Alaa: I agree, there is more to the economic crisis than is listed in this article. This information is related to the effects of the Great Recession that happened worldwide from 2007 to 2012. Purchasing power is reduced, and it takes more money to accomplish the same thing. I think you are right as far as it goes, but you have made an error that almost everyone makes: there are no US companies anymore. Where is your evidence the government “threatened banks”? [19] By October 2009, the unemployment rate had risen to 10.1%. My own home’s value took a couple of years after the Great Recession to drop. The Great Recession also ushered in a new period of financial regulation in the United States and elsewhere. All very true, and all very sad. As inflation was truly raging, and loans were available at below these inflation rates, hedge fund profits were enormous and almost guaranteed. We, as a country and as taxpayers, will be paying for this for a long time. Dodd-Frank put regulations on the ...read more, The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939. This spread the collapse to most other countries that used them for short-term cash holding thus causing a worldwide financial meltdown. The financial crisis still continue this year 2011..countries are going in debt and ppl trying to save it as well also giving out signs of future weakness..lets see how it all goes till 2012 lolz if the world ends then no worries abt economy buhaha. However, we do not accept compensation for positive reviews; all reviews on this site represent the opinions of the author. The Dodd-Frank Act, which was signed into law by President Obama in 2010, was designed to restore at least some of the U.S. government’s regulatory power over the financial industry. “Dodd-Frank Wall Street Reform and Consumer Protection Act.” Investopedia.com. Tell me why, CEOs of business made billions of dollars, while there businesses were going out of business. The teaser rates and HELOC really impacted some of our friends and made it easy to buy a large house with no money down. Domestic demand, in decline for five straight quarters, is still three months shy of the 1974–75 record, but the pace – down 2.6% per quarter vs. 1.9% in the earlier period – is a record-breaker already. Credit is a great tool when used wisely. We do not need to spend more, we do not need a cash influx, and we do not need to bail out the very organizations that created this problem. However, many people who got loans were not financially ready to own a home. Poor use of credit, however, can be catastrophic, which is what we are on the verge of seeing now. https://www.history.com/topics/21st-century/recession. Unfortunately the chickens are now coming home to roost. on stakes of European and U.S. businesses, including industrial enterprises. The government stepped in with a massively expensive bailout program in late 2008 and continuing into 2009. Bank uses that fund for expands its martgage backed securities (MBS) which is paying 8% interest rate. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. That’ s, proportion of capital and labor increased and it attained more economic growth. In more recent months speculation on oil prices and higher unemployment further increased inflation. They made a cut on the sale, then packaged the mortgage with a group of other mortgages and erased all personal responsibility of the loan. This article may contain links from our advertisers. Listen in their own words……..Youtube “How the Democrats caused the Financial Crisis”……and yes, Republicans too, Phil Graham was a Republican who helped Lawrence Summers (Clinton Treasury Secretary–Obama Financial advisor) overturn parts of the Glass Steagall Act which kept parts of financial sectors from commingling…..which if the mortgage sector failed, at least the insurance and securities would be safe…if the insurance sector went, at least the mortgage and securities would be safe..if the securities sector went bad, at least the mortgage and insurance would be safe….but all the walls were torn down..parts of the Glass Steagall act that kept financial sectors apart were repealed, passing Congress with a Republican majority and signed into law by Clinton (google New York Times Clinton Signs Legislation Overhauling Banking Laws–New York). These problems have been well over a decade in the making. uhm, did anybody mention the role of credit default swaps? “Obama Signs Stimulus Plan Into Law.” CBSNews.com. Was the crisis cause mainly by sub prime lending or are there other factors that influenced the crisis…you can in box me your reply ……thx. The housing slump set off a chain reaction in our economy. Great video…well its time to save folks! In early 2009, TARP funds were also used to bail out automakers General Motors and Chrysler (a combined $80 billion) and banking giant Bank of America ($125 billion). The American economy is built on consumption and consumerism. Please answer asap. All this started happening even before GWBush was Governor of Texas and yet he gets blamed for everything. What does this mean for you, though? When things go wrong, you fix them, you reform, you eliminate – but you certainly do not double, triple, or quadruple down, using the same tactics that brought on the problem, and then use it as an opportunity to create more regulations, when it is clear the regulators that were already in place didn’t do their jobs. The next few days will be interesting. The key was to generate more revenue thru more loans volume. These are very good points. [24][25] In the UK, youths bore the brunt of unemployment during the recession. Hotels are responding to the downturn by dropping rates, ramping up promotions and negotiating deals for both business travelers and tourists. Another consideration is the drop in wage income. Alaa :I think that was really selfish of you to mention. In their own words, Youtube “How the Democrats Caused the Financial Crisis Cuomo….Cuomo threatened Accubanc in Texas (and that’s just one Bank–the reason Cuomo sued was because an illegal alien was trying to buy a home and had no down payment, no credit history, no legal status within the U.S.) with all the weight of the Community Reinvestment Act Legislation and also Attorney General Janet Reno behind him, he threatened every mortgage lending bank in America…to cough up subprime loans or else…..that they would suffer consequences and/or Clinton Admin would come in and shut them down…Accubanc gave $2.1 Billion in subprime loans which were sold to Fannie and Freddie (aka taxpayers) first, then they were bundled together (all the crap loans) and sold to pensions, to unsuspecting investors here in the US and worldwide. The so-called “Stimulus Package” also provided businesses with financial incentives for capital investment. © 2020 A&E Television Networks, LLC. [58], The stress of unemployment affects men and women differently. Effects on Financial Regulation The period known as the Great Moderationcame to an end when the decade-long expansion in US housing market activity peaked … For instance, credit can be used to start or expand a business, which can create jobs. Private equity firms leveraged billions of dollars of debt to purchase companies and created hundreds of billions of dollars in wealth by simply shuffling paper, but not creating anything of value. But if you see something that doesn't look right, click here to contact us! The Great Recession is the name commonly given to the 2008 – 2009 financial crisis that affected millions of Americans. There was a resultant rush to “un-load” mortgage-backed securities as fast as possible. A lot of people got rich quickly and people wanted more. This market crash may have been a once in a lifetime opportunity. ToughMoneyLove – I’m not sure I understand your point. [26], The rise of advanced economies in Brazil, India, and China increased the total global labor pool dramatically. The crash of 2008 made this abundantly clear!!! While we’re told that inflation isn’t a big deal right now, it could really kick into high gear later as a result of QE3. American popular media labeled the Great Recession the "mancession" because of the many male dominated industries affected (e.g., construction) although many more men were hired than women during the recovery period. Opinions expressed here are author’s alone, not those of the bank advertiser, and have not been reviewed, approved or otherwise endorsed by the bank advertiser. Honestly, if individuals learned to live within their means, and use credit for large purchases like houses (when financially ready) and cars, we’d be in much better shape. Investors didn’t want to wait on the homeowners to pay, they didn’t want to work anything out,…according to a youtube: BREAKING NEWS! In the face of weakening product markets and growing unemployment, successive administrations, not wanting to up government expenditure, turned to financial deregulation in an attempt to stimulate houehold debt and in the process, stimulate the economy.
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