1.
PART 1
There are a number of similarities between the American economic crisis and that of Europe. Most countries within Europe have little or no control over the important policies that the government can use to increase employment and income. In the European situation, the Federal Reserve is independent from the government and it favors powerful financial interests. In the USA, the congress reduces autonomy of the Federal Reserve, this affects the financial outcomes of the nation (Blinder, 2013) .In Europe the financial crisis has often been used to pursue political agenda, and this leads to different outcomes nationally. Both the federal government and the euro zone reacted to the financial crisis in the same way and this was by injecting liquidity and loosening the monetary policy. It is important to realize that there were structural and institutional differences as well as timing differences between the peaks of both of these crises. It is important to realize that both American and European recessions had major economic impact on both nations and these were seen at all levels (Blinder,20130.Both of these nations saw contrasting outcomes in industrial production and there was a financial market turbulence leading to drastic outcomes in both situations. However, Europe as a whole exhibited milder downturns and it is also important to consider that there was a high degree of correlations between these two financial situations.
PART 2
The European Central Bank strengthened the monitoring as well as analysis of pension funds as a regulation. This particular demand has been deemed unfair because it does not consider the rights of workers. These demands aim at raising the retirement age as well as extending the period of contribution with the aim of imposing an emergency pension freeze as well as solidarity levy on larger pensions (Blinder,2013).These measures have little effect on most current pension recipients except those who are in the top income bracket. The cost of pensions in Europe nations has been increasing steadily but the combinations of reforms and the ongoing recessions has halted this particular trend. It shows the devastating effect of the recession on economic activity and the effect that this has had on the unemployment sector (Friedman & Posner, 2011). These demands by the government are therefore unfair and lack basis. There have been demands by the government aimed at bailing out the Greek economy but some of these demands are actually not feasible.
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They are mostly based on the theory that a commitment to shrink budget deficits and bring down public debt levels would actually boost the confidence of financial markets. It means that investors would actually demand a lower premium for holding sovereign debt and this would result in lower long-term interest rates (Blinder, 2013).Lower long term interest rates would therefore mean higher levels of growth. The implementation of the crowding theory is actually inappropriate in this particular situation since banks are usually dysfunctional and credit flows have dried up since to a lack of investment in this particular sector. This approach has acutely led to a spiral of decline as jobs have been shed and tax revenues have slumped. Legislations such as TARP and ARRA have been effective to some degree.
These legislations have helped to stabilize the economy and especially so considering that they have not used a large chunk of the allocated budget. It is however important to consider that when a financial system succumbs to panic this means that only the government can be powerful enough to prevent a complete collapse. It is however important to realize the impact of nationalization of banks and the practical problems that this would bring. These legislations usually fail to realize their full potential and this is usually because there is little oversight in their activities. Such legislations will usually encourage reckless risk taking since big organizations will know that they are bailed out of their failed gambles (Blinder, 2013).TARP has not allowed banks to recoup losses which are already incurred on troubled assets. It is also important to understand that these legislations have failed to stabilize the bank capital ratios and this has become an issue of concern.Itis therefore important to note that both of these legislations have failed to ensure better financial outcomes at the organizational level.
2.
PART 1
The financial crisis has managed to change perspectives concerning the American economy and especially in a economic aspect. It has helped to create new perspectives concerning the importance of rethinking economic theories as well as policies (Goddard, Molyneux& Wilson, 2009). Through this, one can understand the changing economic frameworks in which the developing nations will usually formulate (Blinder, 2013).It also leads to new considerations concerning the examination of development strategies from a historical perspective. It also shows a need to adapt to specific conditions and national goals as well as the need for a structural determination of economic setup. Through this one also realizes the need for a variety of tools for intervention as well as the importance of enhancing investment in domestic sources of finance. The financial crisis also reveals the fact that the rules of economic order will usually constitute a significant constraint to effective industrial policy.
PART 2
My professional goals and ambitions include career advancement as well as the ability to attain financial freedom. It is therefore important to use the financial crisis as guideline concerning how to understand and follow financial indicators to understand one’s financial goals. This course is therefore relevant because it gives a clear perspective concerning the importance of financial knowledge at all levels (Blinder,2013).Through this one gains a proper understanding concerning a need of adherence to financial rules in order to achieve financial objectives. Learning this course is therefore relevant because it gives important financial lessons and at the same time educates concerning how financial freedom can be attained. The financial crisis also teaches important lessons concerning the importance of making critical decisions effectively in order to ensure positive financial outcomes (Blinder, 2013).One can also learn the importance of moral decision making to ensure better financial outcome. Through the crisis, one learns the impact of consequences from mistakes and how this can affect outcomes in any financial situation. All this gives important lessons conce4rning how to attain financial independence and how to make proper financial decisions at all levels. It therefore gives important financial lessons and helps creates better understanding concerning financial markets which is important in any work scenario.
References
Blinder, A. S. (2013). After the music stopped: The financial crisis, the response, and the work ahead (No. 79). Penguin Classics.
Goddard, J., Molyneux, P., & Wilson, J. O. (2009). The financial crisis in Europe: evolution, policy responses and lessons for the future. Journal of financial regulation and compliance , 17 (4), 362-380.
Friedman, J., & Posner, R. (2011). What caused the financial crisis . University of Pennsylvania Press.
