“Alan Greenspan, the former chairman of the Federal Reserve, described the 2008 financial crash as a once-in-a-century event (socialeurope.eu).” Andrew Gamble, author of, The Aftermath of the Financial Crisis added, that “The financial crisis of 2007-2008 is easily recognized as one of the largest financial crises to have hit the international capitalist economy in the last hundred years (socialeurope.eu). Needless to say, the crisis was surely different from any other recent financial crises (socialeurope.eu).
The crisis was the direct result of housing bubble burst, also known as the United states subprime mortgage crisis. The United States subprime mortgage crisis was a, nationwide banking emergency, occurring between 2007-2010, which contributed to the U.S. recession of December 2007 – June 2009. Subprime lending means, “making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc. (investopedia.com).” Up until 2006, It was easy to have good credit because the credit (money) they obtained came from different countries. As a result, people used this credit to get expensive home loans, and this is what created an economic bubble triggering the houses' prices to …show more content…
This caused the price of housing to decrease, and beginning in the summer of 2006 the values of homes began to depreciate, so much that it had dropped below the worth of the remaining mortgage debt. In turn owners moved away because they were unable to sell their homes. By March of 2008, nearly more than 8 million homeowners in the U.S. had zero or negative equity. As a result, about 1.3 million people lost their homes due to foreclosures. However, at the same time the number of houses for sale continued to rise, this in turn made the cost drop so much that the value of the initial subprime loans was now worth more money than the
The crisis was the direct result of housing bubble burst, also known as the United states subprime mortgage crisis. The United States subprime mortgage crisis was a, nationwide banking emergency, occurring between 2007-2010, which contributed to the U.S. recession of December 2007 – June 2009. Subprime lending means, “making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc. (investopedia.com).” Up until 2006, It was easy to have good credit because the credit (money) they obtained came from different countries. As a result, people used this credit to get expensive home loans, and this is what created an economic bubble triggering the houses' prices to …show more content…
This caused the price of housing to decrease, and beginning in the summer of 2006 the values of homes began to depreciate, so much that it had dropped below the worth of the remaining mortgage debt. In turn owners moved away because they were unable to sell their homes. By March of 2008, nearly more than 8 million homeowners in the U.S. had zero or negative equity. As a result, about 1.3 million people lost their homes due to foreclosures. However, at the same time the number of houses for sale continued to rise, this in turn made the cost drop so much that the value of the initial subprime loans was now worth more money than the