Impact of financial crysis into international economy Essay

Impact of financial crysis into international economy - Essay Example In addition, there is a global credit crunch that has paralyzed economic development in the third world countries as well as slowing down the economic growth rates of the developed countries. Furthermore, both the first and third world countries have reported an increase in the rate of unemployment and poverty. There has also been a nosedive in exports, investment and asset markets (Healy and Palepu 13). Therefore, with the aim of studying the impact of financial crisis into international economy this article will outline its causes, consequences and the impact of the credit crunch. CAUSES OF THE GLOBAL FINANCIAL CRISIS (GFC) According to most economists, the current economic crunch is the worst kind of financial crisis that the world has faced so far since the Great Depression of the 1930s (BWND ch. 1).. The root cause of the credit crunch is related to the development of the US housing bubble that rapidly occurred between 2005 and 2006. This resulted to an increase in the number of default rates of the adjustable rate mortgages (ARM) and subprime (Calomiris 6-52). This is because the banking institutions were willing and readily gave out loans to investors to purchase real estate property. Investors were encouraged to apply for high loans believing that they would settle them within a short time (BWND ch. 3). Investors applied for loans with ignorance of the interest rates. In fact, investors could easily access a plethora of loans including credit card, mortgage and auto which lured them to apply for the loans without considering the unprecedented load that would be caused by the debt. There were also a myriad of financial agreements including collateralized debt obligations (CDO) and mortgage-backed securities (MBS) which stipulated a more friendly strategy for settling the debt (Salmon ch. 5). This was a marketing strategy that encouraged investors from all over the world to venture in the US housing market. Moreover, the US federal bureau had monitored th e interest rates since 1982 to ensure they were steadily decreasing. The easy access to foreign funds encouraged investors to undertake the loans for fuelling the housing construction projects (Healy and Palepu 13). Come the year 2007, interest rates increased with an outrageous margin resulting to a decrease in the housing prices. Conversely, most investors were adversely affected since raising money became increasingly difficult. Within a short time there was an increase in the number of foreclosed real estate properties. Also most of the global financial institutions that had invested heavily on the financial agreements incurred huge losses. This led to the erosion of financial strength for banking institutions. As a result there was a worldwide drain of wealth which led to an increase in poverty levels. In addition, there were an increased number of loan defaulters and not only in the housing sector but also in other economic sectors resulting to unbearable losses that cost the globe trillions of dollars (Calomiris 6-52). Another factor that resulted to the growth of the credit crunch is the financialization process. The US credit and housing bubble rapidly expanded the international financial stability until it became fragile and susceptible to a wide array of risks. This is because financial institu

Business system analysis Essay Example | Topics and Well Written Essays - 500 words

Business system analysis - Essay Example ructure is created to visually demonstrate the clients what their needs can seem similar to when they are applied into a completed system (Sommerville, 2009). Evolutionary prototyping method is a software development lifecycle model in which software prototype developed for illustration and requirements explanation. There are four main phases in Evolutionary prototyping model: (SoftDevTeam) Evolutionary Prototyping is also recognized as breadboard prototyping. Evolutionary Prototyping is moderately dissimilar from Throwaway Prototyping. The major objective to utilize Evolutionary Prototyping is to develop an extremely strong prototype in a prearranged way and continuously process it. The cause intended for this is that the Evolutionary prototype, at what time developed, shapes the compassion of the novel system, as well as the developments and additional requirements will be developed (Hanna Kulas, 2009). A class diagram graphically demonstrates classes and subclasses in a system(Shelly, Cashman and Vermaat). A class diagram is a diagram that demonstrates the associations as well as source code dependability amongst classes in the UML or Unified Modeling Language (Ambler, 2009). A class outlines the techniques and variables in an object that is a precise body in a plan or the component of code instead of that entity. The Class diagrams are practical in the entire shapes of OOP or object-oriented programming. The idea is a number of years mature on the other hand have been advanced like object-oriented programming modeling paradigms have developed (Searchsoa, 2009). Below is an example of Class diagram: A use case is a task that an actor who interacts with an information system can carry out(Shelly, Cashman and Vermaat). A Use case is intended to elucidate a series of events that offer something of quantifiable worth to an actor as well as is drawn like a horizontal ellipse (Ambler, UML 2 Use Case Diagrams, 2009). In software engineering, the utilization of a