Verified Document

Era Of Globalization Arose After Thesis

Banks in one country are able to invest their dollars rather than sell them. In this case, the investments were of poor quality. Compounding the issue is that other investments backed by U.S. institutions began to lose worth as the ability of those financial institutions to meet their obligations became compromised by subprime exposure. This is one of the main reasons why the government bailed out AIG. Banks around the world owned AIG-backed securities and if those securities were subject to default the global financial system could have collapsed.

The rise in international trade is intended to create more wealth more quickly that what has been achieved before. The international trade in goods has created substantial wealth transfers, resulting in countries around the world having significant exposure to the U.S. economy. Nations like China have essentially built their wealth on American credit. Increased exposure, however, results in increased risk. Freedom of trade does not inherently bring an increase in wealth; it brings an increase in volatility.

Thus, as global barriers to trade in goods and capital have fallen, volatility in the global economy has increased. During the Great Depression -- the best corollary we have to the current situation -- many nations recovered quickly relative to the United States. Some nations had other problems that hampered them -- Germany, for example -- but in general the spread of the crisis around the world was minor and short-lived. There was little impact...

Parts of this document are hidden

View Full Document
svg-one

Today's crisis is global in scope. No longer are regional crises confined to their home regions.
By lowering regulations and increasing international trade, we increase global economic volatility. This works well during growth times, but it also means that crisis times are worse. The present economic crisis has spread to more countries, has spread faster, and has hit harder, all as a result of the sharp increases in global trade that we have seen in recent years. Countries are increasingly exposed to each other's risk, a function of easy trade in goods and virtually unfettered trade in capital. This reality must be understood for what it is -- international trade does more good than harm by far, but it does increase global economic risk such that a U.S. domestic crisis can be rapidly diffused across the world.

Works Cited:

Roach, Stephen S. (2006). Save More! Save Less! CNN Retrieved May 1, 2009 from http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371823/index.htm

Padgham, Jane. (2007). Sub-prime crisis could spread to other markets, IMF warns. The Independent. Retrieved May 1, 2009 from http://www.independent.co.uk/news/business/news/subprime-crisis-could-spread-to-other-markets-imf-warns-444214.html

Frank, Nathaniel. (2008). New Channels Spread U.S. Subprime Crisis to Other Markets. International Monetary Fund. Retrieved May 1, 2009 from http://www.imf.org/external/pubs/ft/survey/so/2008/RES092308A.htm

Sources used in this document:
Works Cited:

Roach, Stephen S. (2006). Save More! Save Less! CNN Retrieved May 1, 2009 from http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371823/index.htm

Padgham, Jane. (2007). Sub-prime crisis could spread to other markets, IMF warns. The Independent. Retrieved May 1, 2009 from http://www.independent.co.uk/news/business/news/subprime-crisis-could-spread-to-other-markets-imf-warns-444214.html

Frank, Nathaniel. (2008). New Channels Spread U.S. Subprime Crisis to Other Markets. International Monetary Fund. Retrieved May 1, 2009 from http://www.imf.org/external/pubs/ft/survey/so/2008/RES092308A.htm
Cite this Document:
Copy Bibliography Citation

Related Documents

Globalization and the Impacts in
Words: 4413 Length: 13 Document Type: Essay

These companies are getting bigger and bigger. Some companies have such huge assets all over the world that they are worth more than many small countries. If you compare the GDP of many countries, you can see that the GDP is even less than the earnings of those big companies (Disadvantages of globalization, 2012). The governments do not have the power to stop the multinational companies from closing a factory

Globalization and Its Impacts in
Words: 2957 Length: 10 Document Type: Term Paper

No efforts have been made to create a strong consumer base in the Philippines itself by improving the lot of the Filipino workers (Bello 3). Had a local market been created and some protections afforded to Filipino workers, development may well have proceeded in a more positive direction as the nation would have been better able to take advantage of those aspects of globalization that offered true benefits, rather

Globalization Western Imperialism
Words: 4372 Length: 11 Document Type: Term Paper

Globalization=Western Imperialism Modern science and all the various process that are involved with the modernization process evolved because of the progress made by the western countries and the progress made in the field of science, medicine and the notions held in respect of human rights and liberty. There are several sections of individuals who state that dissatisfaction that people seem to have is that they are troubled with their daily life.

Globalization Make the U.S. More
Words: 3432 Length: 10 Document Type: Thesis

" (2007. p. 46) Guay also states that a consequence of "increased international trade is a corresponding increase in demand for commodities." (2007, p. 46) Guay writes that companies that are producers for civilian and military markets "are susceptible to increased global competition on the civilian side, even as the military side of their business may be fairly protected." (2007, p. 46) These firms may be forced to restructure which

Globalization on Developing Countries Globalization
Words: 6090 Length: 20 Document Type: Thesis

India was also part of this globalized trading world. The cities within the Indus Valley were well planned and included a trading system that was managed much in the same way as that in the Middle East. Indian socialism, combined with an economy of private managers played a significant role in the success of their trading endeavors. Moore & Lewis note that ancient India could well have been the inventor of

Globalization and Food Culture in Hong Kong
Words: 2127 Length: 6 Document Type: Term Paper

Hong Kong Food Culture Unlike many other cities, Hong Kong offers a unique case study in the effects of globalization on local economies and cultures due to its premier status as a nexus between China and the West. Over the years, and even through British rule, Hong Kong maintained its own distinctly Chinese culture even in the face of relentless influence from other countries and explicit attempts to manipulate Hong Kong

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now