Financial System Trials Tribulations Starting Early 2008. Essay

Open, View, and/or
Download this Document

Total Length: 541 words ( 2 double-spaced pages)

Total Sources: 3

Page 1 of 2

financial system trials tribulations starting early 2008. Indicate major reasons contributed financial market's collapse. Please leave a space reason. -College Level paperOrder ID

Five major factors that contributed to the financial market's collapse

Reason 1: Historically low interest rates

The first major contributor to the collapse of the worlds' financial markets was the housing bubble. The Federal Reserve dropped interest rates to historically levels after the September 11 terrorist attacks and the dot.com bubble burst. This was to generate more spending and borrowing and propel the nation out of recession. Low interest rates encouraged people to buy on credit. Many people took out mortgages, thinking that this was a good time to buy a house, and many others took out mortgages hoping to 'flip' a house, or sell it for more than they paid for it, as they were convinced that it was impossible for housing prices to go down ("The reasons behind the global economic crisis," Fair Loan Rate, 2008).

Stuck Writing Your "Financial System Trials Tribulations Starting Early 2008." Essay?

View All Our Example Financial System Trials Tribulations Starting Early 2008. Essay

Have A Custom Example Essay Written



Reason 2: The growth of the subprime mortgage market

The subprime mortgage market increased exponentially after the drop in interest rates. Many of these loans were adjustable rate mortgages, and as interest rates increased, more and more consumers defaulted. Some consumers did not fully understand the mortgage instruments they were purchasing, and brokers, eager to cash in on the boom, often pressured people to make potentially ill-advised decisions. Eventually, the housing market began to dry up, as more and more houses stood unsold. When people could not sell their homes and banks could not extend more mortgages, adjustable rate mortgages increased, and more and more people could….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Financial System Trials Tribulations Starting Early 2008 " (2011, May 25) Retrieved May 4, 2024, from
https://www.aceyourpaper.com/essays/financial-system-trials-tribulations-starting-51031

Latest MLA Format (8th edition)

Copy Reference
"Financial System Trials Tribulations Starting Early 2008 " 25 May 2011. Web.4 May. 2024. <
https://www.aceyourpaper.com/essays/financial-system-trials-tribulations-starting-51031>

Latest Chicago Format (16th edition)

Copy Reference
"Financial System Trials Tribulations Starting Early 2008 ", 25 May 2011, Accessed.4 May. 2024,
https://www.aceyourpaper.com/essays/financial-system-trials-tribulations-starting-51031
   

Open, View, and/or
Download this Document
order custom essay example