University of management and technology

Name: Hadiqa Bukhari

Student ID: F2018001122
Section: C
Topic: Economic Crisis

Economics crises 2008/2009

The 2008/2009 crisis was the largest crisis even since the Great
Depression of 1930’s. Several reasons were made that why suxh
massive crisis had take place. Several reasons were made about its
explanations but there was no attention on the fundamentals causes of
this crisis. The causes of this crisis was housing bubble and ensuing
subprime mortgage in Us economy. However the true cause of the
crisis is much more complicated than this. These fundamentals causes
are a) failing from transforming economies from extensive to intensive
production, b) global instabilities witnessed, c)rise of neoblirisim.
This crisis was also called as Global financial crisis (GFC),was a
impactful worldwide crisis. The economic crisis started in U.S and
spreaded into the rest of the world. And the rest if the world depending
on the U.S consumer as a source of demand. There were many loses
seen after this crisis such as reduction in the growth of developing
countries due to fall in trade, commodity Prices, investment. This led to
a drastic rise in the numbers of households living under poverty line.
 At last two major reports were made on the causes of this crisis by the
congress; FINANCIAL CRISIS INQUIRY COMMISSION report , released on
the January 2011 and the other one WALL STREET AND THE FINANCIAL
CRISIS, which was released on April 2011.About 47 bankers were sent
to jail in case of this crisis most of which were from Iceland where the
crisis was severe ,which lead to closing of 3 banks there. Only one
banker in the United States was sent to jail in the crisis time, Kareem
Serageldin, who was sentenced for 30 months in jail and he paid
penalty of $25.6 million as compensation of lose.
COVID 19 crises in U.S
The COVID-19 pandemic lead economies into a Great Lockdown,
which helped contain the virus and save lives, but also raised the worst
recession since the Great Depression. Over 75 percent of countries are
now reopening at the time as the pandemic is increasing in many
raising market and developing countries. Some countries have started
to upcoming on the pandemic. However, in the negligence of a medical
solution, the growth of the recovery is highly uncertain and the impact
on countries is uneven.
The economic impact was expected to affect small and medium-sized
businesses, as they have limited financial resources.
Similarities
 Uncertainty, both crisis faced by uncertainty as both were emerged
from two leading economies ( 2008 crisis from U.S and covid crisis
in 2019 by China)
 Collapse, the initial drops in the stock exchanges have been similar
in both crisis.
 In both cases, there is a major comeback of the roles of the public
authorities, the scope of regal (sovereign) powers, and the call for
better regulations.
Differences
 It took time and a new US administration in 2009 for the G20 to
start coordinating but in 2020 after pandemic world easily
coordinated with the their work as the world have already faced
crisis.
 The economic outcome of COVID-19 seems arguably worse than
2007-09 because of such severe collapse in such a short time.
 As the differences may occur from the history because we learn
from our mistakes and we learn how to get control on the crisis
situation.