Financial Crisis

Now, the world is facing the biggest issue.....financial crisis due to the war in the middle east! It is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. A wider reduction of economic activity affecting the whole economy is known as an economic crisis. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Many economists have offered theories about how financial crises develop and how they could be hindered. There is little consensus and financial crises continue to occur from time to time. It is apparent however that a consistent feature of both economic (and other applied finance disciplines) is the obvious inability to predict and avert financial crises. This realization raises the question as to what is known and also capable of being known within economics and applied finance. It has been argued that the assumptions of unique, well-defined causal chains being present in economic thinking, models and data, could, in part, explain why financial crises are often inherent and unavoidable. Many financial crises are triggered by the bursting of economic bubbles, when rapidly inflated asset prices suddenly collapse. Financial crises often undermine confidence in financial institutions and markets, which can amplify their economic and social consequences.