The Financial Crisis Of 2008 Hit The American Economy

The financial crisis of 2008 hit the American economy and the world economy as well. It cost tens of millions of people their savings, jobs, and their homes. For decades the American financial system was stable and safe, but it changed. The financial industry turned its back on society; it corrupted the political system, and plunged the world economy into crisis. It was not an accident; it was caused by an out of control industry, a greedy industry. The crisis has made more damage to society while the industry has made more money. The residential mortgage crisis affected commercial real estate by making credit much more difficult to get. Real estate investment has been driven by leverage. One of the great things about real estate investment is that you do not need just cash to do it. The possible investors are either reluctant to acquire and develop real estate without the need of debt. As a result, the demand for real estate slowed and prices fell down. To understand better how ever ything started, let’s mention the great depression. After the Great Depression, the United States had forty years of economic growth without a single financial crisis. The financial system was regulated, and most of the banks were local. They were prohibited from speculating depositor’s savings. Investments banks were small private partnerships in charge of handling stock and trading. The private partnerships partners put their own money up as their investments; therefore they didn’t risk asShow MoreRelatedThe World s Economy Was Devastated1732 Words   |  7 Pagesthe western world’s economy was devastated. With the crash of the United States Wall Street, the realm drove into what is now known as the â€Å"Great Recession†. Its neighbour to the north, Canada also felt these affects as unemployment and poverty grew. After a decade of despair, the massive rise in government spending for the Second World War and the reductions in taxes, the econo mies returned to prosper. With decades of industrialization, population growth and surging economies, the Western WorldRead MoreThe Crisis Of The United States1711 Words   |  7 PagesDuring the mid-2000s, the global economy was impacted by one of the biggest financial catastrophe; the subprime mortgage crisis. The housing market in America was on the decline that indirectly affected Canada. This case study will provide an overview of what happened before, during and after the crisis in order to obtain an understanding of what could be applied to predict a better future for North America as a whole and Canada individually. This case study also provides an opportunity to appreciateRead MoreFactors That Affects The Global Economy And Its Impact On The Nigeria And Egypt Economy1568 Words   |  7 Pagesaffects the global economy and their impact on the Nigeria and Egypt economy. In 2007, the financial crisis, which later extended to the global financial crisis began in the United S tates of America. The origin and elements of the 2007/2012 global financial crisis have been widely discussed in the literature throughout the period. The aim of this work is to, however, try to point out the reasons and also the macroeconomic effects of the financial crisis in both countries economy and the resultingRead MoreNotes On Credit Default Swaps1401 Words   |  6 PagesCredit Default Swaps Another financial vehicle that could be problematic was CDS (credit default swap). CDS is a financial derivative works like insurance on securities. The underwriter is obligated to pay a pre-determined fee to counterparty if a certain security default. In return, underwriters charge a fee as compensation. CDS can be used to hedge against risks. However there are still some difference between a CDS and an insurance contract. The CDS does not require buyers to actually hold underlyingRead More2008 Us Economic Recession1709 Words   |  7 PagesINTRODUCTIONS The  Global Financial Crisis  of 2008 is considered by many economists to be the worst  financial crisis  since the  Great Depression  of the 1930s. It resulted in the threat of total collapse of large financial institutions, the  bailout  of small and big banks by national governments, and downturns in stock markets around the world. In United States, the housing market also suffered, resulting in  evictions,  foreclosures  and prolonged unemployment. The crisis played a significant role inRead MoreThe Financial Crisis : Rescue Efforts855 Words   |  4 PagesThe Financial Crisis: Rescue Efforts Throughout the early 2000’s, relaxed lending regulations and lowered interest rates sparked the growth of the securitization of subprime mortgages. In order to increase profit and revenue, a number of financial institutions became heavily involved in the process of securitizing the loans. When house prices began to fall in 2006, homeowner delinquencies and foreclosures increased causing many institutions to become overleveraged. As a result, the destabilizationRead MoreThe Crisis Of The United States Of America1721 Words   |  7 PagesDuring the mid-2000s, the global economy was impacted by one of the biggest financial catastrophes: the subprime mortgage crisis. The housing market in the United States of America was on the decline and it indirectly affected Canada. This case study will provide an overview of what happened before, during and after the crisis in order to obtain an understanding of what could be applied to predict a better future for North America as a whole and Canada individually. This case study also providesRead MoreThe Subprime Mortgage Crisis Of 2008 Impacted The Us1581 Words   |  7 PagesMortgage Crisis of 2008 impacted the US According to data from the United States Census Bureau: 501 thousand new single-family houses were sold in 2015 compare to 1,051 thousand in 2006. Real estate always impacted the economy by creating jobs and housing opportunities for families. But around 2006 because of a shortage of homebuyer, the nation saw an increase in the number of mortgage credits and subprime loans granted which lead to the 2008 subprime mortgage crisis, a nation wide banking crisis, puttingRead MoreThe Financial Crisis Of 20081747 Words   |  7 PagesThe economic crisis of 2008 was one for the ages, it changed the world of investing forever. That year, the stock market crashed, bank failures and the infamous wall street bailout that can all be traced back to the subprime mortgage crisis.. The 2008 economic crisis rocked the global economy for the worst, and to this day the United States is trying to recover from the impact that the crisis had. In order to understand why exactly the banks failed people have to understand the subprime mortgageRead MoreThe Crisis Of 2008 And Its Effects On The Economy1361 Words   |  6 PagesThe Crisis of 2008 has been the worst financial crisis since the devastating era of the Great Depression. The Crisis of 2008 just like the Great depression left millions of people unemployed, and homeless. After the crisis the causes were viewed like speculation, fragility of the system, and greed of the managers which adversely affected the market. The effects of a financial crisis are truly devastating to the economy, and many people that live in the country of which it occurred. There are many