Causes and Consequences of the Global Economic Crisis in the Present Period and its Impact on the Slovak Republic

Abstract

The beginning of the present global economic crisis dates back to the year of 2007 when, in the same year, the crisis of American mortgage institutes emerged. The crisis was initiated by a large number of doubtful loans requested by clients, mostly by physical persons who were not able to pay them off. The market with securities (mortgage bonds) being covered by insolvent mortgages collapsed. This collapse led to an export of the American mortgage crisis to the global financial world because the mortgage bonds had been purchased by huge bank houses and institutional investors in all continents of the financial world. It is paradoxical that these bonds were given the favourable rating evaluations by renowned worldwide rating agencies. The mortgage crisis in the U.S.A. was gradually growing into the global financial crisis, at first in the U.S.A. and then throughout the world. As a consequence of the globalization and worldwide financial internationalization of the financial world the crisis spread to all spheres of the world economy and gave rise to the global economic crisis.