Introduction:

The global financial crisis is affecting the entire world and it is causing slow down of the growth in both the developed and underdeveloped countries. The governments of all the countries are trying their level best to contain the crisis and many economists of the world believe that it is not yet over. The stock markets of the world are going down by 40% from the heights they have achieved. Major investment banks of the world have collapsed and different countries are initiating rescue packages that could cost more than a trillion dollars. The interest rates of the world are also experiencing diminishing returns as the leading indicators of the global economy are declining with alarming rates.

The financial crisis across the global financial markets began in July 2007 due to the lack of confidence of investors in the securitized mortgages in US as a result of which the liquidity crisis erupted and became severe. The root causes of this current financial crisis that have been observed by a number of economists are global macro policies and poor regulatory framework of USA. Both causes have burst the stability of the world wide economies. The affects were severe on the civilized economies and therefore the struggling economies of the third world companies were also affected.

It seems imminent that those responsible for the financial problems must be bailed out because the global financial meltdown will affect the lives of millions of people and everyone in the entire world would be affected by this. The entire world is already feeling the damaging effects of the crisis and this is the reason why efforts should be made by the developing countries to solve this issue. Coordination between countries can only solve this problem in both short and long runs.

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