Role of the American Government in Creating the Conditions for the Term Paper

Role of the American Government in Creating the Conditions for the Emergence of the Financial Crisis - Term Paper Example This paper discusses how the US government’s requirements for the banking system to provide affordable housing led to a global economic crisis. The greatest mortgage crisis scandal is possibly that it directly resulted from intentional loosening of underwriting standards. This was with the objective of ending discrimination, despite warnings that it could culminate into extensive defaults. Loans were at the core of the financial crisis, which were made with practically non-existing underwriting standards. There was no asset or income verification, no down payment and there was little consideration of the applicants’ ability to repay Relaxed underwriting standards implied that there would be a considerable reduction or removal of assets, income, savings and credit history as well as the overall repayment capability from the equation. This is in addition to permitting products that avoided the criteria for basic good lending practices. Banks did not come up with the idea of loosening underwriting standards. The regulators, at ‘progressive’ political forces and community groups’ behest, loosened them. This encouraged lenders to offer products and underwrite loans impartially, irrespective of the borrower’s repayment capability and financial soundness Due to globalization and currency integration such as dollarization, goods and services, stock and financial markets, trade and housing have close inter-connection globally, resulting into greater global interdependence. As one of the world’s largest economies, any slowdown in the economy of the United States will inexorably spread to other countries. This is exactly what happened leading to the rapid spread of a severe financial crisis around the world.

The Third World Essay Example | Topics and Well Written Essays - 1000 words

The Third World - Essay Example The political conditions of many of these countries are extremely unstable, like in Somalia and Afghanistan, leading to the conditions described as ‘failed states’. Such unstable political picture also in turn leads to failing economic conditions which in turn give rise to increase in chaos and antisocial activities in the country, thus showing deteriorating social conditions. Developed countries on the other hand, show strong and stable economic and political conditions. The social conditions of these developed countries are extremely good with all sorts of facilities readily available to all its citizens. Health infrastructure is very well developed and population rate low. Basic education is made available to all people whose lifestyles show a certain standard of living. Kuznets analyses the differences between a developing and a developed country and tells us â€Å"the former have no ‘middle’ classes: there is a sharp contrast between the preponderant p roportion of the population whose average income is below the generally low countrywide average, and a small top group with a very large relative income excess. The developed countries on the other hand are characterized by a much more gradual rise from a low to high income shares†¦Ã¢â‚¬  (cited in Fields, 60). Asian, African and Latin American countries generally are clubbed together to form the developing countries. Canadian, American, European countries along with Japan are generally treated as the developed countries. However many developing countries are now progressing fast and are catching up with the developed countries. These include China, India, Singapore, South Korea, Taiwan and the oil rich Middle East countries. The origins and importance of the liberal/orthodox approach to the study of the third world, exemplified by modernization theory and its strengths and