Five Years from the Brink (movie) Movie Review Example | Topics and Well Written Essays - 750 words

Five Years from the Brink ( ) - Movie Review Example However, the immediate cause that triggers the crisis was the fall of Lehman Brothers. Their collapse caused much fear to the global financial markets. This was in 2008 of which their fall prompted banks to stop lending to each other. The impact was the rising interbank borrowing risk premium to 5% which was previously at 0%. Despite the effort to inject liquidity to the financial markets by the authorities, the financial markets were already suffering the consequences (McKibbin and Stoeckel 1). Conversely, article by Positive Money claims that financial and economic crisis are attributed to the large sum of money created by banks through loans. The banks doubled the money and debt in the economy in a period of 7 years. The larger sum of money created by the banks was used to increase the cost of property in the economy, house prices increase significantly. A huge amount of money loaned to the property owners by the banks increased the cost of houses and personal debt. Additionally, the property owners had to pay interest on loans provided by the banks. However, the increasing debts and low income led to the failure of loan repayment. Some individuals could not afford to pay back the loans and so the banks become bankrupt. Immediately after the crisis, financial institutions reduced their lending rates to household and the businesses. The reduction of lending rates by the banks to businesses caused a drop in prices. This prompted the property owners who had previously borro wed a large sum of money to sell their property. Those who had borrowed a large amount of money thought that they could easily repay their loan because of favorable prices of their property. The sale of the assets by the property owners led to fall of house prices and so the bubble burst. Hank stated that the improved value of the derivatives, hidden banking structure, and the off- balance sheet financing encouraged exceptional business transactions and therefore contributed and