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The global financial crisis of September-October 2008 is a major ongoing financial crisis, the worst of its
kind since the Great Depression of 1930s. It became prominently visible in September, 2008 with the
failure, merger or conservatorship of several large United States-based financial institutions. The
underlying causes leading to the crisis have been reported in business journals for many months before
September with commentaries about the financial stability of the leading US and European investment
banks, insurance companies and mortgage banks consequent to the sub-prime mortgage crisis.

The question is why these problem arise?

In the American financial system fannei mae and freddie mac are two largest financial institution. both of
which had originated as government organization to help fund housing.

They work in two ways-firstly, they purchased mortgages made by bank, thus refinancing the lending
bank and enabling them to make still more loans. Secondly they guaranteed mortgages so that the lending
bank did ot face any risk and could cover its potential loss from default by paying the insurance premium
to these two insurer. This pooling of the risk meant could be made available to the guy that want to buy a
house. these two organization got their money by borrowing from the capital markets. they borrowed
from the central banks around the world with the encouragement of the us treasury, which assured
everyone that this was as sound as a us government security. This channeled substantial foreign saving
into the mortgage market in the united states, enabling more and more to be directed to housing.

Those housing loan were called prime mortgages. the availability of fund from the foreign lending to the
us was so great that the financial institutions needed to increase the amount of lending and hence, the so
called sub-prime mortgage market emerged. this market comprised loans that did not meet the condition
of fannie or freddie and so were generally riskier. of course such sub-prime loans could not be refinanced
through the two institution.

As the price of house inreased American found that their house were more valuable. For example

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The world economy is facing very serious problems because of plunging house prices, falling credit
availability and decreasing real incomes in many countries. the crisis began when fannie mae and
mreddie mac re two most largest mortgages lender went bankrupt . the bankruptcy of fannie and fraeddie
mac and federal takeover of these institutions, surely is one of the most serious financial crisis since the
wall street crash in 1929.

In 2007 us economy began to crumble. Several things happened more or less conjunction: the mortgages
market in the united states had build in increase in interest rate, suddenly increasing the required payment;
as the market for house prices stopped and it became more difficult to use home equity financing as a
cushion. at the same time the American economy slowed somewhat, making it even more difficult as
people lost jobs and bonuses and overtime were reduced. there were dramatic increases in the prices of
food and gasoline, undermining consumer purchasing power. These price increase also arose from the
high demand levels in a rapidly a growing world economy.

Now it is not only a problem of America or related nation it becomes a global problem.

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Apparently, the export sector, especially the 34c'c will feel the first pinch as the
galvanising effect of the global financial meltdown. The projected havoc will consequently create
unemployment in society and reduce the purchasing power of the general masses.

But this is true that the global crisis originating in the developed world will create new opportunity
for our export products as the buyers of those countries will be compelled to buy low-cost RMG
products raising the demand for our apparels. On the other hand, the Bangladesh RMG is enjoying a
competitive edge over China and Vietnam which is also a boon for our export promotion.

This scribe will now focus on remittance issue. The ongoing global crisis will largely hit heavy and
hi-tech industries absorbing white color job holders and skilled labourers where Bangladesh remains
insulated because of its very poor presence in the international companies or factories. A large
number of non-resident Bangladeshis (NRBs) are employed as unskilled workers, so they are less
vulnerable to the risk of job-loss.

On the other hand, the continuous price fall of oil will help the international entrepreneurs to
undertake new business efforts creating fresh employment opportunities which will ultimately save
our remittance flow.

The price of per barrel of oil declined to US $ 65 from that of $ 147 and it is expected that the oil
price will hover between $ 80 and $ 90 per barrel in the years to come.

It is also apparently clear that the flow of

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But our national priority should be to reduce the dependency on foreign aid. We have to ensure our
self-esteem in the world as a self-dependent nation. We must create food safety net and energy safety
net right now to ensure our national growth to withstand the challenges.

The food safety net should be created through enhancing domestic production, meeting shortfall
through import in time, adopting stringent program and ensuring adequate supply.

On the other hand, the energy safety net should be created as the pace of development of any nation is
intimately linked to its level of energy consumption. Bangladesh, like many other developing
countries, has been rated poorly for its low per capita energy use. Yet there have been significant
discoveries of commercial energy resources in the country, especially natural gas and coal. Successful
exploration and exploitation of these energy resources can boost the economic development through
industrial growth. Lately, there have been significant activities in the gas exploration and production
sectors of the country. Also the country is about to enter a coal era with the commencement of the
commercial coal production from the first major underground coal mine in North Bengal. As the
energy sector opens up its potential for the present time, the nation's aspiration for achieving an
energy security fin the near future still remains unfulfilled.

The first benefit with the implementation of food safety net and energy safety net will be in the field
of price stability which will directly create new entrepreneurship. New entrepreneurship will lead to
generating new employment opportunities, which in turn will create effective demand in the economy
through increasing the purchasing power of common people.

Nevertheless, the middle and lower middle segments of the population, who constitute a potent force
in society and economy and are verily termed "the life blood of economy", can ensure a stable
economic situation for the country as long as they have the purchasing power. Such a condition will
guarantee momentum to the economic growth leading to the longed-for economic prosperity in the
life of the nation.

Meanwhile, according to a World Bank South Asia report, the effect of the global financial crisis on
the financial sector of Bangladesh is likely to be negligible. Bangladesh is relatively more exposed
from the real economy effects of a possible slowdown in exports, especially garments, and from
remittances. The balance of payments is in surplus owing to rapidly rising remittances and prudent
demand management. Inflation, which reached double digit, is now coming down due to falling food
prices.

Fiscal deficit has increased to 5-6 per cent, but remains manageable in view of falling global oil and
food prices from their global peaks last fiscal year.

The financial sector is showing signs of improved health from past reforms and is mostly insulated
from foreign markets because of very low foreign capital inflows. External debt is low and reserves
 are comfortable.
so we can now in a position to sum up all of the problems we are going to face because of global
financial crisis

c Our exports and garments are going to slow down slowly.

c Remittance will also reduced.
c International financial institution and development agencies such as the world
bank, the IMF and ADB will not dole out credits and grants due to bankrupt or are
bailing out their on economies.

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Government have to manage stock market with strong hand. Because our astock market is too much
volatile. To ensure sound economy it must have to be managed.

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