The Financial Crisis Of The Decade

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The financial crisis of the decade is considered the largest and most severe compared to the Great Depression. The crises reshaped the financing and investment banking business not only in the United States but globally. The top largest banks have fallen due to the losses they have incurred in connection with their investments in the subprime mortgage markets. (Financial Crises 2007-2008 Overview) Governments had to come up with some solutions in order to further avert the decline of their country 's economy as the financial crises of the United States overflowed into the global financial and world economy. (Marshall, n.d).This paper discusses the history of the financial crisis - its causes, impacts, and the responses of governments and other institutions. The origins of the financial crises The root causes of the financial crisis were a combination of debt and mortgage-backed assets. While inflation had been going up since the end of the World War the house prices in the United States had been steadily rising at a much higher rate than the inflation trend. As shown in the chart the fluctuations are few, but the trend had been upward. (Financial Crises 2007-2008 Overview). Prior to the financial crisis with rising prices of housing in the United States banks and investment managers had been looking for more loans and credit to offer potential homeowners. The funding of credits had been backed by real estate or through investments in construction companies which were
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