Free University of Tbilisi

By Ilia Gogichaishvili
In spite of still some obscurity, now there is an international agreement of economists that the sub-prime mortgage market failure was the main reason for the ongoing financial crisis. This failure was caused by the boom of credit loans and presence of unjustified lending practices. Lending standards tended to decline when the credit boom had an upward propensity. Afterwards, high credit rates and low lending standards were followed by huge growth of construction in the world scale and house price appreciation accordingly. This situation created artificial confidence in the mind of borrowers that the credits, in the case of default, would be refunded by the house compensation. This situation was also supported by the market penetration of the world’s large business or financial institutions into small open economies. (more…)

I am sure all of you will be interested in this:

The Wall Street Journal Digital Network debuted today ‘The End of Wall Street: An Oral History,’ a three-part documentary-style series created in partnership with Wall Street Journal Books that presents an in-depth look at the 2008 financial crisis as told by the reporters and editors who witnessed history and defined the coverage. ‘The End of Wall Street’ — http://wsj.com/EndofWallStreet — is available for free on WSJ.com, MarketWatch.com and Barrons.com. The documentary is narrated by Dave Kansas, former Journal editor

by Alesya Parshina
In 2008, a global economic crisis was suggested by several important indicators of economic downturn worldwide: high commodity prices, inflation and unemployment.

HIGH COMMODITY PRICES - high oil prices, which led to both high food prices (due to a dependence of food production on petroleum, as well as using food crop products such as ethanol and biodiesel as an alternative to petroleum) and global inflation. In January 2008, oil prices surpassed $100 a barrel for the first time, the first of many price milestones to be passed in the course of the year. By July the price of oil reached as high as $147 a barrel.

INFLATION - (more…)

by Elene Kvanchilashvili
Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems – such are the effects of a current global financial crisis. But what does it all mean to an average person, living in this world and specifically in its developing part?

Developing countries’ economies have been growing faster than economies of developed countries for some time now (China, India and even Georgia to some extent are good examples). But it is now clear that the financial crisis that emerged in the developed part of the world will not stop spreading over its poorer parts: Chinese trade shrank for the first time since 2001; India’s industrial output fell for the first time since 1994, and Georgia, although predicted to overcome the current effects of Russian aggression of August events successfully, thanks to the financial aid from many of the developed countries, will still have to face an economic slowdown next year.

What does it all mean to an average Georgian? (more…)

By Alexander Revia 
On 14th of October at Fordham University held public lecture of Mr. John Forbes Nash Jr., the Nobel prize Lauriat in Economics and one of the genius of 21th century. The speech was concerning world crisis and possible solutions to the downturn in the economies worldwide. During the presentation he argued about two main points. First was concerning government ability to deal with long run problems and as he mentioned: “I get the impression that the government is not ready to do anything that is really beyond a short-term basis,” It seems quite realistic, because what was done till now did not have any reasonable positive effect. Even after decelerating that US government support the economy in amount of $ 700 billions it had only short run positive effect (as it was posted on some economic blog: “US government just burnt US taxpayers’ money). So maybe Nash is right and the thing we need is just: “a natural stability of value”. (more…)

By Yaroslav Udovenko
The main reason that made me write this article is the stream of bad news and talks about the crisis. Thus I want to start the topic and develop it in a few ways:  I’ll search about the companies who gained from the crisis and the investors who look upbeat in the time of the worst crisis since Great Depression.

In September I read the interview with Google’s CEO Eric Schmidt at “McKinsey Quarterly”, and he said that recession is the good time for investments. This mean crisis is not the utmost evil, it’s also an opportunity.

At a recent conference in Southern California 1,000 investment professionals came from all parts of the United States to hear and talk to 330 aspiring companies. Many of the companies were developing environmental, clean energy, cellphone, water treatment and biomedical technologies. (more…)