American Economic Meltdown

One of the most famous features on the landscape of the banking crisis in 1980s was the crisis involving the Continental Illinois National Bank and Trust Company in May 1984, which still is one of the largest bank failures in U.S. banking history. The collapse of CINB was a significant event in banking history that had a moral for both bank risk managers and regulators. It showed how quickly the exposure of credit problems at a well regarded bank could turn into a liquidity problem that danger not only the survival of the bank but also the financial system in the US.

In 2009, the Obama Administration bailed out the General Motors and Chrysler automobile companies. Having begun their decent into bankruptcy in 2008, losing thousands of jobs, sales plummeting forty percent, with a high threat of liquidation, General Motors and Chrysler finally reached government-assisted chapter 11 bankruptcy in 2009. Obama allocated eighty five billion dollars in TARP funds to the auto industry, close to fifty billion dollars of it going to General Motors. The allocated funds were successful in keeping two of the Big Three auto companies afloat, keeping taxes from sky rocketing and saving millions of jobs.

Because of this downfall of the housing market, the U.S. economy fell along with other markets across the country. Homeowners had mortgages higher than what their homes were valued at, the decline in housing prices caused many people to default on their mortgages which caused the values of mortgage backed securities and CDO’s to collapse, leaving banks and their financial institutions holding those securities with a lower value of

Links that might be somewhat related to the movie, and the questions: A recent interview of Alan Greenspan (watch from the 6:00th minute) http://www.youtube.com/watch?v=AWM0l8_F_X0 About CDOs: https://www.khanacademy.org/economics-finance-domain/core-finance/derivative- securities/CDO-tutorial/v/collateralized-debt-obligation-overview What is the total cost of TARP program? http://www.cbo.gov/publication/43663

Q. 1. What were the major factors that led to the recent financial crisis? How did we get here?

I think this so far was my favorite chapter. I was raised in Latvia until I was 16teen years old and saw my country come up couple times in the chapter, it was a nice surprise since usually nobody ever hears of Latvia. I watched the "European Meltdown" video and I have couple thoughts on it. I agree and disagree with this video. First of all, they are stating that the German government is spending way too much money of the immigrants and shouldn't be doing this, I believe that when a human being needs help, we come together and help. I do not think that they should deny help to the immigrants, these people left their own country because they were in danger, a lot of them are just looking for a safer environment for their families and children.

Over a decade into the War on Terror, the U.S. has largely succeeded in its attempts to destabilize Al-Qaeda and eliminate its leaders. In the writing Manhunt by Jonathan H. Cody, he states that these accomplishments didn’t come without a price; in fact the cost was enormous, and our nations decisions on how to finance it have profoundly damaged the U.S. economy. The US economic crisis can all be traced back to 9/11. In Catherine New’s article Then and Now she compared the US economy today to the economy in 2001 before the attacks. The results are astonishing; the average price of gas per gallon has increased by over $2, the median sales price per house has increased by over $50,000, the poverty rate has increased by 3%, the unemployment rate has increased by 4%, and the public debt has increased by trillions of dollars (New)! These facts show how devastating the attack was and the extent at which it changed the US. Since 9/11 we have ramped up our national investments, concerns, and spendings. The 9/11 attacks had both immediate and long-term economic impacts, most of which continue to this day. The stock market closed for four trading days after the attacks, which was the first time this has happened since the Great Depression! The attacks caused the Dow to drop more than 600 points, the 2001 recession to deepen, and according to Asad AbuKhalil’s book Bin Laden, Islam, and America 's New "war on Terrorism” also led to one of the biggest government spending programs in U.S.

The financial crisis of 2007–2008, also known as the 2008 or global financial crisis, is considered by many economists to have been the worst crisis since the Great Depression of the 1930s. It occurred despite aggressive efforts by the Federal Reserve and Treasury Department to prevent the U.S. banking system from collapsing. This led to the Great Recession. That's when housing prices fell 31.8 percent, more than during the Depression. Two years after the recession ended, unemployment was still above 9

Started in December 2007, began with the bursting of an 8 trillion dollar housing bubble, this is called the Great Recession. After 911, the economic in US trundown, in order to stimulate economic growth, the Fed chairman decrease the interest rate, tons of money flew into market. Because of the low interest rate, the housing prices start increasing; also, the government encouraged people buy house for stimulate economic growth. People realized the housing prices was keep increasing, they went to commercial bank applied for loans,eventhough, they did not need a new house. Because Fed chairman set a low interest rate, the householder pay less money to bank than they earn from the house, many householders got a huge profit from it.

The financial collapse of the U.S. economy that occurred in 2008 created a foreclosure crisis that resulted in thousands of homeowners losing their properties nationwide. This great recession caused many homeowners to even lose their jobs, savings, and credit worthiness. Predatory lending was a major contributing factor in these foreclosures.

TARP money was also infused into housing programs in February 2009, President Obama took measures to strengthen the housing market that had been consistently been declining for 30 months; Establishing the Making Home Affordable (MHA) and Hardest Hit Fund (HHF) programs to offset the damage done by the banks to families that lost their homes during the recession (Editors, treasury.gov).

Secondly, the business failures combined with the stock market crash was harmful for the banking

Those who live in park ave Manhattan own over 56 rooms in their apartments, mansions. Although they are big spenders with the most expensive things, we’ll think they all only spend money on fancy cars clothes & etc. Not knowing they use their wealth to rig the game with political system in their favor. The wealthiest Americans take the term “financial meltdown “as if it meant freedom. In other words getting money from taxes from other American’s not only making them a little richer but a lot more. While everyone’s income went down the rich, they went up 5%. The Rich learn to use government control to get more and more Federal Reserve notes which gives them more assets to negotiate with. This may help them to receive the money they get but hurting & destroying a lot of other people’s lives in America.

The housing market crash, which broke out in the United States in 2007, was caused by high risk subprime mortgages. The subprime mortgage crisis resulted in a sudden reduction in money and credit availability from banks and other lending institutions, which was referred to as a “credit crunch.” The “credit crunch” and its effect spread across the United States and further on to other countries across the world. The “credit crunch” caused a collapse in the housing markets, stock markets and major financial institutions across the globe.

The main cause of this worldwide economic contraction was the credit crunch in 2007/2008. In the United States, mortgage lenders received incentives to sell mortgages, regardless of the income and credit score of the individual receiving the loan. This lead to an influx of loans being sold that were likely to be defaulted on at a later date. These subprime mortgages proved to be very profitable for the mortgage companies; thus, in order to continue selling these mortgages, they consolidated the debt and sold it to financial intermediaries. Therefore, the loans were no longer being financed through the traditional banking model.