Essay topic TBC. Soumi will help look into the question I have suggested about the Minsky moment and it will be updated!

WHAT REALLY CONSTITUTED THE MINSKY MOMENT IN THE FINANCIAL CRISIS IN 2007-2008?
Table of Contents
Introduction    3
Section 1: History and Theory Relating to Financial Crisis    3
Section 2: Case Study: The 2007-2008 Financial Crisis    7
Section 3: Analysis of the 2007-2008 Financial Crisis as an Example of Minsky Moment    8
Conclusion    9
References    10
Introduction
The economy of a country determines the degree of prosperity, comfort, healthcare, security, employment and global contribution attained by the country and considering the transition from multinational to global economic transaction, the role of national economy must be appreciated. In order to meet the surfeiting demands of the country, the economy is expected to grow every year, and under the pressure of growth, financial errors take place, initially appearing in the guise of promising prospectus and later turning out to be financial disasters. It is seen that economies cannot attain growth without taking risks and too much risk lead to financial issues hampering economy. In order to sustain growth and avoid the risk of facing financial issues a perfect balance involving minimal risk and high growth must be considered. In the current essay, the Financial Crisis of 2007-2008 has been discussed from the perspective of speculative finance, Ponzi finance and a Minsky moment in the context of global economy.
Section 1: History and Theory Relating to Financial Crisis
The Financial Crisis of 2007-2008
The Financial Crisis of 2007-2008, although started in the United States of America, very much every country in the world was affected. As stated by Chari et al. (2008), the financial crisis of 2008 was the worst financial issues after the Great Depression of 1929. In 2001, US economy was worried with a small-scale and temporary financial recession, which led the government of the Federal Reserve of the country to lower its interest rates of lending, creating unforeseen scope for borrowers. It was seen that the interest rates, which were 6.5% was reduced to 1.75% in 2001 and 1% in 2003 (The Economic Times, 2018). As mentioned by Reinhart and Rogoff (2008), in a financial system, the biggest threat a financial organization faces is the failure in the recovery of the loan amounts. In case of USA in 2001, the banks started to give loans to people with eligibility that does not clarify them as borrowers in standard context of loan providing. The lowered interest rates made people in USA start buying homes, the prices of which were beyond their repayment capacity.
The number of subprime loans increased and after gradual increase in the interest rates in the banks, the people started to become defaulters and as the majority of the defaulters were people with no proper earning, no assets, the recovery of the loans depended heavily on the mortgaged houses. However, as more and more houses were put on sale in the market, the lack of buyers and the higher interest rates, declined the sales, increasing the supply more than the actual demand, resulting in downfall of home prices. The fall of the prices of the homes, as assessed by Kotz (2009), clogged the chances of loan amount recovery as the houses, against which banks provided loans became less worth in the market, resulting in large-scale bankruptcy files by big investors who bought collateral debt obligations (CDOs).
Minsky Moment in Financial Crisis
Minsky Moment is the final stage of a financial system, where the financial system tends to fall under economic crunch and results in huge amount of loss, spread across the entire economy, often reaching multinational and rarely reaching global status. As noted by Bose and Pal (2018), Minsky Moment arrives after hard economic pushes, where the economic policies incorporate lofty goals in terms of earning and growth and end up taking actions that inflate the value of a commodity or service. The inflation is encouraged to such an extent that post saturation of the market; the values fall flat, causing enormous losses to investors, brokers and financial institutions. A part of the system, financial organizations and their business complement each other and because of inflating the values of a product, the bank and the business organizations profit from the hike in prices. As identified by Wong (2018), in many cases the price hike of a product, there must be ample demand in the market and in order to meet the demand there must be ample money in the hands of the customers. In order to promote business sectors banks in many countries and even in international markets reduces the interest rates to increase borrowing and the borrowed money eventually end up being used for the increased purchase of business services and products.
Considering the importance and systematic offering of benefit through increased sales and inflating market strategy economies are boosted and secure their growth targets with ease. However, as noticed by Wray (2011), inflating the market for a longer period makes the investors greedy for profit and they end up taking higher risks, leaning their confidence on the inflated market, which at a certain point in time, becomes Minsky Moment. As Minsky Moment take place it is found that the value assumed by investors, who have invested heavily in the market, tend to be much less than they expected, leading to no scope of monetary recovery as the selling price fails to make up for the purchased amount. The arrival of the Minsky Moment, as suggested by Calomiris (2008), makes it evident that risk should be taken for economic growth; however, keeping in mind the aspect of sustainable growth instead of market inflation, as market inflation will eventually hamper the interest of the long-term investors, resulting in economic stagnancy.
Fisher’s Debt Deflation Theory relating to Elements of Minsky Moment
The Minsky moment is an amalgamated outcome of multiple aspects and there are major elements that construct the Minsky Moment. Fisher with his understanding realized that financial crisis in markets occur, when the borrowers fail to repay their loan amounts due to high interest rates and increased prices of commodities. The high pricing of the comedies increases debt amount, which the borrowers failed to pay back. As mentioned by He et al. (2018), the debt on commodities increase when inflation takes place and as inflation takes place the value of money decreases. Fisher in the theory suggested that financial crisis starts from inflation, which gradually reduces the value of money and increases the price of commodities purchased on loans, ultimately...