Financial Crisis Of The United States

There have been few financial crises in the United States. The Global Financial Crisis of 2008 to 2009 was the most recent and before that was The Great Depression of the 1930s. The Global Financial Crisis actually began in 2007 when prices of homes tanked. It not only affected the U.S. but it also affected economies overseas. The entire investment banking industry, some of the biggest insurance companies, enterprises government used for mortgage lending, top mortgage lenders, the largest savings and loan companies, and two of the largest commercial banks were many of the financial sectors affected by the crisis. “Banks stopped making loans, share prices plunged throughout the world and most of the world plummeted into a recession” (The Financial Crisis of 2008: Year In Review 2008,” 2009, para. 1).

The financial crisis from 2007 has caused the greatest global economy recession since the Great Depression and also the European sovereign debt crisis. The consequences and cost are enormous. Due to this fact,

The housing crisis of 2008 can trace its origins back to the stock market trends of the mid- to late 90 's. During a period of extended growth in the stock market, increased individual wealth among investors led to generalized increases in spending, including in the housing market. With more disposable income in the pockets of consumers, the demand for housing increased in the late 90 's. Due to the fact that homes are large projects and their construction takes a large amount of time, the supply of homes in the market is inelastic on the short term. Because of the fixed supply of homes, as per the law of supply, which

Where there is darkness there is ultimately light and the various homeownership opportunities under the current economy reflect this notion. Real estate prices

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

Financial crisis is really a major concern for all economies in the world. Every time a crisis occurs, companies, banks and financial institutions should draw their own lessons, because if the lessons are not recognized, they may still go on the trail of failure of

Though in most areas of the country the housing market has rebounded even creating another balloon in the real estate market. Many lessons were taught with the collapse of the housing market. Having purchased my first home in 2015, I found out how selective mortgage lenders are now with providing mortgage loans. The lowering of the interest rate and the increase in employment has help stabilize the economy and revived the housing market. Dokko, Doyle, Kiley et all validated that America strayed too far away from the Thomas Rule when issuing interest rates and when valuing properties.

In 2010, the American economy was struggling to bounce back from a devastating collapse in 2007. The housing market had collapsed and economists were baffled. The stock market did not entirely crash, yet the economy still could not be stimulated. For the most part, much of the financial industry was left unregulated, allowing banks to loan money to people trying to buy houses, with no guarantee of the money being returned. With a low interest rate of 1.24 percent, people were looking towards the housing markets as an investment. The low interest rate sparked a demand for both mortgages and housing, expecting the prices of houses to rise. However, in 2004, the rates began to rise. By the end of 2004, the interest rate was 2.25 percent.

The current economic-financial crisis was indeed caused by the simultaneous occurrence of events in different parts of the world that all had a negative effect. These events are subtly different and therefore it is common that only one event is held responsible for the crisis. In reality, the world economy became critical due to the mix of four major events: 1) the unrestrained greed of financiers in the U.S. and U.K., which transformed bad mortgages into toxic financial assets 2) the habit of getting deeply indebted in the U.S. and U.K., 3) the excessive liquidity in Europe, 4) the real estate bubble in the U.S. and some European countries (Thomas, 2011) At the beginning of the financial collapse in the United States, many commentators, among which was the President of the Federal Reserve, hastily affirmed that the situation would only affect the United States and at most, the UK, where the banks,

In 2008, a number of Banks, Financial Institutions and Non-Financial institutions failures sparked Financial Crisis or as some economist call “The Great Recession” that efficiently froze the entire world Financial institutions,

Since the inflation of the United States dollar continues to rise every year, housing prices in relation to the peak of the market in 2006 are at a standstill, or even are decreasing in many cities. The housing market has fully recovered from the devastation of 2006. Currently, homes in San Francisco are worth, on average, almost 15% more than in 2008. Unfortunately, due to inflation the majority of the value in the housing market has decreased since the mortgage fallout, by 19.4% (“American House Prices”). The housing market peaked just before the collapse of 2006, mainly because banks became greedy and did not check the majority of their clients credit scores. As the time passed, banks soon realized that their plans were not unfolding as planned. The Washington Post estimated that at the time of the fallout 1 in 5 mortgage holders had below average credit. In many banks, whole empires were controlled by “subprime mortgages”. This meant homebuyers who had poor credit scores dictated the

The house 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.

Around 2006 the price of houses began to fall substantially fast. “The oversupply of houses and lack of buyers pushed the house prices down until they really plunged in the late 2006 and early 2007” (The Subprime Mortgage Crisis Explained). These actions threw investors into a big dilemma. In the beginning they believed buying the mortgages would bring them a profit, but quickly realized that the mortgages would cost them more financial damage than reselling the homes. “Nationwide, home vales have declined about 16% since the summer of 2006 and experts project that the drop will continue until homes have lost about 25% of their value” (Biroonak, 2008). In other words mortgage homes are “underwater”, that is, the mortgage owed equals or exceeds the value of the house (Biroonak, 2008). Investors and homeowners started to go more in debt trying to pay off their original debts.

Just after ten years of Asian financial crisis, another major financial crisis now concern for all developed and some developing countries is “Global Financial Crisis 2008.” It is beginning with the bankruptcy of Lehman Brothers on Sunday, September 14, 2008 and spread like a flood. At first U.S banking sector fall in a great liquidity crisis and simultaneously around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. (Global issue)

The recent global financial turmoil started on July 2007 ,mainly in the USA and spread among developed nations in the later part of 2008 and subsequently shifted to the developing nations .this crisis consisted of some prime drawbacks not only for the developed countries but also for developing countries .the most talked about issue in the recent financial arena in the global financial crisis ,which started to show its effect in the middle of the year 2007.the turmoil ,however ,was rooted in the subprime mortgage crisis that began in mid -2007.the massive global crises ,already being dubbed by some as the great Recession since the great depression of the 1930s,began since the end of 2007with the subprime montage crisis in the USA .it subsequently and quickly spread to the international financial system, resulting in negative growth rates in key countries and regions ,including the US,UK and Japan .many developing countries were also infected by the contagion, from China, Brazil and South Africa to the countries of South Asia and Latin America. Asian countries were more affected by a strong recession in the USA Bangladesh