The credit crunch:
Whose fault was it anyway?
What is it?
In their critical thinking exercise that concludes the reading "The credit crunch: Whose fault was it anyway?", Warwick and Rogers (2018, p. 66) invite us to discuss two follow-up questions related to the events that led to, marked and followed the economic crisis of 2008.
Questions
- What reasons do you think the writer will give to support his claim that central banks, regulators, and governments were also to blame for the financial crisis?
- Use information in the paper to help you.
- What risks do ordinary people take with money every day?
- How can these risks be avoided?
You have 12:00 minutes to plan and write a response to the two questions. I suggest you divide your time roughly as:
- planning = 2:00 minutes (It's usually a good idea to plan before you start to write.)
- writing = 8:00 minutes, and
- editing = 2:00 minutes.
A helpful strategy
Imagine you are writing for someone who has not read the question you are answering or the article that the question follows up. Your aim is to clearly communicate your response to that reader, so it might help to paraphrase the question at the start of your response to it. But you need to rewrite (paraphrase) the idea in the question as a statement.
Because your writing should make sense independently of the question it might be answering, it is usually useful to give background, which can often be done by paraphrasing the question into statements that begin your answer. This is also a useful strategy in exams such as IELTS and TOEFL.
Reference
- Warwick, L. & Rogers, L. (2018). Skillful 4: Reading & Writing, Student's Book Pack (2nd. ed.). London: Macmillan Education
Although the main culprits of the 2008 economic crisis are usually seen as being irresponsible commercial banks, the author of the paper "The credit crunch: Whose fault was it anyway?" argues that central banks, regulators, and governments also contributed to that financial crisis. I thought that the clue to his support is mainly in the concluding paragraph where he tells us about the reforms enacted by President Obama in 2009. These suggest changes in response to the crisis and the reforms suggest that the writer could use statistics to show that the central bank and other government regulators had not exercised enough control over the commercial banks but had allowed them to act recklessly in pursuit of profits. That the government felt the need to change the law regarding suggests that the writer believes there is evidence to support the need for the reforms that are suggested.
ReplyDeleteI thought he might also have evidence from the OECD that central banks and regulators had not acted in an efficient manner to prevent a recession.
I agree with you, Peter. I also think that President Obama did the right measure to solve the financial crisis. At the time most commercial banks used to lend larger amount of money to high risk borrowers.
DeleteAccording to the writing, central banks, regulators, and governments should be blamed for delayed internvention in a decrease in an interest rate by the mid-2000s which later lead to mortgage defaulting in subprime banks. From this crisis, I believe that the situation can be prevented by folllowing economic news and study bank policy before making decisions.
ReplyDeleteAccording to the writer*
DeletePream, I often add replies to my comments when I notice a mistake. Unlike with our own blog posts, we can't edit comments after publishing them, so the only option is to add a reply to revise or correct something.
DeleteAccording to the writer, he thinks that central banks, regulators, and governments were are to blame as they had not oversee the commercial banks and they had not have the right measurements to respond to the financial crisis.
ReplyDeleteFor ordinary people, they can take risks on overspending their credit cards.
I agreed with the risk of overspending on the credit card because when my sister got her first credit card, I think she paid so much for the thing by using the credit card. I think the credit card makes her think that she has money to pay everything but in fact she must find more money to pay that.
DeleteI think the financial crisis happened when banks increased interest rates more than normal. It makes people with few or no savings have been persuaded to take out a mortgage. If the bank does not increase interest rates, maybe this crisis wouldn't happen. The risk that people have is about the uncertainty money that we have if they are not saving.
ReplyDeleteI agree with you that If the interest rate of the banks do not increase, the crisis may not happen. Moreover, the reason which the interest rate increased is the number of people who want to mortgage for buying their houses is rising as well.
DeleteIn my opinion, the government and regulators unchecked the subprime loans result in many customers defult on their mortgages. All of this, it make the economy is recession.
ReplyDeleteNowadays, I think that a lot of people who do not have enough money to buy their house or their own property try to mortgage with the banks. As a result, sometimes which the economy of country is recession they do not have enough money to pay for their debt result in they can to be a bsnkrupt person.
I agree with you as government and regulators should be responsible for stimulating the economy in order to prevent a recession. Moreover, homeowners are likely to take risks in mortages as it could lead to bankruptcy.
Delete