Reflections on the international dimensions and policy lessons of the US subprime crisis

Reflection
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Reflection
The United States experienced the Subprime crisis because of poor financial decisions. With the rapid globalization of the financial markets, new channels for spillover emerged. The financial players stretched their financial balance sheets because they wanted to take advantage of the emerging investment opportunities (Reinhart, 2008). As the prices in asset increase, the main participants acknowledge that the financial rules have been changed. This enhances policy makers' confidence since they believe that the increase in prices is a vote of confidence in the regime. However, many of the old rules are usually at play. The rise in asset price usually dies and leaves due to economic shocks (Reinhart, 2008).
During the dotcom era in the early 2000s, many technology firms rose dramatically and experienced enhanced investment. Although many of the startups did not have any revenue, they received funds from the ...