The financial crisis is a sharp decrease in various financial instruments, and also characterizes a certain situation in the stock markets. Most of these phenomena are associated with banking problems and panic that occurs in this situation. At the same time, the concept of a financial crisis still remains rather vague for people without an economic education.
Description
In fact, business is conducted with the help of the so-called financial leverage, which automatically “collapses” when there is a lack of borrowed funds. As a result, a falling domino effect is formed, since even a small shortage of these funds causes the insolvency of many businessmen. At the same time, speculators are included in the game, who begin to massively buy or sell assets, which turns the growth or weak decline in prices either into their rapid increase or into a landslide fall. As a result of such manipulations, the market destabilizes and a financial crisis begins.
According to historians, the first financial crisis in world history occurred in 88 BC on the territory of the Roman Republic.
The consequences of the financial crisis are not only higher prices - it leads to lower profits, layoffs, unemployment, delayed wages, pensions or scholarships. In the modern world during the financial crisis, such international financial organizations as the International Monetary Fund or the Financial Stability Forum are taking a number of anti-crisis measures, coordinating them among themselves. This makes it possible to stabilize the main economic indicators in many countries of the world experiencing the financial crisis.
The reasons
Professional experts attribute the general cyclical development of the world economy, the oversaturation of the credit market, the mortgage crisis, the increase in the cost of raw materials and the use of unreliable financial instruments in business to the main reasons for most financial crises. In addition, the threat of armed conflicts in individual countries, the existing political instability and the globalization of the world economy / finance almost always lead to a financial crisis.
The causes of financial crises provoke not only economic instability, but also global capital flows.
Oil also plays an important role in the development of the financial crisis - namely, the specific impact of its high price on loan capital and the separation of pricing for oil itself from the classical formation of value. In addition, the pressure of a huge amount of “free money” on the financial centers of the world has a negative impact, as a result of which economic “soap bubbles” are created, and the scale of fictitious capital is growing at an extraordinary rate.
