem. The governments tried and still trying to keep the world in the save side but no guarantees about what is going to happen in the future. I think that after few years the world will be back as successful as it was before and I hope my expectation to be right.