INTERNATIONAL FINANCIAL STRATEGY Coursework Assignment

INTERNATIONAL FINANCIAL STRATEGY Coursework - Assignment Example Financial crisis begun in the USA, spread to Europe and the rest of the world. In the year 2007 to 2009, a deadly financial crisis hit the world (Jones, n.d.). Recession hit several countries such as UK, Spain, USA and Ireland, where the first experiences included raising expenses emanating from the housing. Economists, journalists, and other bodies like countries' governments interpreted the recession widely (Munyo, n.d). According to Fosberg (n.d.), the financial crisis originated from subprime mortgage loans, and debts. These types of finances backed other financial elements deterioration. It extended their problems to other sectors. For example, Bear Stearns announced the initial indicator of financial crisis; two of their subprime hedge funds have translated into worthless assets in a short time (Leeuwen, 2011). Moreover, there was collapsing of the financial market in the USA when the auctioning rates collapsed in 2008. Buyers who failed to bid for securities in the market char acterized it. According to Fosberg (n.d.), recession is a significant decline of economic action occurs in a period ranging from months to years. From the European Commission, there is no specific definition of the term economic activities (Smith, and mendoza, 2011). Instead, the European Commission is comparing the economy movers’ factors such as Gross Domestic Product (GDP), and Production and Income of the country as per its GDP. This explains the identification of an economy headed to recession (Grenville, 1999). Merrouche and Nier defines recession as a phase of business cycle whereby the overall output in the economic actions like income and employment declines for a period extended for more than 6 months (Munyo, n.d). The financial crisis constricts the business activity and the GDP reduces leading to lowering of the employment chances. Moreover, recessions occur when there is a decline in the state of Gross Net Product for more than half a year. Their definition and m entioning of the measures of the economic crisis is wider than just GDP (Zarebski, and Dimovski, 2012). The occurrence of the financial crisis had several negative impacts on the financial market. For instance, there was a reduction of securities issued by the firm such as the lending organizations (Powell, Nilipornkul, and Allen, 2013). Moreover, the world experienced various effects of the financial structure such as disrupted financial markets, the debt and the equity capital for company expenditure reduced, and severe recession in many countries. In addition, economic recession marked a significant change in the way people spend their income in terms of the pattern and habits followed when spending. The main problem required comprehending and anticipation of the expected new environment with an understanding of consumers’ attitudes and needs (Zarebski, Paul and Dimovski, Bill 2012 percentage). Moreover, the same year was characterized by rising of credits as many of the i nvestment firms that used short term loans to fund their projects were having difficulties tapping the resource for their firm`s growth (Schwellnus, Goujard, and Ahrend, 2012). Before recession, early 2007, the USA was experiencing a growth GDP rate of 3 percent and the rate of unemployment was significantly lower than the current trends. However, indicators outlined that the housing cost fell sharply, at a rate of 9 percent. The credit card companies were reducing by refusing new applications