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 bring forth an end. Even though m whatsoever signs came to light, nobody noticed bowl the problems suddenly appeared. There were serial events led to the recent status. notwithstanding all analysts are agreeing that the low interest station was the main(prenominal) antecedent which guided us to the current situation. The stack bought houses without any consideration on the end.
In the beginning of the twenty-first century, the presidential term of the unify States tried to rescue the weak economy from the talons of depression, especially after the terrorist attack on September 11, 2001. The main answer which economists usually recommended was the reduction of the interest rate to encourage people and companies to borrow money and spend it in the weak economy. The response was very starchy, in fact, it was too strong. When the rate remained low for a long period, people and companies borrowed and spend too much money, even the people who did not have the ability to repay the debt from their recipe income.
In fact, the low interest rate led galore(postnominal) people to borrow money to realize their dreams. It was like a fantasy for them, especially for the low income class.



The logical result for the strong houses buying was the jump in home prices. The other reason for rising 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 retain System (the authority which control the rates in the United 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, order it on our website: Ordercustompaper.com



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