Essay Example on Investigating the eminently impacted factors after the Great Recession

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I have been investigating the eminently impacted factors after the Great Recession had happened Although there were a conglomeration of distinctive parts that were encountered after the Great Recession had occurred Furthermore I have decided to focus on three incommensurable perspectives that have predominantly been used to analyse to see why unemployment was impacted mostly ensuing the financial crisis The three perspectives that I am exploring are family life unemployment and small and big businesses The 2008 monetary catastrophe was the subjugated financial disaster since the Great Recession of 1929 It was named the Great Recession as the financial depreciation in the United States and was divided out instantaneously nearly affecting every intersection of the world The financial crisis of 2007 2008 was a severe and major financial crisis and this was the worst of its kind since the Great Recession It apparently became visible in September 2008 with the failure of several large United States based on financial firms The underlying causes leading to the crisis has been reported in journals for many months before September with the description about the financial stability of leading United States and European investment banks insurance firms and mortgage banks consequent to the subprime mortgage crisis 



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Most economists believe that it started in the United States From 1997 until 2006 many people bought expensive houses even though they didn't have enough money to buy it However since the money was coming from other countries it was easy to get good credit People used this advantage of buying expensive loans This created an economic illusion which caused the house prices to raise This was because they had a lot of money and that loaning companies made it easier to get a loan even if the borrower didn t have a good credit history These loans are known as subprime loans During this period homeowners refinanced their homes This caused the entire mortgages to change giving them lower interest rates After they refinanced homeowners could then take out an additional mortgage to use as spending money Firstly the loaning companies changed their loans so that they had low interest at the start then eventually increase This is known as adjustable rate mortgage The companies did this to try and convince more people to take loans Many people that already had a subprime loan also then took these adjustable rate mortgages This would lead to having good pricing on housing which then would help them refinance During the housing prices were still high many American and European companies including banks invested in subprime loans 



These investments gave more money to the loaning companies who gave out more subprime loans These investments would make a lot of money as long as the prices of housing was high However the drawbacks were that housing companies were building to many houses This caused a decrease on pricing of houses from the beginning of the summer of 2006 The value of many homes dropped below the value of the remaining mortgage debt therefore owners were unable to sell and move away This is called negative equity About 8 8 million homeowners in the United States had 0 or even negative equity by March 2008 This caused the number of foreclosures in homes to increase meaning that many people lost their homes During 2007 almost 1 3 million United States homes could be foreclosed on The figure of houses for sale continued to increase which made the prices decrease The homeowners with subprime loans left their properties with less value than they had when they brought This concluded that the loans were worth more money than the house The loaning companies weren't able to make money from these houses The collapse of the housing phantom caused the value of speculations to fall The companies that had invested in subprime loans lost a staggering total of about 512 billion The main two companies which lost the most money were the Citigroup Merrill Lynch More than half of the money lost 260 billion was lost by American firms Citigroup Citigroup Inc is an American multinational investment banking and financial services association headquartered in Manhattan New York City Citigroup began falling apart in 2007 as accelerated home prices home prices caused an increase in loan delinquency which caused a drop in the value of chains backed by loans 



As the subprime mortgage crisis began to spend abundant exposure to harmful mortgages in the forms of Collateralized Debt Obligation CDOs associated by poor risk management led the company into serious predicament In early 2007 Citigroup began annihilating about 5 of its workforce in an expensive reestablishment invented to cut costs and reinforce its elongated underperforming stock By November 2008 the unfinished crisis hit Citigroup hard and despite deferral TARP bailout money the company declared further cuts Its stock market value dropped to 6 million down to 244 billion 2 years prior Merrill Lynch Merrill Lynch Wealth Management is an affluence management bisection of Bank of America The firm is headquartered in New York City In November 2007 Merrill Lynch declared it would diminish 8 4 billion in losses correlated with the national housing crisis and would remove E Stanley O'Neal as its chief executive Merrill Lynch named John Thain as its new CEO that month Later that month


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