The Global Credit Crisis

Ocaya (2012) notes that the credit crisis is the collapse of the financial market or economy, lending money to borrowers and can not look back, and through the serious currency or lack of credit, the financial institution's bad debts, defaults and decreases . However, experts and economists still do not know what constitutes a credit crisis. Wall Street defines the credit crisis as "a period in which it is difficult to obtain borrowed funds and even if funds can be found, the interest rate is extremely high."

The global credit crisis began to have a major impact in 2007, and in 2010 it had a major impact on most economies. The global credit crisis began in the 1980s, and large companies were manufacturing mechanical products. At the end of the decade these companies found that they can earn more money by investing in the financial industry. An example of a company engaged in this work is General Electric. It invested 10 times more money than the 1990s. Due to the amount of available cheap loans, they borrowed a lot of money and had a lot of debts. This money is used for "investment in financial bubble". Initially, huge profits are obtained, many companies follow it, by 2005 the investment will be $ 1.4 billion, equivalent to 14 times the US economy. Debts began to be offered to low-income people to earn more money, and they could not be repaid

Figure 2 shows the changes in the Dow Jones industrial index before, after, and after the global financial crisis. The global financial crisis began in 2007. The rupture of the real estate bubble, in particular, caused the credit crisis in the debt market. (McCarthy, Solomonand Mihalekl 2012, 1277) The stock market was severely damaged between 2007 and 2009. For example, in the US, the stock market peaked in October 2007 and the Dow Jones industrial average was about 14,000. After that, the Dow Jones index declined sharply from 12,000 in August 2008 to 6,600 in March 2009. Since 2009, a significant increase has been seen so far, reaching 14,929 people.