Introduction

The 2008 financial crisis which is sweeping across the world economy has left serious damage for many countries, from the United State to the Europe, other industrial countries, emerging markets, and developing Asia. Especially, in its epicenter – the USA – financial system was nearly crumbled because of the weakness and shortcoming of monetary and financial policies. In 29 September 2008, the stock market saw the largest single-day loss in the history of the DJIA (Dow Jones Industrial Average) with a loss of 778 points. In a short time, the global economy is threatened by a deep recession with the collapse of major investment banks, mortgage loan institutions and the panic that covered the whole of global equity markets. Commercial paper which is usually considered as a safe investment by money market funds, suddenly became risky. A collapse of confidence became unpreventable and global credit condition froze. Credit became impossibly expensive, interest approached zero, loan windows suddenly were slammed shut… In this paper, we will discuss about the causes and impacts of this crisis to the global economy; from that point, proposing methods to solve problems in the present and for future.