The Global Financial Crisis

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The Global Financial Crisis has had a huge impact on the global economy. The American housing market collapses, the house price drops significantly and the bank is losing lots of money, however, people are not pursued in court for money or declared bankruptcy. People tend to spend less on the due to their houses worth less than the bank has loaned originally and some of them are still committed to clearing off their mortgages. This causes less activity in housing market and sales market, hence more people lose their jobs which means the unemployment rate increases, and the American economy recovers slowly. As the unemployment rate increases, people’s income decreases, therefore they don’t have enough money to pay off the mortgage. Banks start to close down due to lack of sufficient money to run the business, people cannot get back the money they put in deposit. As a result, people who have owned a house are more likely to maintain the standard of life. Statistic has shown that top 5 per cent of United States households are wealthy from 1983 to 2007 (Rosenthal, 2012), rich people got wealthier in the decades; however the others go deeper into debt in order to maintain their lifestyle, thus poor people can’t pay off debt as the housing market collapses, poverty gets more serious which widen the gap between rich and poor. It also affects the developing country, China. 34 per cent of China’s economy is from manufacturing export to America, the production was reduced due to the

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