Global financial crisis and its effects on Nokia Company Assignment

Global financial crisis and its effects on Nokia Company - Assignment Example On one side, many people believed those responsible for the crisis were the ones receiving bailouts, whereas on the other end, the worldwide financial problems were to affect the livelihoods of almost every individual on the planet due to global interconnection. The subprime turmoil came about in large potion due to the financial tools such as securitization used by banks (Sheila, 2008: 20). Through securitization, banks would pool some of their loans into sellable assets. In so doing, they off-load the risky loans onto others. For this matter, banks knew they would make millions of cash through money-earning loans. However, these money-earning loans tied up for decades, therefore, banks turned them into securities. Security buyers received payments regularly from all mortgages. As a result, the U.S. banks off- loaded their risks. Upon testing this instrument, financial gurus saw securitization as perhaps the greatest innovation of the 20th century. With economic slump entrenching it s effects into the global economy, the divisions of the Nokia including telecommunication and mobile phones division started backing up the pillars of Nokia. In spite of the global deep recession, Nokia grasped potential, quickly came to its feet, and soon started streamlining its business. Financial crisis affected most financial institutions. However, as the securitization business continued buoying, high street banks got into a form of investment banking where they bought, sold, and traded risks. Same investment banks not contented with trading risks, selling and buying, they ventured into home loans and mortgages while they lacked the right management and controls. Many banks took huge sums of money inform of loans thus increasing their... This paper seeks to address the global issue of the financial crisis unfolding, and tries to consider the effects the crisis had on money lending institutions. Also, the change in the financial state of Nokia company is being considered against the background of the crisis. The subprime turmoil came about in large potion due to the financial tools such as securitization used by banks . Through securitization, banks would pool some of their loans into sellable assets. In so doing, they off-load the risky loans onto others. For this matter, banks knew they would make millions through money-earning loans. These money-earning loans tied up for decades, therefore, banks turned them into securities. Security buyers received payments regularly from all mortgages. The U.S. banks off-loaded their risks. Financial crisis affected most financial institutions. High street banks got into a form of investment banking where they bought, sold, and traded risks. Same investment banks not contented with trading risks, selling and buying, they ventured into home loans and mortgages while they lacked the right management and controls. Many banks took huge sums of money in form of loans thus increasing their exposure to financial problems. When people eventually began noticing the risk, their confidence fell down at an alarming rate. As a result, the level of lending slowed down at once and in other cases ceased . September 14, 2008 witnessed Lehman Brothers collapse. Following its collapse, governments worldwide struggled to rescue their gigantic financial institutions as the state of the failing stock and housing sectors persisted. In conclusion, global financial crisis was inflicting and driving even the developed economies bankrupt.