Financial Crisis Essay Example | Topics and Well Written Essays - 3750 words

Financial Crisis - Essay Example This essay stresses that the impact of the failure in the arena of management of risk and the procedures of estimation became apparent after the financial crisis. In order to analyze the effects of the financial crisis the experts took the help of the mathematical as well as sophisticated techniques. The mortgage backed securities failed to measure the associated risk and so the risks regarding the securities intensified. The World is becoming increasingly unpredictable. The World witnessed overnight contraction of the capital market resulting in credit crisis and lending became difficult. There are possibilities as well as challenges for the decision makers. But since the financial crisis is still a fresh in the mind of the decision makers they are probably taking a safer path that will cement the growth curve. The governments of almost all the nations had to come up with packages that are required to move out from such a situation. As the paper declares the shortages triggered a recreation in the commodity market as well as in the oil market. The situation asked for financial assets from the United States as there was an increase in petrodollars. The flows of petrodollars became an important source of stability while the capital outflows played the role of destabilizations. The impact of the crisis was felt in the second phase when it could be anticipated that the economic growth is likely to get slowed sharply. The slowdown contributed to reverse the commodity market conditions which paved the way for the bubble to develop and ultimately destroyed the bubble. The situation