The Great Recession 1. The greed of the money lenders started it all. Hundreds of thousands of people were not properly qualified for home loans and were allowed to buy houses and get mortgages with very low down payments. 2. The easy availability of money caused an explosion in real estate sales.3. Real estate values are determined by supply and demand. The huge demand and relatively small availability of properties drove home prices up to unrealistic levels.4. Speculators bought additional homes with a view to flipping them for a higher price.5. Banks sold bundled mortgages to insurance companies so they could free up more cash to make more loans.6. The people who did not earn enough to repay their loans defaulted. Hundreds of thousands of them.7. A snowball effect followed.8. Money lenders and insurance companies foreclosed on the unpaid mortgages and now owned real estate inventory. They were not geared to maintain them. They sold them at what was owed just to get rid of them.9. Banks stopped providing easy qualifying loans. The market was flooded with cheap foreclosed properties. 10. There were too many properties on the market and not enough people could qualify to buy them. Many were foreclosed properties sold at a reduced price. Prices started to drop. 11. The demand for housing came to a grinding halt. Too much supply, not enough demand.12. Builders had over built and over extended themselves and were unable to pay their suppliers or contractors. 13. Thousands of industries tied to the building industry—manufacturers, wholesalers, retailers, contractors, real estate agencies and mortgage brokerages had to lay off personnel.14. The laid off personnel defaulted on their mortgage payments because they had no jobs. 15. The value of properties dropped some more.16. Banks and insurance companies were in financial trouble. They were not receiving the repayments of their loans nor the interest, and they had property inventories they were unable to sell.17. They laid off personnel. The small ones went under.18. People who had bought expensive homes during the good times found their mortgages were higher than the value of their homes, so many of them simply walked away. Why pay off a $300,000 mortgage if the house is only worth $200,000?19. Their homes were foreclosed on and more properties flooded the market.20. Consumers stopped spending.21. Small businesses went bankrupt.22. Insurance companies lost the income they would normally get from all the businesses that went bankrupt.23. Very large insurance and banking institutions got into trouble and were bailed out by the government.24. Smaller ones went bankrupt.25. Consumers stopped running up credit and credit card companies went under.26. They stopped buying cars and General Motors had to be bailed out by the government.27. Consumers turned to cheaper suppliers and expensive stores went out of business. Walmart flourished.28. No new jobs were created.29. The federal government agreed to pay extended unemployment benefits.30. Banks took their foreclosed homes off the market to try and stabilize the supply.31. The value of most homes in the U.S. have been cut in half.32. Many older people applied for early social security benefits.33. Jobs are scarce. The government became over extended and got into debt.34. Where will it end?
Posted by trishjax
at 11:59 AM EDT
