Assignment First





Recession was started in a period when no one was able to predict what will happen next. American financial policies were thought to be responsible for the failure of big giants of financial world especially those associated with United States. Major reason behind this viewpoint that fallacious American policies were responsible, was that the rest of the world were following tighter and stable financial policies that were quite successful in maintaining control. The responses that were made by big institutions were too much delayed that all the acts to control the situation just added to the costs faced by these institutes rather than providing some kind of relief. Another reason was that the world underestimated the powers of global integration and the changes in production, consumption and field of finance were on the one side massive and on the other side unpredictable.

As far as the direct association of global recession is concerned it remained more associated with the originating country. Later on the spillover of effects to other partner economies was inevitable.  Rescues of financial institution further intensified the situation rather than controlling it. Europe’s economy remained less affected because of the reason that its financial authorities reacted in time and launched enough liquidity in the financial system as the things started to become shaky. Moreover another step that was taken by Europe was that it nationalized many of its financial institutes so that better control can be maintained. Actual reason behind this lies in the fact that Europe learned from the experience of United States and took necessary steps to tackle the issue of global recession. Globalization policies followed by Europe were also less affected and trade liberalization remained on the previously determined path. Japan which is also a big player in the process of economic globalization also acted wisely and supplied enough liquidity in time, whenever the need for liquidity arises. It can also be said that Japan instead benefitted from the situation because bursting of financial bubble was an opportunity for the country to turn into vultures and to go ahead with the plans of economic liberalization and globalization that was aimed to access the whole world.