Published on August 21, 2014
Rosetta Calabro How has the investment climate in Australia changed over the last 7 years? Investment banking is a financial institution that assists individuals, corporations and governments in raising capital. The economy undergoes fluctuations these are called boom (highs) and bust (lows). In boom period’s people are optimistic and are likely to invest therefore the share market will be experiencing highs (bull market) In bust period’s people are saving and not investing, therefore the share market will be experiencing lows. (Bear market). In 2008 what started as the beginning of the real estate bubble in the United States caused a domino effect disrupting commodity prices and threatening the very foundations of the global economic system. Many consumers and households depended on stable and high real estate prices for their well being, but as prices dropped so did consumer confidence and more important credit availability to the economy. Real estate prices began to drop and consumers were no longer able to afford their mortgage payments and as prices continued to drop and bank losses continued to rise credit availability dried up quick. The crisis ended when the U.S government decided to put taxpayer money into banks and guaranteed their lending. Lots of emergency authority was used to cover the usual deposit insurance and firms bonded together and accounted for about half of the assets and deposits in the US banking system. In 2013 Australia used the exchange rate of A$1 = U.S. $1.036 which was the average rate over the year. This graph shows that in 2008 the Financial and corporate profits, S&P (Standard & Poor's Financial Services LLC (American financial services company)) and employment/population Ratio dropped in profit, especially financial profits. This was obviously during the GBF and is and shows how many households depended on stable and high real estate prices for their well being.