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Lesson 1 Discussion Forum
Main response
According to both the two articles, the international fiscal predicament or recession began
in the middle of 2007 to 2009 and rapidly transmuted from the teeming of the accommodation
effervesce in the USA. This rapidly spread to entire ecosphere, causing the most awful decline, as
was observed and experience in the last six eras. Over a deeper analysis of the predicament with
respect to the sources, concerns, and policies, the two articles identify and give an elaborate
explanation (Islam, 2010). Initially, divergent to the extensively apprehended opinion that for the
period of the affluent before the beginning of the crisis, the two papers underscore that economy
of the world was by no way as steady as was proposed. While in the same period, most of the
developing countries in the domain had advanced inadequately from the economy, which was
stronger. There were very complex and interconnected factors that lead to the rise of the fiscal
disaster in 2007.
These factors were both highlighted by the articles as loose monetary policies,
international imbalance, misunderstandings of the threat, and lax-financial control or regulations.
The crisis did not only resulted to economy failure, an increase in unemployment rate, but also
lead to numerous concerns (Mattern, 2011). The articles highlighted some of the impacts of the
crisis as rather different, imitating alterations in the early situations, diffusion means, and
vulnerability of the economy. According to Nancy, she gave a liberal argument that tends to point
fingers at individuals, however, shift all the blames to the irresponsible stockholders and financiers
who established novel monetary gears including credits swap and collateral debts duties in order
to exploit and create new opportunities (Mattern, 2011). The argument also tends to blame the

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government policy makers who came up with the deregulation of the financial market, which
resulted in the recklessness of the major stakeholders.
Response 1
The process of recession or financial crisis was started by increase in failure to pay and
fore-closure in the sub-prime bank loan flea market, which ultimately extended quickly to extra
secured loan sectors, such as a corporate bond, and commercial real estate. The disaster imposes a
great threat to the validity of most of the financial firms with a deeper exposure to defaults and
foreclosures. An explicit example is given when Bear-Stearn, was vended to JP-Morgan Chase at
a negotiating cost. Lehman Associates was unsuccessful shortly after the government
administrators declined to save it. Banks that tend to survive during the period were overleveraged
in terms of financial deregulation (Islam, 2010). The banks reduced the rate of lending, thus
making it very hard and costly for individuals to borrow money for their business activities. This
conversantly negatively impacted the consumption and investment rate of numerous individuals
hence leading to a decline in the production rate, increase in layoffs and slowdown of the economy.
Response 2
Most of the countries around the globe tend to respond to the crisis situation adequately.
With respect to policy, some of the laws regulating the macroeconomic stimulus, such as the labor
and market policies, have been employed to curb the situation. However, these strategies have, to
some extent, partially offset the danger. In some scenarios, the policies have assisted the
government in avoiding both severe economy contraction and quick deterioration of the market of
labor (Garnaut, 2009). Even though the recovery process is underway, quite a number of risks still
hold, which could derail the improvement of the economy. This could also hinder full recovery

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Lesson 1 Discussion Forum Main response According to both the two articles, the international fiscal predicament or recession began in the middle of 2007 to 2009 and rapidly transmuted from the teeming of the accommodation effervesce in the USA. This rapidly spread to entire ecosphere, causing the most awful decline, as was observed and experience in the last six eras. Over a deeper analysis of the predicament with respect to the sources, concerns, and policies, the two articles identify and give an elaborate explanation (Islam, 2010). Initially, divergent to the extensively apprehended opinion that for the period of the affluent before the beginning of the crisis, the two papers underscore that economy of the world was by no way as steady as was proposed. While in the same period, most of the developing countries in the domain had advanced inadequately from the economy, which was stronger. There were very complex and interconnected factors that lead to the rise of the fiscal disaster in 2007. These factors were both highlighted by the articles as loose monetary policies, international imbalance, misunderstandings of the threat, and lax-financial control or regulations. The crisis did not only resulted to economy failure, an increase in unemployment rate, but also lead to numerous concerns (Mattern, 2011). The articles highlighted some of the impacts of the crisis as rather different, imitating alterations in the early situations, diffusion means, and vulnerability of the ec ...
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