Financial Crisis金融危机英文介绍

• The United States presidential election of 1992 had three major candidates: Incumbent Republican President George H. W. Bush; Democratic Arkansas Governor Bill Clinton, and independent Texas businessman Ross Perot. • Bush had alienated much of his conservative base by breaking his 1988 campaign pledge against raising taxes, the economy was in a recession, and Bush's perceived greatest strength, foreign policy, was regarded as much less important following the collapse of the Soviet Union and the relatively peaceful climate in the Middle East after the defeat of Iraq in the Gulf War. • Clinton won a plurality in the popular vote, and a wide Electoral College margin
• In two thousand six and two thousand seven, the American housing market began to collapse. Home values had been going up and up. Now the balloon burst. • People started losing homes they had bought with money borrowed on easy credit terms -- loans they were then unable to repay. • The hope was that the crisis in the housing market could be contained, and that it would not spread to the wider economy. • Traditionally, local banks would have suffered the losses on the bad loans. But times had changed. Big investment banks had been buying those loans. The investment banks then resold them as securities offering high returns. • Credit rating agencies working for the investment banks had told investors that the securities were safe. Selling a financial product based on a large group of loans was supposed to limit the risk if a few loans went bad. That was the idea. But that was before millions of homeowners stopped paying their mortgage loans. • The economic condition is very bad.
Reasons for the Financial Crisis
• Direct reason: the real estate sub-credit crisis happened in US.
Sub-credit crisis—Financial crisis—Economic crisis (2006-2007) (2008) (2008-2009)
• Root reason: The investment strategy of the world's top traders( the bankers’ scheme to get more money ). The economy crisis is necessary for a country and also for the bankers.
Financial crisis
What is financial crisis?
• A financial crisis is a disruption to financial markets in which adverse selection and moral hazard problems become much worse, so that financial markets are unable to efficiently channel funds to those who have the most productive investment opportunities. As a result, a financial crisis can drive the economy away from an equilibrium with high output in which financial markets perform well to one in which output declines sharply.
• Main reason: the Federal Reserve’s interest rate policy.
Interest rate rose—demห้องสมุดไป่ตู้nd for the house decreased—price of the real estate dropped—banks’ asset lost
• Other reasons: the estate bubble in US; the excess of securitizing; the abuse of the financial derivatives; the loose supervise of the financial market, etc.