Sub-Prime Mortgage Crisis
What caused the start of financial crisis as our global recession? The first main sign was the occurrence of the mortgage bubble burst. Rather than expressing it as a bubble burst, one can say it was more like a sack of rotten tomatoes that tore open unexpectedly, dumping them all on our heads. Although more than a decade of warning signals from educated scholars and economics tried to alert us of this upcoming problem, the mortgage burst still hit us with quite a shock. We just didn’t realize the magnitude of the problem. For more about the timeline of events that led to our global financial crisis, read on.
Knowledge is Power
You must become aware of the timeline of events leading up to the start of financial crisis. Knowing what has caused financial problems in the US and abroad is important. You may be wondering why that is. I strongly believe and hope you will agree that educating yourself as much as possible about the financial crisis will minimize the impact of its effects on you. This will also help you attain a more stable financial future.
Four major events occurred in September of 2008: On the 7th Freddy Mac and Fannie Mae, two large infrastructures, were announced to become nationalized in order to make them financially stable. On the 14th Lehman Brothers were turned down support from the Federal Reserve and thus announced they were forced into filing bankruptcy. Later that day, Merrill Lynch publicized its purchase of the Bank of America. On the 16th AIG received $85 billion from the Federal Reserve to bail them out of financial trouble.
The development of the global recession arose as problems developed in the US banking industry. As a result, the global stock market suffered immense instability and market devaluation. Banks continued to fail over the following two-week period. To help minimize financial chaos and destruction, the Bush administration stepped in offering $700 billion in financial assistance.
During September of 2008 banks either have been bailed out or purchased by other institutions. As for the stock market, it was able to recover, but not completely. Still many of us are reeling from the effects of the global recession. Low classed and middle class citizens have been dragged down from conditions as unemployment, inflation, and foreclosures.
Inflation is yet another factor that has adverse effects on Americans struggling to survive. Until we learn the causes of start of financial crisis, we remain rather powerless. The bailing out of banks by the Federal Reserve (an international and privately owned banking system) made it easy for them to print out a huge amount of money, granting these banks financial assistance. With the influx of new currency circulating in our monetary system, the American dollar is being devalued as inflation progresses. And who will be left footing the bill for the new system implemented since the global financial crisis began? You, the taxpayer!