To what extent have the US government’s policies caused the financial crisis

7/27/2019 To what extent have the US governments policies caused the financial crisis

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5 EFS Project 2Research essay

Outline/Plan

Name: ______________________________ Term 9/2012 Term 1/ 2013

Use this template to create your essay outline in NOTE form. Submitthis completed outline on Friday WK 3 together ith a copy of your

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paragraph in your essay the ieas !ill be use in$ i$e$ %e&inition paragraph#'P(# 'P2# 'P)$ *'P + 'oy paragraph,$

Title: To what extent have the US governments policies caused the financial

crisis?______________________________________________________________________________________________

THE INFORMATION THAT YOU WRITE BELOW SHOULD BE IN DOT POINT FORM

USING ABBREVIATIONS AND SYMBOLS WHERE APPROPRIATE.

WRITE FULL SENTENCES FOR YOUR THESIS AND TOPIC SENTENCES ONLY!!

THE TOPIC and

THE ISSUE

(quest!n":

To what extent have the US governments policies

caused the financial crisis?

INT#O$UCTION

%a&'r!und

n)!rmat!n *

d))erent +e,-!nts!n t.e ssue:

The U.S. financial crisis in august 200 started to emerge full!"lown in

200#$ the impact from the U.S. financial mar%ets to the glo"al financial

mar%ets continue to spread$ from the virtual econom& to the gradual

infiltration of the real econom&$ so that the glo"al econom& into the worstrecession since world war ''. (s of the end of )ecem"er 200*$ although the

glo"al economic development$ the most difficult period has passed$ some

countries have "een out of the recession and started to recover$ "ut with

var&ing degrees of glo"al economic recover&$ in particular the unusuall&

slow recover& in the developed countries$ even in the face of new attac%s.

The reason$ it is "elieved that this is mainl& due to the formation of the

U.S. financial crisis$ did not eliminate the underl&ing causes are still

ma%ing. Therefore$ in!depth stud& of the cause of financial crisis in the

United States$ there are lots of reasons resulting in the financial crisis.

+an& scholars argues that the world monetar& fluctuations and the oil

crisis mainl& result in the financial crisis. (nd some advocates that theUnited States government policies such as financial policies and fiscal

policies contri"ute a lot to the financial crisis.

(nd the this essa& would specificall& discuss to what extent that United

,rror: -eference source not found


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States government policies

would cause the financial

crisis.

THESIS

STTEENT

OUTINE O

ST#UCTU#E :

ere$ it is "elieved the Unite States government policies mainl& result in

the financial crisis. (nd it would "e illustrated from the following aspects.

)efinition of currenc& crisis

/omment on (merican governments role in financial crisis

/onclusion

ETEN$E$

$EINITIONP#4#PH ( !)

5E6 TE#S N$

CONCEPTS"

Include references

Definition of cenc" ci#i#

+arx once points out that an& common currenc& crisis is a special stage of

production and "usiness crisis$ which should "e the apart from the special

crisis. The special crisis can produce alone$ onl& reacting to the industrial

and commercial$ and the movement center of this crisis is monetar& capital$

so the direct scope of the crisis is the "an%s$ stoc% exchange and finance

/olander$ et.al$ 200*1.+arxs currenc& crisis has two meanings. or the first t&pe of currenc&

crisis$ it happed in a period of time "efore financial crisis with the currenc&

crisis of economic crisis. (nd the currenc& crisis is the s&mptoms and signs

of financial crisis$ which is caused "& the capitalist overproduction and

capital surplus. or the second t&pe of monetar& crisis$ in the case of an

independent currenc& crisis$ occurs in the financial sector$ which is a

special stage of virtual capital independence movement. 't is from the

disorder withing the financial s&stem as the social reproduction process has

not "een stretched to the limit and the development of comprehensive

production surplus has not &et "een critical degree of the financial

crisis/olander$ et.al$ 200*1.



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%O$6Section $%

1stsu--!rtn

arument

'dentif& main topic of

this section

TOPIC SENTENCE%

(rguments3'deas34oints Sources that support &our

ideas author surname$

date 5 page num"er1

(merican scholars -ehinhart and -ogoff

200#1 comprehensivel& anal&6ed the

influence and results of financial crisis ofUnited States$ and he concluded that the

government intervention contri"utes a lot to

the financial crisis. Since the #0 s last centur&$

the new li"eral capitalism in the United States

occup& the dominant position$ (merican

government implements the financial

deregulation 7on$ 8**91.

Under the governments intervention$ the

United States most housing mortgage loan

originators are regional savings ;an%s and

savings and loan associations$ localcommercial ;an%s are also involved in

mortgage loans.These institutions have not

ver& strong financial strength$ that a lot of

mone& was put on the housing mortgage loan

poses a severe stress to the turnover of

funds. Some.S$ 200#$ 7ol.9@1$4ages$ 2*8!2**

7on$ A. -$ 8**9$ 7ol$

921$ 4ages$ 8!2.



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"onds. +ortgage companies had a stead&

stream of the financing channels$ to create the

rapid growth of new su"prime. 'nvestment

institutions so o"tain higher earnings. Bnce

the "u""les come up$ it can eventuall& result

in financial crisis.

rom this point$ it can see that thederegulation of (merican government on

financial industr& ma%e the "ad situation of

economics. The disorder and irregular

housing loans at the merc& of government

intervention results in the disorder of current

rates$ which contri"utes a lot to the financial

crisis. So the government of (merican on the

housing loan policies ta%e more responsi"ilit&

of the financial crisis.

%!d7Section &%

2ndsu--!rtn

arument

TOPIC SENTENCE%



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this section (rguments3'deas34oints

;ased on the famous (merican government

intervention theor& put forward "& the

economist Coseph stiglit6$ he thin%s that in

the United States financial crisis is out of a

variet& of factors$ such as the im"alance ofthe real estate mar%et and inappropriate

monetar& polic&$ the chaos of the asset

securiti6ationTa&lor$ 200*1. inancial

derivatives$ credit rating and the lac% of

financial regulation$ loss of e=uili"rium of

international econom& and the international

monetar& s&stem$ the consumption of

economic model and neo!li"eral capitalism$

etc.$ are closel& related to the mar%et defects

and government intervention +ish%in$ 20881.

The financial crisis is li%el& to "e destructive

and has the widest affective scope. (s Coseph

argued$ U.S. governments financial polic& is

a hot"ed of the financial crisis. The long time

loose monetar& polic& and financial

regulation$ on the one hand$ impel the

transformation of the financial mar%ets and

product innovation$ on the other hand also

"ecause of the change of the economic c&cle

and regular$ it plants the seeds of all %inds of

crisis. 'n earl& 2000$ due to the economicdownturn$ in 200@ to 200D the fed has cut

short!term interest rates to %eep the level of

around 8E$ "ut a low interest rate polic&

ended in 2009$ the short!term interest rate

clim"ed to .2E soon. The rising of short!

term interest rates are influenced "& monetar&

polic&$ thus it affect long!term interest rates$

the result is that return curve "egins to flatten$

and narrow the difference "etween the long

and short rates. Thus$ it strongl& affects the

house rate of (merican$ which is the firstphase of financial crisis. So the (merican

governments monetar& polices exert great

impact on the

Sources that support &our

ideas author surname$

date 5 page num"er1

Ta&lor$ C.;$ 200*$ 7ol$

2@21$ 4ages$ 8!

+ish%in$ .S$ 2088$ 7ol$

8981$ 4ages$ 8!82



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%!d7Section '%

3rdsu--!rtn

arument


this section

TOPIC SENTENCE:

(rguments3'deas34oints

Forld "an% senior vice 4resident and chief

economist Custin Gin said in an interview that

the financial crisis to the current development

stage is greatl& connected to the U.S.

government having not well dealt with the

'nternet "u""le "urst in 2008. 'n the process

of economic "ooms and "usts$ the stoc%

mar%et and real estate mar%et often show the

fluctuations/hristiano$et$al$200D1. ,ventuall&

ma%er people dont understand of the

economic c&cle is not the stoc% mar%et$ also isnot the real estate mar%et$ "ut mastering the

power to implement the expansion of the

monetar& polic& "& the government. (ustrian

school argues that the ultimate source of

economic depression is credit expansion$ and

the modern mar%et econom& power in the

hands of the government$ therefore$ the

government has "ecome the ma%er of the

"usiness c&cle;arnet and /hauvet$ 20881. So

once the stoc% mar%et shows fluctuation$ the

government should adopts suita"le monetar&police to help deal with the pro"lem.

owever$ the (merican government does not

ta%e the new monetar& policies "ased on the

Sources that support &our

ideas author surname$date 5 page num"er1

/hristiano$ G.C$ Aust$ /$

-oldos$ C$ 200D$

7ol$88*81$ 4ages$ 9D!

80@.

;arnet$ F.($ /hauvet$ +$

2088$ 7ol$89881$

4ages$9!2@.



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modern situations "ut releases a series of

laws and policies on restricting export and

import. Thus$ it finall& results in the financial

crisis.

C!n&8us!n

(s is illustrated a"ove$ the nature of the U.S. financial crisis lies in the

intensified currenc& of internal contradictions./urrenc& as pa&ment method

contains a pair of contradictions: the contradiction of calculation and the

real currenc&. Fhen people trust each other$ most trading currenc& would

"e settled "& calculation. Fhen people distrust$ trading should "e carriedout "& real currenc&$ this raises pa& crisis or illi=uidit&$ goods will not "e

a"le to smoothl& transformed into a currenc&$ internal contradictions of

commodit& would out"rea%$ social production will "e in stagnation. rom

the moment$ the financial crisis in the United States will out"rea%$ is

characteri6ed "& illi=uidit&. ;an% credit crunch is a t&pical pa&ment crisis

and credit crisis. Thus$ the economic polic& such as monetar& polic& pla& a

vital role in the financial crisis as it is closel& related to the capital

li=uidit&. (ccording to the argument a"ove$ it can "e concluded that the

government policies contri"ute a lot to the financial crisis.



8/18

#e)eren&es (s 7!u ,!u8d ,rte t.em n a 8!ra-.7 )!88!,n P ude8nes "

Hame of article: 's the 200 US su"!prime financial crisis so different? (n international historical comparison

(uthor: -einhart$ /.+$ -ogoff$ >.S$

Hotes:

http:33www.n"er.org3papers3w8@98

http://www.nber.org/papers/w13761http://www.nber.org/papers/w13761


9/18

Hame of article: The financialcrisis and the polic& responses: (n empirical anal&sis of what went wrong

(uthor: Ta&lor$ C.;

Hotes:

http:33scholar.google.com3scholar?=Irelated:G'J%Fu;J>l+C:scholar.google.com35hlI6h!

/H5as_sdtI0$

Hame of article: +onetar& polic& in a financial crisis$ Cournal of economic theor&

(uthor: /hristiano$ G.C$ Aust$ /$ -oldos$ C

Hotes:

http:33www.sciencedirect.com3science3article3pii3S00220@80@0022#K

Hame of article: Thefinancial crisis and the s&stemic failure of the economics profession

(uthor: /olander$ )$ Aold"erg$+$ aas$($ Cuselius$ >

Hotes: http:33www.tandfonline.com3doi3a"s380.80#030#*8@#80*02*@D80*

http://www.nber.org/papers/w14631.pdfhttp://www.nber.org/papers/w14631.pdfhttp://www.tandfonline.com/doi/abs/10.1080/08913810902934109http://www.tandfonline.com/doi/abs/10.1080/08913810902934109http://www.nber.org/papers/w14631.pdfhttp://www.nber.org/papers/w14631.pdfhttp://www.tandfonline.com/doi/abs/10.1080/08913810902934109http://www.tandfonline.com/doi/abs/10.1080/08913810902934109


10/18

Hame of article:+&th and realit& of /hinas seventeenth!centur& monetar& crisis

(uthor: 7on A. -

Hotes:

http:33Lournals.cam"ridge.org3action3displa&ulltext?

t&peI85fidID829#5LidIC,5volume'dI95issue'dI025aidID8290

Hame of article: +onetar& polic& strateg&: lessons from the crisisM(uthor: +ish%in$ .S

Hotes:

http://journals.cambridge.org/production/action/cjoGetFulltext?fulltextid=4127768http://www.nber.org/papers/w16755http://journals.cambridge.org/production/action/cjoGetFulltext?fulltextid=4127768http://www.nber.org/papers/w16755


11/18

http:33www.n"er.org3papers3w89

Hame of article:ow "etter monetar& statistics could have signaled the financial crisis

(uthor: ;arnet$ F.($ /hauvet$ +

Hotes:

http:33www.sciencedirect.com3science3article3pii3S0@0DD0980008#2K

Hame of article: (uthor:

Hotes:


http://www.sciencedirect.com/science/article/pii/S030440761000182Xhttp://www.sciencedirect.com/science/article/pii/S030440761000182X


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To what extent have the US government’s policies caused the financial crisis