Causes of the Global Financial Crisis of 2008 Free Essay Example, 4250 words

This paper tells that capitalism, by many is viewed inherently unstable due to the many speculations involved in it e. g. producers believe that their sole purpose is to produce and the consumers will feel the need to buy on their own and will buy the product. At the same time the competitive nature and the right to gain maximum profits, has finally shown its bad side (Katsuhito, 2008). The fact that the New Financial Architecture (NFA) is based on weak assumptions, which presumed that unregulated capital markets are efficient and they price risk and return accurately, hindered in understanding and addressing the financial meltdown on its onset which aggravated the matters to such an extent that the Global financial crisis of 2008 comes only next to the Great Depression of the 1930s, in terms of the financial destruction caused (Crotty, 2008). Adam Smith said, financial market needs to be more regulated than other markets ; the subprime mortgage crisis and the incidents leading to it clearly show the significance of his words (Akrasanee, 2009). In the earlier part of the 21st century, there was excess capital in the economy and investors were looking for low-risk investments. We will write a custom essay sample on Causes of the Global Financial Crisis of 2008 or any topic specifically for you Only $17.96 $11.86/page