Essay Example on Given the tentative state of the global Economy

The problem with these CDOs is that they were being classified as AAA when in fact the were far from it Then when subprime mortgage owners began to default all of the rest defaulted too Because of this hundreds of billions of dollars in CDOs were lost Another factor that went into the collapse was mortgage backed securities A mortgage backed security gives banks the ability to turn a mortgage into a security and sell it to investors The housing market seemed insanely stable so investors were very interested in buying these but this made it so that the MBS market also had more subprime MBS s These subprime buyers started to default and again the rest followed The banks that were collapsing due to these factors although in US had global implications Georgia especially was hit very hard by this crisis due to the unfortunate timing for the country Through Georgia's recent projects rebuilding an unstable and inefficient economy the country and its government have gained valuable experience and knowledge regarding financial infrastructure Before 2008 Georgia s once incredibly unstable economic system was doing very well This is due to the 2003 Rose Revolution which resulted in a new nonviolent government led by Mikheil Saakashvili who remains the president of Georgia The Rose Revolution was a series of peaceful protests to overthrow Shevardnadze s government After the movement there was an economic growth average of 10 5 

This will help people enter their desired fields of work while creating more job opportunities In the pre crisis world banks were surveilled minimally It was too easy for them to keep information from the government To prevent this we must first increase regulation on banks We can create a governmental branch specifically for surveilling and coordinating with the banks Second we must create more thorough credit and stress checks If we create a better vetting system and bottom line standard for how to obtain a loan we can prevent a resurgence of the issue Countries should adopt an expansionary fiscal policy increasing public spending to promote economic growth Finally if we can increase tourism inflows and high levels of public investment the world can slowly start coming out of this crisis We cannot change what has happened in the past but what can be changed is the economic future If these solutions are enacted we can begin to start ensuring that this crisis never occurs a second time