How The United States Differ From The 2008 Financial Crisis?

The United States was founded on life, liberty and the pursuit of happiness. This pursuit of happiness has led to some drastic events that set the economy in the wrong direction. People use financial techniques to achieve their dream of becoming wealthy. The financial institutions do not lend money out of kindness of their heart, but in order to make greater profits for their business. In the 1929 Wall Street crash and 2008 Financial Crisis, financial institutions were right in the center of the problem. The reason for learning history is because the market repeats itself in various forms. There are some major differences from the 1929 Wall Street crash and the 2008 Financial Crisis, but there were also similarities that could have helped to
much like the 1929 crash; the 2008 crisis was fueled by greed and a desire for more money. The 2008 credit crisis was the result of low interest rate. The low interest rate offered by the Federal Reserve makes T-bill unattractive to investors. The other side of this expansionary monetary policy by the Federal Reserve caused Wall Street to borrow as much as possible. According to Kharusi and Weagley, banks loaned their money to the buyers “who would not normally qualify” to buy mortgages. In return, housing prices dropped “following a period of easy money and excess demand” (27). The problem became that more and more unqualified debtors defaulted and money turned into more houses. The price of houses started to decrease and caused homeowners paying the mortgage to be overpaying as the price of their house fell. These families left their mortgage and more money turned into houses for financial institutions. “Mortgage backed securities held by financial firms, foreign investors, and governments lost most of their value” (Kharusi and Weagley, 27). As a result, all parties going bankrupt, and “the collapse of the United State housing market created the financial crisis”