Paper2 1500 Essay Example | Topics and Well Written Essays - 500 words

Paper2 1500 - Essay Example s concerning the depths of both crises, with close attention to ways in which stock prices, GDP, employment, manufacturing production and overall economic policy reacted in both cases. Before making the comparison between the Great Depression and the financial crisis of 2008, it is prudent to perform and analysis of the pivotal differences in the nature of the capitalist system now and in 1929. It is noteworthy that the rise of neo-liberal capitalism in the 1970s, and the post-war shift to Keynesian economics that followed it precipitated the era of capitalist development. This was fundamentally different from the previous economic regimes, including the period after the Great Depression. Several arguments have been made regarding the main causes of the recent global financial crisis, and even though it may be hard to discern the exact causality. There are a number of factors that remain clear. Firstly, in a similar manner to the Great Depression before it, before the onset of the financial crisis, the world economy experienced a boom period with a rapid growth rate between 2001 and 2007. The rate of growth during this period was higher than any other period in the preceding thirty years (Wade, 2008). In this regard, most analysts concur that the financial crisis was initiated by the collapse of the subprime mortgage bubble in the United States. However, this fact was not the primary cause of the crisis. Secondly, even though the emerging financial crisis first appeared in early 2007. It was not until the year 2008 when major banks such as the Lehman Brothers began going to the wall, and financial assets started crashing that the full extent of the crisis became appa rent. As a result, credit flows dried up, and the global financial situation became dire with each passing day. One clear example of this situation is the subprime mortgage crisis in the United States. For instance, there was $130 billion of subprime lending in the country in the year 2000, but this