Munim Hasanov, Ph.D. (Econ.), head of Economics and Finance Management Department, Institute for Improving the Qualifications of Civil Servants (IIQCS) of the Civil Service Department under the President of the Republic of Tajikistan (Dushanbe, Tajikistan)


The financial crisis that started in U.S. real estate markets in late 2007 has now developed into a financial and economic crisis, spreading to most countries of the world.

The signs of a financial crisis include a decline in bank liquidity, which means a loss of potential customers; rising interest rates on loans, the demand for which decreases; the bankruptcy of a certain part of credit institutions and a financial market slump.

An economic crisis is characterized by a slowdown in GDP growth and a decline in GDP per capita. The supply of goods and services decreases due to a drop in their production, while demand increases accordingly; prices go up, unemployment rises and social tensions increase.

The current crisis is the deepest one in the history of capitalism since the Great Depression of the 1930s, and its consequences will probably be felt in the medium term as well.

1. The Main Causes of the Crisis

A review and analysis of numerous sources show that the crisis erupted for the following reasons:

Massive provision of mortgage loans to subprime borrowers with low income or a blemished credit history. The mechanism of this phenomenon was described in detail by M.A. Niezov, Ph.D. (Econ.).

Imbalances between the real and financial sectors of the economy, and also between GDP growth and the increase in financial fixed assets. For example, world GDP in 2006 was $48.4 trillion, while financial fixed assets (shares, bonds and commercial bank assets in the aggregate) were estimated at $194.5 trillion, i.e., an amount more than 4 times larger than GDP. For comparison: in 1980, the ratio of financial fixed assets to world GDP was 109%. The excess of assets over real production is particularly large in developed countries: 4.3 times in the U.S. and almost 5.5. times in the EU, whereas in developing European countries the ratio was 1 to 14 (italics mine). According to estimates, for every dollar circulating in the real sector of the world economy there is an average of about 50 dollars in the financial sector (italics mine). As can be seen from Fig. 1, in 50 years (from 1947 to 1997) the share of profits earned by U.S. corporations (which account for almost a third of world GDP) from the largely speculative financial sector increased 3.5 times, while the share of profits from the real sector of the national economy (which is largely responsible for..

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