The International Financial Crisis Of 2007 Essay

The International Financial Crisis Of 2007 Essay

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The international financial crisis of 2007, was the outcome of an extremely volatile housing market, completely collapsing in the United States. Widespread deregulation implemented by Ronald Reagan in the nineteen-eighties, combined with extremely low interest rates, created the perfect environment for increased investment, ultimately leading to the creation of a housing bubble. Although all of the factors responsible for the crisis originated in the United States, the outreach of the financial crisis was experienced worldwide, because of the modern, integrated, global economy. Globalization has revolutionized the manner in which sovereign nations deal with crises of contagion, as well as individualized policy choices. Concurrently, nation-state’s no longer act in singular, isolationist terms; an economic failure in one part of the world will inevitably spread and be endured universally. The world as we know it has evolved rapidly over the last one hundred years, it is significantly different than it was during the time of Ricardo, as well as the interwar period between World War I and World War II. However, with all this development and growth, traditional international relation theories still assist in understanding and explaining the cause of the global financial crisis.
As the global economy becomes increasingly intermingled, crises and contagion flow across borders expeditiously. In addition to individual nation-states being subject to the woes of the global economy, their personal policy decisions can be heavily constrained by international institutions like the International Monetary Fund and the World Bank. Although both the IMF and WB were created to promote international stability by setting goals and restrictions for t...


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... sector, in and outside the United States, grew to be so powerful that its crash sent shockwaves through the entire international system. Many periods before this one may have seen crises of contagion like this one, but the international system has become so integrated that the consequences are far more grave than even twenty or thirty years ago. Simply put, times have changed, for the betterment of the few and the diminishing of the many; the financial crisis may be over for now, but if the international system does not reform, another period similar to the interwar period will erupt, resulting in irreconcilable damage for numerous nations. Therefore, traditional international relations theories were, and still are, invaluable in examining the international political economy and offering solutions to potential crises like the global financial crisis of 2007.

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