The global financial crisis, which emerged in 2007, was the result of the expansion of banks and financial markets in Western countries, completely independent of the real economy, with no close monitoring of the performance of these financial institutions. The crisis has caused losses to global financial institutions, It is difficult to pinpoint all the reasons behind the crisis, including the fact that many financial institutions freeze the granting of loans to companies and individuals for fear of being difficult to recover. And the lack of liquidity in circulation of individuals and companies and financial institutions, and this led to a sharp contraction in economic activity and in all aspects of life, which led to the cessation of borrowers …show more content…
The Federal Reserve has taken a range of other political steps to support the broader economy. Since the beginning of the crisis in the summer of 2007, the Fed has provided credit to banks on more generous terms and at longer maturity than usual. Subsequently, the Fed introduced the "auction facilities", under which it maintains fixed-term bid amounts for banks on a regular schedule. By providing banks with a firm source of certainty, these changes have reduced the need for banks to enhance liquidity by selling assets to arms and making them more willing to lend and to establish markets. The Fed also expanded liquidity from outside US banking institutions to other financial institutions and market participants. Since US dollar markets affect US markets, swap lines were established with foreign central banks in late 2007, allowing them access to the dollar to meet the needs of dollar liquidity in banks within their powers. As pressure from some large investment banks intensified in early 2008, the Fed, in line with its role as a lender of last resort and in light of the key roles played by these institutions in a range of financial markets, introduced programs that could provide liquidity to key customers. Financial Situation Last fall, the Fed created liquidity facilities for funds in the financial markets and introduced programs to provide direct liquidity to borrowers and investors in major credit markets, including the commercial paper market, where the potential strains …show more content…
The Treasury Department says the economy may recover in the second half of the year under the influence of rising dairy prices, boosting farmers' incomes and lowering personal tax rates, which come into force on Oct. 1. Some 23 financial firms in New Zealand applied for bankruptcy a year. Housing in New Zealand fell 20 percent in June, the lowest level since 1986. Excluding apartments, approvals fell by 13 percent from May. Approvals in the year to June fell 12 percent from a year earlier. Second quarter approvals fell 19 percent. Figures show a decline in construction and economic growth. Home sales fell 42 percent in June from a year earlier. The New Zealand Treasury concluded that the country's economy contracted for the second quarter based on economic indicators, putting New Zealand in a recession. The New Zealand central bank cut interest rates by half, saying the economy was in recession. New Zealand's gross domestic product fell 0.2 percent in the second quarter, putting the country in its first recession in a