What causes a financial crisis ?

Financial crisis occurs when there is instability (the state of being unstable; lack of stability.) in the finance systems which pose danger to the economic, political, social and international affairs leading to decisive changes. It will reveal perspectives on the functioning situation of monetary economies.

Financial crisis does not affect only the country itself; it is like a contagious disease that spreads to neighbouring environments and across to its partners especially in this modern time where the world is connecting. It is financial mismanagement ( the process of managing somthing badly or wrongly) which leads quickly to economic destruction, diminishes individual and national wealth, lost growth, etc.

It is an interruption to financial markets which is connected with falling asset prices that will result in the inability to pay debts among debtors and intermediaries that spread out through the financial system. By this happening it will cause disorder to the flow of markets capacity to pump capital within the economy.

On the basis of international crisis, this commotion will overflow into national borders, causing disorder to the market’s ability to allot capital internationally. When this happens, no one takes blame or at least will admit that they foresee it coming. It causes a lot of violent changes around the country and across the globe with devastating consequences.

On the aspect of Private and individuality; this will result to unemployment; people will not be able to find work, loss of properties, families will lose their homes to foreclosure process and many will be in arrears on their mortgage payments. Household wealth worth a lot of billions of Euros will disappear, life savings, retirement accounts all will go down the drain.

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