Critically discuss the view that capital markets created the Essay - 4

Critically discuss the view that capital markets created the conditions that led to the late saving bubble and the banking crisis - Essay ExampleThis essay aids, to discuss the view that capital markets created the conditions that led to the upstart thrift bubble and the banking crisis.Old economy firms were or are large, well established firms that operate in a form of traditional sector. Old economy firms nurture small investment and less mingled in the current technology era (Torre & Schmukler 2007, p. 88). These old economy firms were the ones, which dominated the entire economic activities in the beginning the introduction of the dotcom epoch. The current dotcom era ushered in the economy back in the 1990s, leading to the creation of late and high-growth firms hence improving the economic status of many countries bubble and causing banking crisis internationally. Old economy firms normally exhibit low volatility and suffer continuous dividends as they continue to particip ate in good firm sectors, which tend not to provide potential investments for companies (United Nations Conference On Trade And Development 2009, p. 90).In contrast, newfangled economy firms operate in advance technology industry sectors and the highly competing and successful firms have the opportunity of building value at a higher growth rate. Good examples of these new economy firms include primary firms, whose operations involve commerce and technology-based services such as Intel, Google, eBay, and Cisco. These new economy firms typically operate in environments, which are extremely different from of the old economy firms and have more volatile stocks (Stiglitz & Ocampo 2008, p. 30). New economy firms do not necessarily pay dividends since they opt to reinvest their profits into new businesses or expansion.Old and new economy firms not only differ in terms of their activities, scarce also they differ in the way markets value them. New economy firms tend to have squiffy vol atility valuations since their modes of