This is why the housing market caused the financial crisis of 2008 – tekst geschreven door AI

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This Is Why The Housing Market Caused The Financial Crisis 2008

The 2008 housing crash is one from which many Americans are still recovering, and the financial crisis has reached its peak. The economic crisis of 2008, the largest in the history of the United States, still accompanies us today. [Sources: 2, 7]

This led to a rise in bad debts and borrowers defaulting on subprime mortgages, resulting in a global Great Recession. Ultimately, it was the collapse of the real estate market and the issuance by banks of mortgage-backed securities (MBS) that triggered the 2008 economic crisis. So the sub-prime mortgage crisis not only caused the housing market to collapse, but also created mistrust of banks, which refused to lend to each other, largely affecting the financial markets of other countries, such as the US and Europe. [Sources: 9, 10, 14, 19]

Simply put, the 2008 financial crisis was caused by many banks making a lot of loans to a lot of people who could not or did not want to repay the money. In fact, mortgage lenders helped by lending and signing these loans, so that people would have difficulty paying them back, inflating the housing bubble that was bound to burst. [Sources: 4, 5]

In January 2011, a United States-based agency called the Financial Crisis Inquiry Commission (FCIC) issued a comprehensive report blaming the 2008 financial crisis. It turned out to be the case that it caused the crisis, and it led to the freezing of the financial system and triggered a terrible financial crisis. If there is a so-called mortgage meltdown, it is when very weak mortgages start to fail and are held by a very large number of people with very poor credit ratings. This caused a crisis and led directly to a financial crisis, but it was because of the property market. [Sources: 13, 18]

The FCIC concluded that Fannie and Freddie entered the subprime game too quickly and scaled too big – too – too small – which caused the financial crisis. It also noted that the Federal Reserve failed to stop the housing bubble by setting prudent mortgage-lending standards, because it was the only regulator with the power to do so. [Sources: 4]

The team also says that it makes little sense to call the housing crash a primary emerging problem. Fannie and Freddie’s good behavior would not have been enough to prevent the bubble from spreading to other parts of the financial sector, which then turned into a full-blown financial crisis as housing prices plummeted. Indeed, Fligstein and colleagues argue that it was not events in financial markets that FOMC members saw, but that they downplayed the severity of an impending crisis. They assumed that the macroeconomic impact of a housing bubble would be limited, as they saw after Lehman Brothers filed for bankruptcy. It was the lack of transparency and the fact that they had to see which financial instruments were being used to package mortgage securities. [Sources: 1, 8, 12]

In this way, the collapse of subprime lending fueled a downward spiral in housing prices, which unwound much of the rise seen during the subprime boom. For one thing, both the 2008 financial crisis and the recession were due to deep-rooted weaknesses in the housing market. As you can see, this great recession of 2008 is due to a combination of factors, not only to a lack of transparency in the financial markets, but also to an over-reliance on the financial sector as a whole. [Sources: 0, 9, 15]

The housing market today is different from that of 2008, but there are good reasons why there will not be a real estate bubble in the near future. For one thing, while domestic real estate prices in the United States have only risen, US housing markets are so stable that home prices can go up and down in a very short period of time with little or no volatility. [Sources: 7, 17]

Remember the lessons of the 2008 housing crash and don’t let the past haunt you. If it has taught us one thing, it is to use a seller’s market, not the other way around. [Sources: 20]

Step four: What began as a subprime mortgage crisis later turned into a financial crisis in the US financial sector, caused by the failure to address the housing market’s problems. He says: “There is no doubt that the financial crisis of 2007-2009, which began with the collapse of the mortgage markets in New York, Los Angeles and Chicago and spread to all financial sectors in the US, was the result of a combination of factors: lack of regulation, over-reliance on the financial system, and a failure of government regulation. [Sources: 6, 16, 17]

The 2008 financial crisis devastated the global economy, with some calling it the worst economic disaster since the Great Depression. The root cause of the crisis was the bursting of the US housing bubble, which began in early 2007, as described by former US Treasury Secretary Timothy Geithner and former Federal Reserve Chairman Alan Greenspan. Most Americans know that a housing market – “bubble bursts” – is the main cause of this crisis, but what they do not know is that mortgage-backed securities were responsible for the bubble. [Sources: 3, 11, 16]

Sources:

[0]: https://www.federalreservehistory.org/essays/subprime_mortgage_crisis

[1]: https://economistsview.typepad.com/economistsview/2008/10/what-caused-the.html

[2]: https://www.360training.com/blog/housing-market-crash

[3]: https://www.weforum.org/agenda/2018/10/two-myths-of-the-2008-meltdown/

[4]: https://www.propublica.org/article/cheat-sheet-whats-happened-to-the-big-players-in-the-financial-crisis

[5]: http://www.uspolicymetrics.com/the-clinton-era-roots-of-the-financial-crisis/

[6]: http://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0187-69612012000200008

[7]: https://riskmagazine.nl/article/2019-05-21-the-real-estate-market-a-decade-after-the-global-financial-crisis

[8]: https://www.knowablemagazine.org/article/society/2018/subprime-crisis-housing-think-again

[9]: https://medium.com/mashvisor/coronavirus-the-2008-housing-crisis-again-78c28ee8f2a6

[10]: https://www.investopedia.com/articles/economics/09/subprime-market-2008.asp

[11]: https://web.northeastern.edu/econsociety/what-caused-the-financial-crisis/

[12]: https://irle.berkeley.edu/what-really-caused-the-great-recession/

[13]: https://link.springer.com/article/10.1007/s10551-016-3052-7

[14]: https://www.thestreet.com/politics/what-was-the-great-recession-14664025

[15]: https://www.usatoday.com/story/money/2020/03/11/recession-heres-how-coronavirus-crises-different-2008/5012228002/

[16]: https://academy.binance.com/economics/the-2008-financial-crisis-explained

[17]: https://www.brookings.edu/research/lessons-from-the-financial-crisis-the-central-importance-of-a-sustainable-affordable-and-inclusive-housing-market/

[18]: https://reason.com/2012/05/17/the-financial-crisis-was-the-result-of-g/

[19]: https://en.wikipedia.org/wiki/United_States_housing_bubble

[20]: https://www.homelight.com/blog/housing-market-crash-2008/

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