Hi Erina, another good effort with this essay, and it’s nice to see how much work
you’re putting in to these essays. It’s good to see graphs and diagrams that help theexplanation and add interesting visual content. Good work!
As with the other essays, I’ve marked words that should be deleted in red, words
that I have added to the essay are in blue, and general comments about structure, style, andword use etc are in green. I’ve numbered parts of the essay where I’ve made comments andadded advice or explanations. You can find the comments at the end of the essay.

The Causes and On Going Effects of the Global Financial Crisis
Erina Yamashita
The date was September 15. 2008 when the world’s largest stock brokerage andinvestment firm, the Lehman Brothers, collapsed. The bankruptcy of the Lehman
Brothers gave the world a great shock, but this event was only a small part of the global
financial crisis. In fact, more than 10 thousand of the companies had already went goneout of business in America within 2007 (“Increase of Bankruptcy”, par.1);, and therecent news of the bankruptcy of General Motors (GM) and the acquisition of Chrysler,
both (1)a major company of automobiles in America major American automobilecompanies, told the world that the financial crisis is yet to continue, rather, get worse.
(2)Now, the ripple of this economic crisis is spreading out to the world;, and to the letter,became the “Global Financial Crisis”. In this essay, the author makes a reference to thecauses and the on going effects of the global financial crisis.
How did this financial crisis begin in the first place? The causes are many, but thedirect and the immediate cause of the crisis lies in the subprime loan system in America.
A subprime loan is, “a A type of loan that is offered at a rate above prime to individuals
who do not qualify for prime rate loans” (“Subprime Loan”). In other words, it is a loan,
mainly a housing loan in this case, lend lent to people who have (3) a lower credit rating,and (4) thus have a reasonable chance of defaulting their repayment. Thereof Therefore,
the interest rate is usually set higher than the other loans. At first, many people areattracted by the low interest of the subprime loan, but later suffer from gradually riseninterest;, which is a distinctive characteristic of a subprime loan.

1The subprime loan system first prevailed in the mortgage market in America in theearly 1990s (Danis,Pennington, par.2).
The rate started todecrease at the endof the century, butagain showed aremarkable growthin 2003, right in the
middle of a housing
bubble. It was a time
when the housing
price (5 )has had
been constantlyincreasing. As the housing price increased, the American civilians began to havedifficulty purchasing a house and could also expect to gain a profit from the risen price; .
(6)Then, this lead to subprime loan became common among American people. The graph(above) by the U.S. Consensus Bureau shows that the share of the subprime loan morethan doubled through 2003 to 2004, and was over 20% in 2006.
Subprime loans was were originally made for people with a lower credit rating; thus,
the rate of delinquency is(2) was usually about 10%, which is 5 times larger than otherhousing loans (Ono, par 3). The graph below shows the rate of delinquency by subprime
loan borrowers.

Through 2004 to 2005, the rate stays stayed around 13%; however, it

starts started to increase dramatically as the interest rise rose and when as the housing
bubble busted at last around 2006. As the rate of delinquency increased, the financial
institutions that were accommodating the subprime lenders began to hold back theirmoney. Moreover, the housing bubble burst caused a sudden drop of housing price. Oncethe housing price began to decline, refinance became ever more difficult, and the rate ofdelinquency soared. Thus, the subprime lenders, and not to mention its borrowers, weremet with financial crisis. The bankruptcy of New Century Financial, one of the largest
subprime lending institutions in America, is its symbol (Stempel, par.1)

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Dark blue: The rate of delinquency in subprime housing loan
Light blue: The rate of delinquency in subprime housing loan (including interest)
Green: The rate of attachment in subprime housing loan
Blue line: The housing price index(7) It was would have been better, if the financial crisis had stayed within America;
however, because of the system that subprime lending has taken, it became a “globalfinancial crisis”. Subprime lending is a security backed system, and its system isscattered around the world so that risk can also be dispersed. The diagram below
roughly explains the how housing loans are securitized in America, and how it involved
the financial circles of the globe. As can(MBS, RMBS, governmentalCredit Guranteed)Ⓟ Government-owned: Ginni Mae〃 -sponsored: Fannie Mae
Freddie MacHouse Loan Financial Disposal of Securities IssuingHouse
Purchaser
InstitutionFirmsHedgefundⓅ Prime Loan

Loan Credit

SecuritiesⓈ Subprime Loan

Ⓢ Private enterprise(MBS, RMBS,No Credit Guaranteed)

Investors
around theWorld
CDO
Notes: MBS = Mortgage-Backed Security, RMBS = Residential Mortgage-Backed Security
CDO = Collateralized Debt Obligation
Sorce: KOKUSAI Asset Manangement Co., Ltd.

be seen in the diagram, loan credits are sold to security firms. Then, the security firms
issue securities like MBS, RMBS, or CDO, which are bought by the hedge funds;, where,3

the securities are,; furthermore, are bought by the investors around the world. Eachactor is connected, and if one of them fail; then, others also will, like a chain reaction. Infact, after the financial institutions faced the crisis;, security firms,; for example, Ginni
Mae, Fannie Mae, Freddie Mac, Bear Stearns,(8) all a major security firms in America,
fell in to a slump one after another. This,The Divergence from the Nominal Level of Interestrate

not to mention, the spread to the hedge
funds and investors,; as a result,became a “global financial crisis”.
We can now see how the subprime loansystem had caused the global financialcrisis;, but it is also important that welook into “the cause of the cause”. In
other words, we have to search forindirect causes. The reason why
subprime loans excessively increased isbecause the housing price soared;, thatis to say, the housing bubble. Then, why
had housing price made a sudden upturn?

Notes: The graph is based on Taylor rule, downward:

What was the cause of the housing bubble?

Cutting interest, upward: Raising interest
Source: “Global Economic Policies and Prospects”

One of the reasons goes all the way back to the September 11 Attacks. Because of
September 11 Attacks, America fell into a chaos. In the destroyed World Trade Center,
there were many financial institutions, and its amount of damage was inestimable.
Thus, the then Chairman of the Federal Reserve Board, Alan Greenspan, tried to keep
the financial order by greatly cutting the interests interest rates. We can see from thegraph above how much America was cutting cut their interests interest rates. This
policy, first justified by many, now is said to be the hotbed of the housing bubble (Suzuki,par.3).
The Second reason is the excessive inflow of money to America. At a time when
America started Iraq War, the worldwide flow of money was concentrated in particularcountries; the oil producing countries and BRICs (Brazil, Russia, India, and China).
When the war started on 19 March, 2003, Iraq, a country with the second largest oil
reserves in the world, were forced to cease its oil exporting. Thus, the OPEC
(Organization of Petroleum Exporting Countries) started to control the price of the oil.
As a result, the oil price globally increased, bringing excessive profits into oil producing

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countries. In addition, BRICs, making a rapid economic growth, increased their amountof foreign reserves (Tamura par. 2). These this surplus money intensively flowed into
America including and its housing market; a natural result to a country with the largest
economic market and in a the middle of war. This formed the structure of the housing
bubble.
When Saddam Hussein, the former president of Iraq, was executed on 30 December
2006, and when others, becoming tired of lingering war, saw this event as a sign ofpolitical stability to come in Iraq, the money that was overflowing in America suddenly
turned outward. The money started to move to countries with higher interest rates thanAmerica, causing the American dollars to rapidly fall (Tamura par. 3). The result waswhat the author has been explaining up until now; the housing bubble burst, collapse of
subprime loan system, and the subprime loan system collapsed leading to the global
financial crisis.
The effect of global financial crisis is emerging everywhere. (9)For the financial
institutions were the targets of the shock, companies of any with many sections havealso been effected. The global financial crisis has caused the world economic market tocontract, decreasing the number of jobs and increasing the rate of unemployment
around the world.
According to the report by Business Labor Trend 2009, in America, the epicenter offinancial crisis, almost all the companies has been conducting an extensive personnel
reduction, and its rate of unemployment has reached to 6.5% which（10) is the highest in
14 years (“The Global Financial Crisis” par. 1). The rate of unemployment has also been
increasing in Europe and Asia. (11) Britain, and Germany, has have been hit bynegative growth, and Korea and France has have been conducting a tax reduction tohelp the citizens (“The Global Financial Crisis” par 10.). In Greece, the rate ofunemployment is high among the youth and is about 21% for under age 25, causing theriot to break out (“Riots in Greek Continue” par. 5). Japan has also been experiencing adifficult time in financial aspect terms. The rate of employment has increased from 3.8%to 4.4% in 2009. Furthermore, many young people who had supposedly have finishedtheir job hunting, are having their job offer withdrawn by the once accepted companies
that once accepted them. (12) According to the report by Japanese Ministry of Health,Labour and Welfare, a total of 2125 university or high school students had their job offer
taken away (“Withdrawal of Job Offer” par. 1).
In conclusion, global financial crisis was the result of the collapsing subprime loansystem in America; however, this was only an immediate cause of the crisis. There wereother causes, though (13) indirectly but important, that caused the global financial

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crisis: the domestic financial policy in America just after September 11 Attacks andexcessive inflow of world’s money to America. Now, the world is together facing similar
problems such as decreasing number of jobs and increasing rate of unemployment:(14)both a problems that must be solved to make our future brighter.

Works-Cited
Ono, Ryo. “The Status Quo of Subprime Lending System in America”. Mizuho Research Institute 14
Mar. 2007. 4 Jun. 2009.
<http://www.mizuho-ri.co.jp/research/economics/pdf/market-insight/MI070314.pdf>
Danis, Michelle A., and Pennington, Anthony. “The Delinquency of Subprime Mortgages”. The Federal
Reserve Bank of St. Louis. March 2005. 5 Jun. 2009http://research.stlouisfed.org/wp/2005/2005-022.pdf#search='subprime delinquency refinance'>
Stempel, Jonathon. “New Century Files for Chapter 11 Bankruptcy”. Thomson Reuters. 2 Apr. 2007. 5Jun. 2009.
< http://www.reuters.com/article/topNews/idUSN0242080520070402>
Suzuki, Sin. “Who is to be Offended for the Housing Bubble? The FRB” Nikkei Business. 16 Apr. 2009.
6 Jun. 2009
< http://business.nikkeibp.co.jp/article/money/20090410/191609/>
Tamura, Hideo “America is the Head of the Bubble.” Nikkei. 10 Oct. 2005. 10 Jun. 2009.
<http://www.nikkei.co.jp/neteye5/tamura/20051002n18a2000_02.html>“Global Economic Policies and Prospects” . International Monetary Fund. March 2009. 6 Jun. 2009
< http://www.imf.org/external/japanese/index.htm>“Increase of Bankruptcy: Problems of the Subprime Loan System” Money-zine News. 13 Dec. 2007. 26

Jun. 2009<http://moneyzine.jp/article/detail/13474/>“Riots in Greek Continues.” Asahi. 22 March. 2009. 11 Jun. 2009.
<http://www.asahi.com/international/update/0319/TKY200903190303.html?ref=rss>“Standard and Poor’s” Mortgage Bankers Association 2008. 4 Jun. 2009.
< http://www.mortgagebankers.org/default.htm>“State of the Nation’s Housing Report 2008” U.S. Census Bureau .2008. 4 Jun. 2009<http://www.census.gov/>“Subprime Loan.” Investopedia: A Forbes Digital Company. 2009. 2 Jun. 2009.
<http://www.investopedia.com/terms/s/subprimeloan.asp>“The Global Financial Crisis: The Effect and its Measures.” Business Labor Trade 2009. 11 Jun 2009<http://www.jil.go.jp/kokunai/blt/backnumber/2009/01/044-061>'“The Problems of Subprime Loan: Adjustment of Financial Market.” KOKUSAI Asset Management,Co.,Ltd. 8 Nov. 2007. 5 Jun. 2009<http://www.kokusai-am.co.jp/report/senryaku/2007/071108/02.pdf#search>“Withdrawal of Job Offer” Asahi News 5 Jun. 2009. 11 Jun. 2009<http://www.asahi.com/national/update/0605/TKY200906050318.html?ref=rss>

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Again, this was a great attempt to explain a difficult concept and you’ve done very well to make itlargely understandable. The organization is very good and the support is relevant. You used good
examples from a range of sources and in a range of styles to effectively illustrate your main points.
You’ve also used some good vocabulary to express your views. This essay is not without problems,
however. Things for you to focus on are punctuation and connecting your sentence clauses. There werea large number of punctuation mistakes especially with semi colons, and a lot of errors with connecting
words (thus, as a result, furthermore, and then ) which made the meaning a little hard to follow inplaces. Please take a look at the following text book sections: Chapter 10 about types of sentences has
information on this point. Please check pages 216 – 221 about reason clauses etc. Please checkappendix B starting on page 280 also refer to parts about punctuating direct quotes on page 45. Also,
appendix C starting on page 291 has information about punctuation of connecting words and examples
so please check through that section too.
Below are the points I’ve picked up from your essay.
1. This is a problem of word order where adjectives need to be listed in a certain order whenseveral are put before a noun.
2. Now, the ripple of this economic crisis is spreading out to the world;, and to theletter, became the “Global Financial Crisis”. Tenses before and after and need to be thesame unless separated by a time subordinator that changes the tense. The correctsentence is Now, the ripple of this economic crisis has spread out to the world;, and to
the letter, has become the “Global Financial Crisis”. Please refer to the chapter onparallelism starting on page 179.
3. a lower credit rating is the correct term for this situation.
4. Please look at the text section starting on page 291 to clarify the use of thus.
5. “Has been rising” would refer to something that is still rising but you

8werereferring to a specific time in the past, so you need to use “had been rising”
6. Then is a special case and is never followed by a comma, it is also never used witha semi colon and comma (;then,) correct forms are as follows:, and then…

.Then…

;then…

This was often misused and you can see correct usage on page

7. Here you have used the wrong type of if sentence, you need to use the type used
for “unreal past situations” please reference a grammar book for clarification of this or
look at page 225 on conditional clauses.
8. This mistake you also made in a few places where you referred to both or all ofsomething then used a singular noun after it.
Ginni Mae, Fannie Mae, Freddie Mac, Bear Stearns, all a major security firm.

both a major company
9. Sorry, I couldn’t really understand what you meant here.
10. This mistake also appeared a couple of times. Don’t forget to use the when using
superlative adjectives eg the best, the biggest, the fastest, etc
11. I think you just overlooked this mistake as you used this correctly later. Whenthe list contains only two items, just connect them with and and no comma
12. Again you’ve used according to a couple of times and it’s better to vary themplease refer to page 43 for some more examples.
13.This is the same type of error as number 2. Please check the part of the text
about parallelism in the text book, page 179.

Aside from these mistakes this was a great effort so don’t be disheartened. You’rewriting is good and you have a lot of great potential to become a great writer. Onceyou’ve ironed out these minor problems you’re writing will be much improved. Also, I9

think that some of these mistakes have come from you trying newly studied textbook
sections. This is a great sign as it means that you’re trying to put into practice new
information, and, as always with any new concept, leads to errors. Once you’ve
overcome them however you’ll be a much better writer for it. Well done, and keep up thegood work!!

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