The financial crisis (2008): is known as the worst economic tragedy since the Great Depression (1929). The US investment bank and Lehman Brothers collapsed as a result of that crisis. The crisis was the result of a series of sequential events, each event activating a mechanism that almost led to the deterioration of the banking system. The roots of this crisis likely date back to the 1970s, when the Community Development Act was enacted, which forced banks to relax their credit requirements for low-income people, creating a market for subprime mortgages. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original EssayBefore the collapse of Lehman Brothers, the US government refused to bail it out, which created uncertainty in the atmosphere due to the counterparty risk that the number of transactions will significantly decrease in the financial markets during the third and fourth quarter of 2008. Working capital shortages began to spread, leading anxious companies to liquidate their inventories, parts and components and lay off staff. Trade financing began to become rare and purchasing by businesses declined, and international consumer trade began to collapse. Many aggressive steps were taken by governments and central banks to stabilize national economies. This is the second phase of the crisis, the stabilization phase that began in the fourth quarter of 2008 and ended at the end of 2009. When interest rates were almost zero and liquidity was made available in large quantities to financial market institutions, the central bank purchased a number of financial assets and implemented large fiscal stimulus packages. From 2010 onwards, the third phase was announced, starting with the austerity plans, which included increased taxes and cuts in public spending. However, these measures were considered rather controversial, as the majority believed that their implementation was brought forward as economies had not returned to pre-crisis growth paths. Austerity and structural reforms worked together to increase the growth rate of economies over the long term, which would subsequently lead to increases in future tax levels and put an end to doubts about the long-term solvency of governments. Austerity merged with many industry-based economies with With high savings rates, people were willing to pay off their debts and start rebuilding their financial portfolios. The sharp decline in real estate prices in some jurisdictions and the effects of the acquisition of foreign financial assets which had significantly decreased in value meant that there was a significant amount of bad debt held by banks. Throughout the process of identifying and writing off bad debt, the bank loans for the new project were miserable. Deleveraging and rebuilding bank balance sheets were the main austerity concerns he had in mind during the year 2010 to 2012, meaning that numerous huge economies had fallen below economic growth projections. Please note: this is just an example. Get an article habit now from our expert writers. Get a Custom Essay During the third quarter of 2012, austerity was heavily questioned by the International Monetary Fund; It was not until 2013 that several former adherents (such as the President of the European Commission) began to question the austerity policies that..