The Causes of the 2008 Financial Crisis

621 Words2 Pages
Reason #1. The 2008 economic downturn was affected by the housing market and specifically the defaulted loan percentage. Davis (2008) claimed "Most of the sub-prime loans have been made to borrowers with poor credit ratings, no down payment on the home financed, and/or no verification of income or assets (Alt-A's). Close to 25% of sub-prime and Alt-A's loans are in default." It seemed in the events leading up to the housing market crash were marred with irresponsible investors who took very little effort in ensuring that sound investment fundamentals were applied. The human emotion of greed took over a more reliable and conservative approach. Reason #2 The 2008 financial crisis demonstrated a lack of national focus and cooperation. The national political landscape at the time, as it is today, is extremely polarized with very little mutual benefit. Overseas political and military involvement have committed economic and intellectual resources that most likely would have prevented such a meltdown. Defense spending has increased on a yearly basis with fewer wide reaching positive results. Unchecked government spending not only literally draws away national capitol, but much time is wasted allocating personal time and physical effort to bloated and overvalued projects when more cooperative and mutually beneficial domestic efforts are ignored. Reason #3 The 2008 financial crisis was severely affected by the lack of trade regulation, demonstrating the infiltration of
Open Document