The Recent Financial Bubble: an Overview

Abstract

The main aim of this paper is to analyze the recent financial crisis and to make recommendations on how to handle it in the best possible way. Financial bubbles, since the great depression, have been analyzed and some recommendations have been made taking into account the internationalization of the world economy which behaves like a domino. The recent financial crisis in the subprime mortgage market has created new problems in the world market with unforeseen continuances. Deflation has been referred to as a possible continuance after a financial bubble because often but not always deflation follows. Deflation often results in financial and economic crises. Financial and economic crises affect the architecture of the monetary system, while a change in the system may affect the role of the dollar, the euro and the yen.