How the World Crises Happened and What are the Causes Essay

How the World Crises Happened and What are the Causes - rise ExampleThe resultant was a steep fall in both personal and corporate credit. This cypher with the fast recession that occurred in the house and the construction markets. The financial origins especially the investment banks have been lending to each other at lower rates. The reason is that the banks have been well aware of the solvency of other institution and dont want to take the high risk rather they want to keep the hard currency reserve for themselves. As lending by the bank lowered due to the economic instability, the bank change magnitude the borrowing cost to increase the operational r veritable(a)ue. This strategy was taken by the banks in order to defend a sustainable business operation in the financial market. The company undertaken for discussion is Barclays PLC. The company is a multinational bank of Britain. It operates in the financial sector and is headquartered in London. The operations of the agre ement spread over 50 countries and territories. The company emerged as the fourth largest in terms of total assets in the year 2010. The organization has got two business clusters namely retail and Business Banking as well as Corporate and coronation Banking. The company is listed in the London Stock Exchange. How the crises happened and what are the causes The collapse of the U.S. housing market regarded as the housing bubble is characterized as one of the prime reason for the situation to occur. The collapse resulted in a charge of default of mortgage loans (World Health Organization, 2009). The collapse of the real estate market and the subprime mortgage market of the U.S. roll in the hay be held responsible to spread the severe make of the crisis. Uncertainties accrued in the financial system. The creditors became inclined to wrench come in their funds and cashed out the securities issued by the financial institutions. The situation thus caused led to culmination down of many institutions while others just managed to survive. The loan and credit facilities available from the banks dried up. The investors began to dump their holdings and the axiomatic situation was a downturn in the share market. In order to create securitization, the banks started to borrow more money. The dependency of the banks on the savers can only be felt when the banks are not able to draw in out by selling loans on the basis of securities. Some of the banks launched to buy securities which increased the exposure of the banks towards risk. When the problem got realized, the process of lending got slowed. Some of the banks were on the verge of the riskiest loans which was beyond the intention of the investors. The lenders fell upon to take tail end their loans. The investment banks fell drastically as they had no or little deposits. The problem got intensified and even the banks with large capital reserves began to feel the pressure. They turned to the government for supp ort. The banks began to feel nervous to loan out the injected money and the shrinking banks sucked money out of the economy. In spite of the fact that the global financial crisis has shown its effects a year ago, yet the prime banks of UK were able to accrue a profit in the sec quarter of the financial year 2009 in the area of non-recurring items. The retail business of Barclay got affected along with the put across three banks of UK. In the middle periods of the year 2009, Barclays reported that profit hasdecreased far more than what it was in mid-2008.