quora
Nobody downloaded yet

Economic Crisis in the United States - Research Paper Example

Comments (0) Cite this document
Summary
Economic Crisis in the United States POL 201 Janice Hodge Professor Dovie Dawson March 19, 2012 Analysis of the 2008-2009 Economic Crisis in the US: The Root Causes and the Policies Implemented The magnitude of the US economic crisis in 2008-2009, having affected millions of peoples’ lives not only within and outside the nation, is comparable to 1930’s ‘Great Depression’; thus it is dubbed the ‘Great Recession’ (Katkov, 2011, p…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.5% of users find it useful
Economic Crisis in the United States
Read TextPreview

Extract of sample
"Economic Crisis in the United States"

Download file to see previous pages widespread failure in regulatory oversight) (Barclift, 2011, p. 450). However, deeper analysis of the crisis shows that though the crisis is financial in nature, the culprit is not financial as many have explained but structural; it is caused by the faulty macroeconomic strategies of US – the reliance on bubble economy and dependency on international credits and imports. I. Understanding the Crisis Experts, policymakers and observers (BBC, 2007; Zaman, 2009, p. 64; Katkov, 2011, p. 898) perceive the crisis in contending ways, depending on which spectrum one aligns. But as the events unfold, everyone seems to agree that the crisis has started to manifest itself in the burst of the housing bubble in 2007 followed by the financial market crash. How did this happen? This question must have been asked with the shocking realization that this actually happens in the US – the seat of world power and the home of distinguished economists, financial analysts, and bankers. But after understanding the events, one would probably say that this kind of crisis would be most highly probable in the US. Why? The answer to this would come later. Going back to the first question, to answer this requires one to understand the mortgage lending in the US. One good simple explanation on this is to understand the effects of the changes made on the traditional model of mortgage lending to the sub-prime model as illustrated below. The differences between the two models rest on three important factors: First, the reliance on real assets for banks to lend; second, the guarantee on the capacity of borrowers to pay; and third, the transparency in the conditions of loans – i.e. that sub-prime loans are usually adjustable rate mortgages (ARM); toxic instruments, like the collateralized debt obligations (CDO) that the biggest investment banks of the world pump out (BBC, 2007, p. 1). In short, there are solid bases by which banks and borrowers conduct business, giving both parties clear indicators by which to act. Unfortunately, these three important factors on which banks traditionally operate are disregarded in the new sub-prime model. Though it is true that selling on the mortgages to the bond markets has given banks additional leverage to fund more borrowings, however, it has resulted to fraudulent practices, which banks no longer have the incentive to check (BBC, 2007, p. 1) – i.e., falsifying credit histories or income of borrowers by mortgage brokers to qualify borrowers so that brokers can earn fees and commission (Zaman, 2009, p. 65). Truly, the sub-prime model has succeeded in raising the demand for housing, which caused the housing bubble, but in the end caused the financial crisis. Freeman (2002) explained that the housing bubble created a hyperinflationary spiral, fuelling speculative investments in real estate. Consequently, this sent prices, assessments, real estate and mortgage credit volume also spiraling upwards. Such was actually the objective of the City of London-Wall Street financier and Fannie Mae. On the contrary, the productive economy that would have given debtors the capacity to pay and that would have given resilience to the US economy was staggering downward. (pp. 12, 17) Expectantly, as BBC (2007) reported, sub-prime borrowers, which make-up 22% ($1.3 trillion) of the $6 trillion mortgage ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Economic Crisis in the United States Research Paper”, n.d.)
Economic Crisis in the United States Research Paper. Retrieved from https://studentshare.org/history/1444463-economic-crisis-and-the-policies-implemented
(Economic Crisis in the United States Research Paper)
Economic Crisis in the United States Research Paper. https://studentshare.org/history/1444463-economic-crisis-and-the-policies-implemented.
“Economic Crisis in the United States Research Paper”, n.d. https://studentshare.org/history/1444463-economic-crisis-and-the-policies-implemented.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Journalism - The Economic Crisis
The crisis not only affected people in the United States, but was felt by people all over the world. The interview I conducted revealed people’s feelings about the crisis and it showed how people reacted to the crisis by cutting down their budgets (Jickling).
5 Pages(1250 words)Research Paper
Impacts of the recent mortgage crisis on the money supply in the United States and the actions of Federal Reserve take in response to the mortgage crisis
Impacts of the recent mortgage crisis on the money supply in the United States and the actions of Federal Reserve take in response to the mortgage crisis Impacts of the recent mortgage crisis on the money supply in the United States and the actions of Federal Reserve take in response to the mortgage crisis.
4 Pages(1000 words)Research Paper
Moral Hazard and the Financial Crisis
inancial system of any economy. To be explained in simple words, moral hazards fundamentally occur due to the irresponsible acts conducted by one or more parties to avail benefits from the legal or social agreements disregarding the interests of the other allied members.
8 Pages(2000 words)Research Paper
Ten Reasons why United States Intervenes in Political Crisis in African Countries: Survey
Ten Reasons why United States Intervenes in Political Crisis in African Countries: Survey Throughout its timeline as a superpower i.e. when it shared the title with the USSR and now as sole super power, United States has intervened in the affairs of other countries in several ways including militarily.
10 Pages(2500 words)Research Paper
Greeces Economic Crisis
The paper is an attempt to research about the effect of the economic crisis of Greece in the world economy. The economy of Greece, which was a fastest growing one from the year 2000 to 2007, faced severe downturn from the late of 2009. The economy was flooded by the foreign funds in those years. The burden of Greece surpasses €340 billion and this is expected to increase which is more than the economy of Greece.
5 Pages(1250 words)Research Paper
How do diplomacy,economic policies and military action work together in the United States foreign policy
This she realized has to be achieved by ensuring that her economic advancements are kept at a higher level as compared to that of the other nations of the world. Upon this realization, the United States has been involved in the establishment and the growth of her economy to supersede that of the entire world.
12 Pages(3000 words)Research Paper
The political and economic foreign policy developments of the United States in the 19th century from the idea of Manifest Destin
The Manifest Destiny was an idea conceived by the American government in the 19th century, and its ideology of this view was that North America was intended by God to be ruled by Americans of Anglo-Saxon origins. The real meaning of this idea is that it was God’s plan that the USA be at the forefront in pushing for democracy and industrialization in that particular region.
5 Pages(1250 words)Research Paper
United States housing crisis
.It starts out by pointing out that at the annual meeting of the Inter-American Development Bank (IDB), there was a seeming role reversal as the usually debt-saddled Latin firms were riding high on an economic upswing.
2 Pages(500 words)Essay
Migration in America Paper
Migrations throughout history have been effected by various factors that are related to social, economic and environment conditions. In this essay we will examine the migratory patterns of some of the most influential ethnic groups within the country from the beginning of the nineteenth century to the present and ascertain the reasons of the migrations.
3 Pages(750 words)Research Paper
Economic Crisis
Primarily the focus is stressed on the proximate causes that ignited and spurred up the economic downturn. In the subsequent step, endeavors made by the US government in the stabilizing mechanism of the economy is explained with particular emphasis on the role of President, Congress, Secretary of the State, and Treasury Secretary in order to abolish the adverse consequences on the economy.
8 Pages(2000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Research Paper on topic Economic Crisis in the United States for FREE!
logo footer
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • StudentShare App Store
  • StudentShare Google play
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • Miscellaneous
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us