These borrowers had -- knowingly or not -- been gambling on a real estate market they did not understand. Understanding the complexities of the real estate market and fiscal policy is complicated -- those who have grown up without access to the best education and who do not have experienced friends and family to help advise them in this process were the most vulnerable.
Squires, Hyra and Renner showed that subprime lenders were able to segment their market by geography. Combined with the ethnic segregation that exists in most American cities, the outcome was simple -- minorities were targeted for subprime loans. The poor and working class were targeted by predatory lenders. When the crisis hit, it was these groups that suffered the most and foreclosure rates in these communities spiked.
Interest Rates & Bank Deregulation
To spur economic growth during the slowdown in 2000-02, the Federal Reserve lowered interest rates and implemented other measures to inject capital into the economy. This is the money that flowed into the real estate market, initiating the bubble. Banks could not find enough prime borrowers, and so increased their rate of subprime lending. They did this because deregulation of the industry had allowed them to increase their risk. The result was that banks reaped short-term rewards, but at the expense of increased risk levels. In countries that did not experience this deregulation, such as Canada and Australia, the banking system remained robust throughout the crisis and its impacts on workers were not felt as strongly. Bankers made less money, but the economy was insulated from the worst of the impacts.
Bailouts
When U.S. banks began to fail under the weight of mounting foreclosures, the government stepped in to bail them out, first the Bush administration and then the Obama administration after that. The banks expected this -- George Bush, Sr. had bailed out the industry in the wake of the savings and loan crisis so bankers knew the government would step in to protect them. Wealthy bankers gamed the system -- they gambled with money that they knew was guaranteed by the American taxpayer. In the good times, they took home tens of millions of dollars in bonuses. In the bad times, the taxpayers covered the...
In other words, there are few controls in place to ensure responsible spending or, in the case of Greece, that the books are not cooked. The implication of this is that Greece makes errors and commits fraud, knowing that the eurozone will be forced to bail them out or risk grave instability. The other nations are then forced to bail Greece out, because they share a common currency and
The partisan politics seen south of the border would be impossible, because the resulting inaction would be viewed unfavorably by Canadians. The financial crisis has damaged Canada economically, but it has also highlighted the value of financial conservatism. Canada's handling of the crisis has improved its standing in the world. The Canadian banking system has been lauded for its conservative nature. Further esteem has been brought to the government for
What one can determine from the current literature, however, was that today's recession was fueled, at least in part, by the misuse and misdistribution of credit. For this reason, the current culture shift is most likely a solution to the problem it itself. Responding to the recession, the American people have changed their attitude toward politics, spending, and the importance of finances in their daily lives. By spending less,
Employee Relations Financial Crisis Managing Employee Relations in the Event of a Financial Crisis A Look into Management can Effectively Navigate through Adverse Conditions Austerity Protests (Dowling, 2012) Employee relations can often be a difficult aspect of maintaining the overall health of an organization. In general, employee relations often refer to the act of fostering productivity, motivation, and employee morale in an organizations human resources pool. However, there are some circumstances in which it
Causes of Financial Crisis Ireland developed high growth rates based on rapid expansion of credit and a buildup of personal debt fueled by rising property prices (Ireland's economic crisis: how did it happen and what is being done about it?). This lead to risky bank lending practices. Banks also engaged in short-term borrowing from wholesale money markets causing increased risk appetite. Supervisors and regulators failed to identify and act on the
economic and financial crisis (2008-2009), the Federal Reserve took exceptional measures in order to combat the effects of the crisis on the American economy. These measures translated into an expansionary policy that included pumping money in the economy and purchasing assets that were in trouble. Through its expansionary work, the government was able to balance some of the effects of the crisis. The question that seems to be on everybody's
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