Research+Paper

The U.S. Economy:

The U.S. Economy:

-What were the causes of the Financial Crisis of 2008? and what was there impact? - The financial crisis of 2008 occurred due to many reasons such as a bubble failure in the real-estate market, sub-prime mortgages, and greed.

People would get loans for banks, buy houses and then sell them because they real estate market was getting better and better. However that clime stopped and started to go down little by little there for they could not really pay off the banks since they couldn’t sell the houses for higher money. There for the banks lost a lot of money causing the financial crisis People were gambling in the stock market on pure speculation instead of reason. There for when people lost money they could not pay the banks back and that dried up the banks cash. There were historic levels of inflation. The loans made from banks were then being loaned to other people. The Economic Crisis of 2008 is believed to have occurred because of global inflation, increased unemployment, high oil and food prices, a declining dollar value, a horrible housing market, and a sub prime mortgage crisis. Comodities went insanely high and that was a serious threat for inflation POSITIVES: people would have more opportunity to open up new institutions since the government would encourage them. The crisis would help to investigate into what went wrong and also the government would actually try its hardest to make everything better for example new programs, new institution, and new opportunities for the American people. Effect on society: The government would then issue a Bailout and the money needed for the bailout would come from the Citizens tax money. So the people who did not have bad credit were also effected. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Many people were fired from there jobs because business could not afford to have as many people working for them. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Many stocks were effected and for those people who were investing in them would essentially loose a lot of money. Could be possible that they lost all of there money due to many business going bankrupt and filing for bankruptcy. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">The credit system is tightened so if someone wanted to buy a house that they actually wanted instead of as an investment it would be much harder then previous. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Effects most people in the Middle class and also the lower class (poor). The attention was drawn to the global financial crisis and taken away from the poor (global food crisis) <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">The peoples Taxes would be reduced so they could start to spend more and that would increase inflation (good kind) and the movement of money. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">New public works programs would begin by the government inorder to help those who were severely hurt by the crisis. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Those public works programs would most definetly get many, many new jobs for people. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Conditions would be tighter and better in the economy then it was before. Because the economy went into crisis due to the fact that security was loose or there was not enough attention being given to it since it was going really well <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Much of the money of the Bailout was given to the AutoMobile industry (17.4 trillion) || <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">The financial crise’s of 1929 and also 1987 also occured during October. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Credit went way out of control. People were purchasing big ticket items like cars and houses or expanding there business (starting new ones as well) all on credit. The government was not really keeping a strong eye on it there for it got way out of control. GREED!! <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">The inflation was due to rise of demand for food, Higher cost of imports from China, and also excess money suppy around the world. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Oil prices flew up to 147.30$ per barrel meaning almost 4 a gallon! <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Like the NEW DEAL! <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">9.7 Trillion bailout plan was passed (could pay 90% of Americans mortgage. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Intrest rates (money to borrow) also increases. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Just like during the New Era, people started to spend more money (like Clothing, accessories, and unnecessary items) <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">ALSO CARSS!!! <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Just like Roosevelt's program CiIvil Works Administration that helped millions of young people get jobs. <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">During the Great Depression alot of the money was also given to the Automobile industry! ||
 * <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">Notes || <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">CCQ’s ||
 * <span style="background-color: transparent; color: #000000; font-family: Arial; font-size: 15px; font-style: normal; font-weight: normal; text-decoration: none; vertical-align: baseline;">The financial Crisis of 2008 (October) was due to the lack of control on loans. Banks were giving loans to ones people with really poor credit and were highly likely to pay it off

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In the history of every nation there have been natural disasters and economic crisis. It is completely normal however there is to a certain extent that the nation could control. America for one is famous for its financial crisis and its effects. The Great Depression for example put millions of people out of jobs and also many businesses went bankrupt. The main causes for the Great Depression were; the Stock Market crash of 1929, bank failures, drought conditions all over America, and most importantly reduction in spending by the people. Another financial crisis in American history was the financial crisis of 1873 and the causes for that crisis were; the fall in demand for the silver internationally, much money involved in mostly risky projects (railroads), and reduction in domestic money supply.The most recent one was the Financial Crisis of 2008.

The Financial Crisis of 2008 was one of the ugliest and worst crisis in history. Due to the reasons that it effected many markets in America (also overseas) and also many people. Also the amount of money that was needed to get the economy and society into its normal speed again was outrageous. Most importantly the fact that it could have been avoided by simply controlling many institution and business's spending effected many honest and well controlled businesses and also hard working people. The financial crisis of 2008 occurred due to many reasons such as a bubble failure in the real-estate market, sub-prime mortgages, and bank forclosures.

The real-estate market is not a market for ametures looking to make a quick dollar, there is much to be learned and understood, however around 2004 the housing bubble was growing and many individuals wanted in on the deal. All that was needed was a somewhat fair credit and a co-signer for a loan. Then a purchase for a home that was in decent condition and in a fair location. Some buyers did not even visit the houses they purchased and even sold them over the internet. After nine or tweleve months they would just simply sell it to another person, then repay the bank and make a profit of about 30,000$. How-ever once the bubble burst no longer fueled the real-estate market and most homes started to decrease in value instead of increase those loaners could no longer afford to pay off the banks. Some individuals would just simply walk away from the loans and houses causing the banks to sit on many forclosed homes that no-one would purchase due to the crisis. The financial crisis of 2008 was also called the Sub-prime mortgage crisis.

The sub-prime mortgages were also known as adjustable rate morgages meaning the payments made on the morgages would differ from time to time. These types of loans were riskier due to the reasons that these loans were for people that have a credit score lower than 600. Banks would charge more for subprime mortgages then regular mortgages due to the fact that they are taking more risk.

Just like any other crisis the credit system was one of the main causes. Individuals were purchasing big ticket items such as cars and houses, also businsses were expanding (or created new ones) all on credit. The government should keep a strong eye on the credit system at all times but once they noticed the problem it was too late. One of the most crucial markets is the stock market. If one does not know what they are doing then it could be very bad because it would turn out to be gambling instead of investing. People underestimated the stock exchange and bought stocks on credit as well. The most dangerous part was that they invested in the most speculative stocks like oil and gold. There for once the market crashed because of the housing market the stock market went down with it and people lost most of the money meaning the banks were the ones who were hurt the most.

<span style="color: black; font-family: 'Times New Roman','serif'; font-size: 16px; line-height: 115%;">An economic crisis is completely normal since in a regular economic cycle there are booms and busts. However a healthy economy can somewhat control how crucial a crisis will be. Even if it means that the government needs to shut down many banks and being tough on the people of the nation, or open up several business’s or public works programs to create jobs and lower unemployment. Therefore a financial crisis could actually be somewhat healthy to get the economy back on track and institutions on there feet.