Impact Of The Financial Crisis On America

1436 Words Dec 2nd, 2014 6 Pages
CDO impact of the Financial crisis
Since 2003, there are economists warned America 's real estate bubble will burst a year, although this prediction has not fulfilled,however, the occurrence of happen sooner or later. In 2007 August,America sub-prime mortgage crisis broke out suddenly, not only the real estate bubble has finally burst, America also fell into the since twentieth Century 30 the Great Depression of the most serious financial crisis.
From the short term, American economy is dynamic. But a large number of " financial wealth " in fact it created just paper wealth, or even just computer some of the symbols, the deep structural problems American, through dollar issuance, all kinds of derivative instruments issued by financial system, USA spreads all over the world, so the world financial system is filled with a huge bubble and the black hole. As long as the triggered by some impact, will cause a systemic crisis in the world financial system. The loan is triggered the crisis fuse.
Sub-prime loans are the main causes of the financial crisis.For sub-prime loans property buyers generally belongs to the low income stratum, often can not withstand high down payment, also difficult to bear higher in the early period of the loan payment of principal and interest. Therefore, mortgage lending institutions developed new mortgage products of every hue, appeared a series of mortgage product innovation.
(1) interest ( Interest Only Loan ).
Such mortgages allow borrowers in…
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