Causes of the Global Financial Crisis and Its Effectes on the Arab Countries

Abstract

AbstractKeywords:INTRODUCTIONThe first indications of the global financial crisis emerged in September 2008 in the United States and moved quickly to the most advanced economies and then spread globally. The implications of the crisis came to countries varying in intensity and speed of impact according to the degree of openness of their economies in the world economy in its various components, and has reflected the crisis directly and rapidly on the financial sector and banking, indicators of financial markets dropped across the world and began the values of assets in decline, especially in the real estate sector, and as a result has taken many developed countries took urgent measures to provide necessary liquidity to the banking sector to prevent the collapse of their banking and global banking system as a whole.1. THE DEFINITION OF THE FINANCIAL CRISISThere is no specific definition or concept specific to the financial crisis as there are many contributions to the interpretation of the financial crisis, one of them is: a sharp and sudden disruption in some economic balance, followed by a collapse in a number of financial institutions to extend its effects to other sectors. It calls in particular on the disorders arising from imbalance between production and consumption. The crisis can be either violent or slow, it might be limited in the local impact on a country or a particular country or be generic and comprehensive to several countries, also known as a stop in the prices of goods and services.2. THE CAUSES OF THE GLOBAL FINANCIAL CRISISThe current financial crisis began with the announcement of the preventive bankruptcy of the Lehman Brothers institutions, where this is the beginning of the crisis and was the oldest financial institutions in America, which began in the nineteenth century, and was one of the few companies that survived the Depression of the consequences of the recession in 1929. The features of the global financial crisis began to appear in the United States of America in mid-2007 as a crisis in the real estate sector the along with the non-payment of mortgage loans granted to civilians that do not have adequate capacity to pay, which contributed to this accumulation in the United States in its first bankruptcy in the banking institutions which turned this crisis into a credit crisis in the banking system and financial U.S sector , along with the complexity of the global financial markets and their relation to each other turned the U.S. financial crisis to the global financial crisis, that affected the financial markets and banks in developed countries, mainly and directly and then began to show its impact on capital markets in the economies of emerging countries to turn then to the global financial crisis affecting all economies of the world in directly and indirectly in varying degrees, the causes of the global financial crisis can be divided to internal and external reasons as follows:2.1 Internal Reasons2.1.1 The Existing Capitalist SystemSome economists believe that the cause of the crisis was because of the capitalist system itself, and that the endeavor of clients to achieve rapid and substantial profit by investing in financial instruments rather than investing in the real economy. Leading since the beginning of the seventies of the last century of economic growth at a declining rate in Western countries. Where financial instruments have become more profitable than investments in tools to achieve a real increase in production.We have adopted the U.S. economy since the economic liberalization policies of the eighties and the commercial, financial, is one of the principles of the capitalist system and modern liberalism known as New-Liberalism. Which is able to correct itself in the event of a disruption or crisis without the need for state intervention, this belief was prevalent at the Classic who believed that the invisible hand is able to correct any defect, but it took them what happened in the thirties, what was known Great Depression, where the market is no longer able to correct itself and this is similar to what happened in the global crisis. …