glass
By 2006, it was evident that the housing bubble was starting to burst. People began defaulting on their mortgages, sending a ripple effect throughout the financial system. As more people defaulted and went into foreclosure, more houses came on the market and precipitously pushed down housing prices .
Consequently, 2007 and 2008 saw significant rises in delinquency and foreclosures.57
Serious mortgage delinquency rates rose in both the prime and subprime markets, although the latter’s rise from just over 6% in 2006 to 18% in 2008 was particularly salient.58 The number of properties subject to foreclosure filings rose by 79% in 2006 to reach 1.3m in 2007, and increased by a further 81% to 2.3m in 2008 (a 225% increase on 2006).59 As the Joint Center for Housing Studies at Harvard University found, delinquency and foreclosures were concentrated among subprime and ARM customers:
By October 2008, the Federal funds rate and the discount rate were reduced to 1% and 1.75%, respectively. Central banks in England, China, Canada, Sweden, Switzerland and the European Central Bank (ECB) also resorted to rate cuts to aid the world economy. But rate cuts and liquidity support in itself were not enough to stop such a widespread financial meltdown.
The U.S. government then came out with National Economic Stabilization Act of 2008, which created a corpus of $700 billion to purchase distressed assets, especially mortgage-backed securities. Different governments came out with their own versions of bailout packages, government guarantees and outright nationalization.
The financial crisis of 2007-08 has taught us that the confidence of the financial market, once shattered, can't be quickly restored. In an interconnected world, a seeming liquidity crisis can very quickly turn into a solvency crisis for financial institutions, a balance of payment crisis for sovereign countries and a full-blown crisis of confidence for the entire world. But the silver
Consequently, 2007 and 2008 saw significant rises in delinquency and foreclosures.57
Serious mortgage delinquency rates rose in both the prime and subprime markets, although the latter’s rise from just over 6% in 2006 to 18% in 2008 was particularly salient.58 The number of properties subject to foreclosure filings rose by 79% in 2006 to reach 1.3m in 2007, and increased by a further 81% to 2.3m in 2008 (a 225% increase on 2006).59 As the Joint Center for Housing Studies at Harvard University found, delinquency and foreclosures were concentrated among subprime and ARM customers:
By October 2008, the Federal funds rate and the discount rate were reduced to 1% and 1.75%, respectively. Central banks in England, China, Canada, Sweden, Switzerland and the European Central Bank (ECB) also resorted to rate cuts to aid the world economy. But rate cuts and liquidity support in itself were not enough to stop such a widespread financial meltdown.
The U.S. government then came out with National Economic Stabilization Act of 2008, which created a corpus of $700 billion to purchase distressed assets, especially mortgage-backed securities. Different governments came out with their own versions of bailout packages, government guarantees and outright nationalization.
The financial crisis of 2007-08 has taught us that the confidence of the financial market, once shattered, can't be quickly restored. In an interconnected world, a seeming liquidity crisis can very quickly turn into a solvency crisis for financial institutions, a balance of payment crisis for sovereign countries and a full-blown crisis of confidence for the entire world. But the silver