2008 Housing Crisis Cause Effect and Prevention of Future Similar Outcomes

This research is being carried out to understand and discuss the forces which could have prevented or at least greatly assuaged the crisis as it has been presented to the financial markets and subsequent global economies over the period of the past 5 years time. In this way, such an exploratory look into the realm of the financial crisis and its subsequent aftermath can allow for a more informed understanding of how the crisis itself could have been prevented as well as the formulation and creation of new and insightful ideas within the reader with regards to how such a situation might be stopped in the future. The first aspect of anticipation and reduction to the crisis came as early as the mid to late 1990s when a number of lawmakers and political analysts began to make a series of warnings concerning the untenable nature of the ways in which the financial sector was being deregulated. Although this deregulation has been attributed to both sides of the political spectrum, in all fairness it can be assumed from a moderate interpretation that both sides were complicit in the wholesale deregulation of the financial sector which ultimately caused the collapse of the real estate bubble. Moreover, the first real and measurable signs of impending difficulties on the horizon were first demonstrated around the year 2006 when the Department of Commerce noted that new home permits had dropped an astounding 28%. Normally incremental increases and/or decrease in the reduction or expansion of new home permits are little cause for alarm. however, when something as earth-shattering and innately odd as nearly a 1/3 reduction in the demand for housing should have been a major red flag to the Federal Reserve as well as the entire regulatory system.

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