America being economic leader, the liquidity crunch in the banking sector began in the United States and triggered a global financial crisis which affected the whole world with a devastating effect. George Soros explained that “the salient feature of the current financial crisis is that it was not caused by some external shock … the crisis was generated by the system itself”. Australian Prime Minister, Kevin Rudd feels that the current crisis is a climax of a reign of 30 years of economic policies by the ideology of free market, which has diversely called economic liberalism, fundamentalism, economic neo-liberalism or the Washington consensus. The thrust of this ideology is that government activity should be limited and eventually replaced by market forces. But as Stiglitz has sarcastically noted: “the reason that the invisible hand often seems invisible is that it is not there.”
In order to better understand global financial crisis, this essay would first discuss the main causes of the global financial crisis and further go on to discuss the steps U.K. government could take to reduce the danger of another crisis.
The shift from industrial to post industrial society has been a disaggregation of employment in which the employment relation has changed. As defined by sociologist Daniel Bell “the majority of the labour force is no longer engaged in agriculture or manufacturing but in services,” (Bell, 1973, p.15) the largest employers are in retail sector where wages, benefits, job security and tenure of employment are substantially lower. Average tenure in manufacturing companies were 8-10 years while in retail it is 3 years. These changes in employment facilitated portable pensions and new investment opportunities in mutual fund. Household became more dependent on financial markets than ever before for prosperity and security, which was exploited by institutional investors. Alan Greenspan and James Kennedy wrote that homeowners earned around $800 billion every year in equity during the booming years of household bubble (Greenspan
Types of economic system and how policies effect organizations
In this report I have outlined Economic systems,type of Economies System, Government Intervention and Policies, Fiscal