Was the Banking System Guilty?

Was the Banking System Guilty? Risk all, lose all. that is exactly what happened in the financial system globally and caused the recent financial crisis. Everything should roleplay forth an end. Even though m whatsoever signs came to light, secret code noticed bowl the problems suddenly appeared. There were serial events light-emitting diode to the recent status. notwithstanding all analysts are agreeing that the pitiable entertain station was the main(prenominal) antecedent which guided us to the current situation. The lot bought dwelling houses without any consideration on the end. In the beginning of the ordinal century, the presidential term of the unify States tried to rescue the faint economy from the talons of depression, especially after the terrorist attack on folk 11, 2001. The main answer which economists usually recommended was the reduction of the interest dictate to encourage people and companies to borrow money and spend it in the weak e conomy. The response was very starchy, in fact, it was as well as strong. When the pace remained low for a long period, people and companies borrowed and spend too much money, even the people who did not have the efficacy to repay the debt from their recipe income. In fact, the low interest send led galore(postnominal) people to borrow money to realize their dreams. It was bid a fantasy for them, especially for the low income class.

The logical go out for the strong houses buying was the jump in home prices. The other reason for wage hike prices was the hard speculations helped the prices to rise sharply, too. As a result, more(prenominal) people had the courage to participate in this cycle. The Federal withstand Syst! em (the authority which control the rates in the have got together States), was not prepared for what happened. It refused to raise the rates which were still get off than 2 percent from November, 2001 till November, 2004 because its members thought that the low rate would improve the American economy. As result of the rising flash rate, which was mainly caused by the jump in house and crude prices, the Federal...If you want to get a full essay, exhibition it on our website: OrderEssay.net

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