Global Financial Crisis

The United States (U.S.) economy has been experiencing a financial crisis since 2007, mainly due to liquidity shortfall in the banking system. Major industries such as automobile, oil, gas, and insurance have urged the government to help. The collapse of the United States banking system resulted from the business cycle that developed in the economy which, was trigged by the recession. The recession resulted several small and large business and financial institutions to collapse which, caused downturns in the stock markets not only in U.S. but around the world. The housing sector has suffered a lot of evictions, prolonged vacancies and foreclosures in past two years. This recession is viewed by economists as the worse crisis since the great depression in the 1930. It resulted to failures in key businesses, reduction in the consumer wealth with an estimate loss of billions in U.S. dollars. The crisis that began in 2007 had its roots in the after years of 20th century where large number of financial commitments was incurred by the governments. It exposed a lot of weakness in the financial industry regulations and in the global financial system. In this crisis, the subprime problem that has resulted to rise in mortgage delinquencies and foreclosures in the United States caused adverse problem for the banks and financial markets around the world. The citizens pay their services on credit.

The most popular is a Housing Credit. A rise in the housing prices trigged the increase in the banks leading due to the belief that it would be paid back faster ignoring the changes that could occur in interest rates. Bank increased easy credit and money inflow which resulted to the housing bubble. Loans like mortgage, credit card, and auto were easily obtained. Financial innovation made it easier for investors around the word to invest in U.S. housing market. Falling prices led to hundreds of foreclosure around the country. This has eroded financial strength of the banking...