PAPER

1) Introduction: The great recession is the name which was given to the 2008/ 2009 financial crisis that affected millions of Americas, which has been affected by some factors

3) Cause root I: market inability

a) Inability to create new lines of credits

b) Cheap credit which made people made people invest in houses and make investment being based on pure speculations

c) Private companies acquired wealth in ways which did not create anything of value

4) Cause root II: The banks were unethical and promoted greed

a) The banks entertained mortgage brokers who were interested in acting as middlemen

b) Exotic and risky mortgages become commonplace and the brokers who approved these loans absolved themselves of responsibility of packing these bad mortgage (Moessner, 2010)

c) Thousands of people took loans they more loan they could afford in the hope they could earn high in-house profits.

5) Cause root III. The government role in the crisis

a) The government reduced the tax sharply improve incentives investment and job creation

b) The previous banking acts promoted uncontrolled housing development

6) The effect of house market on the banking industry

a) The housing changed the chain reaction in the economy; this made individual and investors and they could not use their home for quick profit.

b) The adjusted rates made homeowner and thousands of mortgages become defaulted and which left the investors and financial institutions frustrated.

c) The change caused massive losses in mortgage-backed securities, and many banks and investment firms began bleeding money.

d) The decline in housing demand depressed housing prices thus, it slowed the new home building, therefore putting thousands of home builders and laborer's out of business

7) Regulation: The agencies were focused on changing capital investment rules for companies and insurance companies (Congleton,2009).

a) Increased requirement for professionals and investors to be become registered and accredited

b) Regulations were put in place to promote low and medium populations

c) The official Thrift Supervision was eliminated.

8) My opinion: The government responded to the financial crisis in most effective ways which were the help to solve the problem.

9) Conclusion: The financial crisis was caused by uncontrolled banking loans on the mortgage which significantly affected the USA economy

10) Restating thesis: The paper reveals the cause of the crisis, the conducts of the bank the role of government and regulation which were put in place

References

Congleton, R. D. (2009). On the political economy of the financial crisis and bailout of 2008–2009. Public Choice, 140(3-4), 287-317.

Moessner, R., & Allen, W. A. (2010). Central bank co-operation and international liquidity in the financial crisis of 2008-2009.