Term Paper on "Major Causes of the Current Economic Crisis"

Term Paper 3 pages (1041 words) Sources: 5

[EXCERPT] . . . .

economic crisis in the United States?

There is no single cause that can be made responsible for the crisis. The crisis is a result of political, economic and social situation that developed on a global scale and which has affected many nations. There is a monetary crisis as well as economic crisis. The global financial crisis affected all nations alike and one of the causes of the depression is blamed on globalization which according to experts has caused deflation, to sub-prime lending, especially in the U.S.A. Sub-prime lending is the method by which banks are provided funds by the central bank and is a source of bank collapses. The sub-prime mortgages in the U.S. In 2007 when the current crisis began stood at $1.3 million and rose to $100 million by 2008. It resulted in the burst of the housing and the real-estate bubble causing the sub-prime crisis that made the lenders withdraw from the market. (Jansen; Beulig; Linsmann, 88)

The economic crisis relates to lower buying power, joblessness, less aggregate demand and very high taxes. The corporate taxes as it can be examined caused the spiral that resulted in the crisis. There is also an argument that it is the credit crisis that resulted in the financial crisis and this affected the investment and thus the whole economy in a chain reaction. (Muller, 28) Generally it is the higher rate of taxes that caused a spiral of inflation and subsequently deflation. Richard C. Cook also blames it on the failure of the U.S. government which according to him caused the crisis. It is argued that the U.S. had a collapse of the nation's manufacturing base that was caused when the Federal Reserve raised interest rates "to over the twenty percent level." (Cook, Economic Crisis: The U.S. Political Leadership Has Failed)

But the major culprit in general was the tax policies that drove the entrepreneurs and business to the wall, causing the collapse. Tax in the U.S. On corporate income is so heavy -- 40% to be specific that multinationals and even small firms have made it a point to reincorporate in some other country and thus avoid taxes in the U.S. This has given rise to complications in the U.S. economy because jobs and investment thus are all shifted outside and the resultant depression has become acute. (Brue, 234) There is a lot of capital that was and is being invested outside because of the excessive income tax levied on corporations, and the second issue is of turning a blind eye to the problem of the tax burden. This resulted in companies venturing abroad and investments moving abroad. Politicians blame the joblessness on the companies leaving America but fail to point out that the tax burdens are excessive and are the main reason.

Chris Edwards contends that major financial and investment decisions are taken with a view to find tax shelters. This is exactly what Enron did and the Enron-style tax sheltering has become a major corporate tax scandal. The problem of overburden of corporate which make them find tax havens or those countries with low-tax jurisdictions… READ MORE

How to Reference "Major Causes of the Current Economic Crisis" Term Paper in a Bibliography

Related Term Papers:

Crisis as an Inevitable Feature of Capitalism Essay

Economics

Crisis as an Inevitable Feature of Capitalism

What were the immediate and long-term causes of the current political economic crisis?

Today's economic and financial crisis began in the rich… read more

Essay 13 pages (4733 words) Sources: 13 Topic: Economics / Finance / Banking

---

Economic Crisis Iceland 2008 Research Paper

Economic crisis: Iceland 2008

Current state of the economy

In numerical data, the economy of Iceland is marked by the following:

A gross domestic product of $12.15 billion, making Iceland… read more

Research Paper 4 pages (1162 words) Sources: 6 Topic: Economics / Finance / Banking

---

Crisis the Causes of the Economic Essay

Crisis

The Causes of the Economic Crisis

The complex interactions and relationships that make up the global economy make it very difficult to describe the causes of any large-scale economic… read more

Essay 2 pages (570 words) Sources: 0 Topic: Economics / Finance / Banking

---

Economic Crisis Thesis

Economic Crisis

Introductory Remarks

The statement that the world is facing an economic crisis is becoming redundant. Despite its sometimes exaggerated mediatization, fact remains that the global economy is indeed… read more

Thesis 7 pages (2043 words) Sources: 7 Style: Harvard Topic: Economics / Finance / Banking

---

Savings and Loan Crisis Term Paper

S&L

The discussion explored the causes of the crisis and explains the potential solutions. Inflation, deregulation and financial mismanagement are the major causes for the current Savings and Loan crisis.… read more

Term Paper 6 pages (1942 words) Sources: 5 Style: APA Topic: Economics / Finance / Banking

---

View 100+ more related papers  >>