Nepal: global financial crisis

The classic function of financial crisis that the failure of the company resulting from damage resulting from its creditors, and these in turn are able to repay their debts in order to widen the circle to the corporate failures lead to an epidemic. This in turn leads to an overall production and employment. If banks are able to collapse one after another, without care to the creditors, the situation may lead to a possible downturn, recession, depression, even deflation. The worst scenario for the global collapse of the banking system, the entire financial system. But the situation is neither shade as there is still room for a further reduction in interest rates, the government can guarantee to creditors or directly buy assets. However, whether the policies have failed to eliminate hope, regardless of the amount of funds flowing to the financial system could come into Keynesian liquidity trap. Similarly, the recent Japanese experience shows very low or even negative interest rates if necessary to trigger the application. Happy, the new Obama administration, it seems, are rekindled the hopes of the United States.

But the crisis has deepened, and then brought the house struggling to ease the mortgage crisis. But as soon as the situation began to deteriorate further, and the White House on 19th September 2008 request of $ 700 billion financial rescue plan, the company's mismanagement of the mortgage bonds and the free flow of credit tightening. Representatives of the House of Representatives on 29 September, a huge rescue plan. 1 October, The U.S. Senate approved the plan in the House of Representatives on the assumption localities. With this group of bail, the Fed and the Bank of the West is moving rapidly in the past legends of the investors as a measure of last resort.