The Economic Crisis of U.S in 2008 Essay

2805 Words Jul 11th, 2012 12 Pages
I) Introduction.

“There are more than 26 million who are out of work, cannot find full-time work, or have given up looking for work. About four million families have lost their homes to foreclosure and another four and a half million have slipped into the foreclosure process or are seriously behind on their mortgage payments. Nearly 11 trillion in household wealth has vanished, with retirement accounts and life savings swept away. Businesses, large and small, have felt the sting of a deep recession. There is much anger about what has transpired, and justifiably so. Many people who abided by all the rules now find themselves out of work and uncertain about their future prospects.” When reading this information, you may think it may be
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My essay has information from reliable sources so that I hope it will be helpful for you.

II) Analysis.
A) Causes of economic crisis 2008. The economic crisis of America in 2008 was caused by combination of housing bubble and credit bubble. 3 parts below will explain more about that. 1) Loose monetary policy and formation of housing bubble. Period of former President Bill Clinton (1992 - 2000), which is considered as heyday of the U.S., has technological progress, economic efficiency, budget surplus, and low foreign debt exchange. However, at the end of this period there was one notable event which was rupture of the dotcom bubble. This affected the wealth of the middle class of America. It reduced the likelihood of collateral for loans to invest in housing, real estate and other business activities. In addition the event 11-9 and Irac war also caused some trouble for U.S. In late 2001, when the U.S. economy went into recession, the Fed had cut interest rates repeatedly. This monetary policy has promoted expansion of economic activity. As we all know lower rate has effects on many side of the economy. The first is to stimulate investment and domestic consumption. The second is reducing the value of the dollar in term of other strong foreign currencies, stimulating exports, decreasing foreign trade deficit and controlling foreign debt. In the long run, the stimulation of investment, promotion of technological

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