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what caused the 2008 recession reddit
The holders of the high risk tranch get paid $1.Banks tended to sell the low risk (usually AAA rated) tranches to other banks who used them to satisfy capitalization requirements. I've added this film to my DVD queue, and will watch it as soon as it arrives.New comments cannot be posted and votes cannot be castExplain Like I'm Five is the best forum and archive on the internet for layperson-friendly explanations. The government took on a ton of debt for it. The impact of what is now called the Great Recession of 2008 still reverberates today. And even if the regulations hadn't been changed in the 90's (See Gramm-Leach-Bliley act So what happened? The first $70 to be repaid goes to whoever owns this.High risk tranch. So i decide to go out and give loans to every single one of family members, and even some random people i just met on the street. Don't Panic!Press J to jump to the feed. The Great Recession began well before 2008. Which led to the loss of business and jobs.Fannie Mac Daddy is a bar in the US.
Also, people had taken to using home equity to buy cars, TV's, and much more thanks to easy credit and when the value of their home tanked, people stopped buying nice things. They keep track of the drinks consumed on a ledger (thereby granting the customers loans).Word gets around and as a result increasing numbers of customers flood into Fannie Mac Daddy's bar.Taking advantage of their customers' freedom from immediate payment constraints, Fannie Mac Daddy increases prices for wine and beer, the most-consumed beverages. Toxic Asset Relief Program).Banks sold toxic mortgages to greedy potential home owners who bought more than they could afford. shares, bonds etc). It was aided by governments lying about their tax receipts.The proximate cause in China was unemployment in the US and Europe leading to reduced demand for Chinese manufactured goods.The real causes of the recession are globalization (especially the movement of manufacturing jobs to low-wage regions and the ability of capital to follow those jobs to build factories), greed (people thought they were smarter than the market or thought they'd rather ask forgiveness than permission), and lack of political will to force banks to stop behaving in riskier than acceptable ways, and to stop people from lying on mortgage applications.The economy gets fucked up when the government spends too much money, more than it has, and/or the middle classes lose income. "Featuring in-depth interviews with financial experts and insiders, this sobering, Oscar-winning documentary presents in comprehensive detail the pervasive and deep-rooted Wall Street corruption that led to the global economic meltdown of 2008." Everyone is also dependent on AIG. Causes of the Recession . Now imagine the buyers cutting those strips crosswise, and putting a bunch of those pieces, along with many other bits, into an envelope, and selling the envelope. And wall street didn't care if it was subprime or not. With everyone looking to sell newly acquired houses, home prices fell. Basically these come about from banks giving loans out to people, those loans are now considered to be assets by banks, and instead of holding the loan to it's full term and collecting their principal + interest payments after 15 years or so, they decide to have that mortgage chopped up and sold in the form of Mortgage Backed Securities.So as an example; say my friend owes me $50 bucks in 2 weeks after i loaned him $30 today, but i want the money right now to give out another loan to another friend. Well done.One thing to add, though, is in your third to last paragraph. Yet hom…
AIG has no money because everybody asked for deregulation since the 80's. In Europe it cased bank failures, government debt interest spikes and high unemployment. The financial recession of 2008 was caused by irresponsibility on the fault of the government and the private sector, and a lot can be learned from that event in our nation’s history. By September 2008, Congress approved a $700 billion bank bailout, now known as the Troubled Asset Relief Program. What can go wrong?Housing then devalue triggering insurance payout on toxic mortgages. You have to go on faith. Because interest rates were low, people borrowed a lot of money and used much of it to buy houses. Many ordinary Americans' savings were to some extent tied up them through stock ownership and where their pensions were invested. Before the others figure it out.The recession was a worldwide event. When were they eliminated?And why did other countries with very different regulatory schemes also have a housing bubble and financial crisis? As a country, we have begun creating more jobs each month than we lose but just barely. When interest rates rose enough to trigger a rise in subprime payments, foreclosures soared. I take the 4 grand and they take the asset that is soon to be worth 5 grand.Eventually they figure out that the asset is compromised, and is going to collapse at a later date, and it is in fact not worth 5 grand in 6 months, it's worth $200, because only $200 is going to be paid back.
... help Reddit App Reddit coins Reddit premium Reddit gifts. It's a piece of paper. Rinse and repeat.So now someone has an envelope, filled with a bunch of tiny bits of paper. Nevertheless, as their prices continuously climb, the securities become top-selling items.One day, although the prices are still climbing, a risk manager (subsequently fired due to his negativity) of the bank decides that slowly the time has come to demand payment of the debts incurred by the drinkers at Fanny Mac Daddy’s bar.Fanny Mac Daddy cannot fulfill their loan obligations and claim bankruptcy.DRINKBOND and ALKBOND drop in price by 95%.
Government say, "We give up.
Fast. However, for now It's still priced at 5 grand in 6 months, so my friends decide to hold this asset for What did this mean for the housing market?
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