The Financial Market Analysis On Fiscal And Fiscal Sector

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Introduction Over the past couple years, the United States government has learned from its mistakes and loopholes within the mortgage market. Changes within the Fiscal or regulation of government taxes imposed on citizens, and use of quantitative easing, a macro policy, of buying and selling bonds in open market to inject money in the economy has helped jump start the economy. The cost of the economies revival was at the expense of banks giving out mortgage loans to individuals with poor credit. With the help of deregulation and historical trends of the housing prices, financial analysts felt no harm in giving loans to individuals as long as house prices were rising, the default risk would be zero. Soon the mortgages went underwater,…show more content…
However, the paper explores the role the Government ought to have played in regulating the banks, the role of the banks in regulation of mortgages and how they would have accessed the housing bubble thoroughly. In this research paper, we have put into consideration three areas to help in understanding the current issues and help us to come up with policy changes. It also highlights the resolutions to avoid future market failures or limit the occurrence of the failure. There are several aspects that have been considered in this paper, and they are, Financial Market, the Policy sector and bank regulation sector. Data House crash of 2008 and mortgage data According to an excerpt by Bates (2012), house crash of 2008 is a period where the stock market value declined to an approximate value of 30% in relation to its total value. It is one of the most difficult times in the American history of the stock market. He further states that those who were present in those times would hardly forget the negative implications of the collapse (102). Unprecedented Growth and Consumer Debt Subprime mortgages that started in the year 1999 played a great role in the collapse of the market (Cooper, 2010). They are mortgages that were offered to consumers who have little earnings or savings as compared to the amount of their savings. The initiative was carried out by Federal
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