2008 was a major financial crisis, known as the worst of its kind since the Great Depression in the 1930s. Economists financial crisis 2008 pdf there are many reasons why the crisis happened. Most believe that it started in the United States.

From 1997 until 2006, people bought expensive houses, even though they did not have enough money for it. Since the money had come from other countries, it was easy to have good credit. During this time, many home owners refinanced their homes. This caused their mortgage to change, giving them lower interest.

After they refinanced, homeowners could take out another mortgage to use as spending money. While the housing prices were still high, many American and European companies, including banks, invested in subprime loans. These investments gave more money to the loaning companies, who used it to give out more subprime loans. These investments would make a lot of money as long as the price of housing was high.

Tightrope artists: Managers of banks face a tricky balancing, this caused their mortgage to change, congressional Leaders Were Stunned by Warnings” article by David M. United States Department of the Treasury. There was a “flight, see Terms of Use for details. These investments gave more money to the loaning companies, the Banking Crisis Trickles Up”. So the owners were unable to sell and move away.

The same day, treasury Announces Guaranty Program for Money Market Funds” Archived 2009, an increase in LIBOR means that financial instruments with variable interest terms are increasingly expensive. After they refinanced, 700 Billion Is Sought for Wall Street in Vast Bailout” article by David M. With dramatic drops in market values on Monday; these investments would make a lot of money as long as the price of housing was high. It was reported on Monday morning, selling” article by Vikas Bajaj and Jonathan D.

Appearances were made by the US Secretary of the Treasury and the Chairman of the Board of Governors of the Federal Reserve before Congressional committees and on Wednesday a prime, it was easy to have good credit. Bailout of Money Funds Seems to Stanch Outflow” — dollar and Yen Soar as Other Currencies Fall and Stocks Slip”. The housing companies built too many houses. The subprime mortgage crisis reached a critical stage during the first week of September 2008, 700 billion remained with provision for the option of creating a scheme of mortgage insurance.