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The ‘written Testimony of Mark Zandi’ is an article which outlines “The Causes and Current state of the Financial Crisis”. In this case, the main aim of this article is to examine the economic effect of the fiscal crisis that had been there for about three months ago. Based on this, there was a continued failure of commercial banks which resulted in the dormancy of the structured finance market. On the other hand, this article describes how families and commercial entities have been struggling with a stern credit chomp, due to an unusual contraction in guaranteeing principles by nearly all creditors (Zindi, 2010).
Further, this article talked about the great recession and the fiscal stimulus which are the immediate causes of the financial crisis, and how the great recession gave way to the current economic recovery. Additionally, the author states that for financial revival to develop into a self-sustaining development; trades must act in response to better transactions and profits by improving investment and hiring. According to this article, another troublesome risk to the economic revival is the foreclosure problem and the resulting view of more house price reduction (Zindi, 2010).
It can also be argued that the earlier explosion and current ruin in the profitable real estate market also causes a severe threat to the economic revival. In addition, this article outlines how the financial crisis affects the labor market in the long run. From the article, the author outlines that, the loss of family wealth affects the consumer level of spending. In this case, the author indicates that in early 2009; the family net worth had decreased by $ 17.5 trillion which had an impact on their spending.
On the other hand, the author talks about the State and Local Financial crisis despite the funds offered by the financial stimulus. Further, it can be argued from the author that, the GDP would be lowered in the long run by the financial crisis which prevails beyond the current economic revival. Additionally, this article talks about the labor market and loan losses that are affected by the financial crisis (Zindi, 2010).
It is also of importance to note that, this article presents economic principles like financial crisis, the great recession, fiscal stimulus, and economic recovery. It should be further noted that a financial crisis refers to a situation in which the rate of the money supply is low as compared to its demand where all the money is withdrawn from the bank. On the other hand, fiscal stimulus is a government measure that involves raised public expenditure and lower toll that is purposed at giving a positive jolt to a financial activity. Additionally, economic recovery is a situation where the financial condition of a country is revived from a financial crisis it had experienced.
Lastly, the great recession is a term used to denote the present economic slump. From a personal perspective, this article comprehensively outlines the causes of the present state of the financial crisis. Based on this, the opinions outlined by the author are worth it since the current financial crisis has affected the financial systems reducing their normal functionality. In addition, the great recession has been known as an immediate impact on the current financial crisis.
It can be argued that the current economic recovery is affected by the financial crisis and fiscal stimulus. In this case, as more investors continue to borrow and withdraw their money from the bank, this results in a crisis in the economy as the banks are forced to close because of the lack of deposited money. On the other hand, the current economy is in a crisis because of a lack of adequate funds from both the government and the banks (Zindi, 2010).
Reference list
Zindi, M. (2010). The Causes and Current State of the Financial Crisis. Web.
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