The U.S. Financial Crisis- Impact on Trade Research Paper

The U.S. Financial Crisis- Impact on Trade - Research Paper ExampleAs a result of the crisis starting in 2007 and building up by 2008, the Wall Street could be said to have been remade (Jones, 2009, p.2). The Financial Crisis of 2007/2008 The international trade and the stinting growth in the world had presented significant positive results before the economic crisis of 2007/2008. From the time period from 2000 till 2007 the gross domestic product of the world had reflected an amplify of 3.2 percent in a year that surpassed the annual growth of the 1990s that figured around 2.5 percent. Countries like China, India, and Russia that were emerging as economic countries in the commercialize likewise reflected expansions in their growth to as high as 6.5 percent in a year resultant of the different economic reforms. The farmers in the U.S. also benefitted from these growths leading to rising farm income of around 43 percent. The financial crisis affected the world starting in 2007 and deepening in 2008 leading to recession in several countries (Appendix A) (Liefart & Shane, 2009). The crisis had initiated in the US when the housing bubble burst out and there were increasing defaults in mortgages, particularly in the subprime mortgages, that had grown for the borrowers who were not graceful of such loans, thereby leading to instability in the financial institutions and subprime losses (Appendix B) (Helleiner, 2011, p.69). The different causes that were obtained to have led to the crisis include imprudent mortgage lending reposeful the standards of lending, housing bubble reflecting rising prices of houses, global imbalances, securitization, lack of transparency and responsibility in mortgage finance, rating agencies giving AAA ratings to several downgraded securities, mark to food market accounting, deregulatory legislation, shadow banking system with financial activities moving out of government safety, non bank runs, off balance sheet financing, subprime lend ing mandated by government, failure of risk solicitude systems, financial innovation, complexities, human infirmity, bad models of computer, excess leveraging, relaxed regulation of leverages, credit default swaps, over the counter derivatives, fragmented regulation, no systemic regulation of risks, short terminus incentives, and tail risk (Jickiling, 2010, pp.5-10). These issues initiated in the US and gradually affected the world and the international trade. With the crisis deepening in 2008, various measures that imposed restrictions on trade activities were initiated by different countries. General hikes in tariffs, particularly in iron and steels, primary products, agricultural foods, were incorporated in countries like Russia, India, Turkey, Vietnam, Ukraine, EU, Brazil, and Ecuador. Standards and certifications in trade also changed in several countries like Malaysia, India, Indonesia, Ecuador, Thailand and South Korea with bans and restrictions on several business issues. L icensing system of imports also altered from free to restricted in many countries as a result of the recession.