Now I start series of writings about the finance crisis. In these serious of articles I hope to address what has happened, what is happening, solutions, forecasts, federal reserve actions, and the stock market volatility. Do you want to keep your mind fresh, refreshed, and up-to-date? Yeah you guessed it. Anyways, this is Part 1. I feel the need to organize my thoughts in this particular post. So lets start over, why did this happen? Read...
The crisis continues. First, many people understand why it has happened:
- Oversupply of housing
- Overvalue of housing
- Subprime lending - credit defaults
- Money evaporation - Collateralize Debt Obligations collapsing, thus, invested dollars decreased ten-fold.
- Panic = bank runs
- Deflation (caused from all above)
- Fear - no one wants to buy. Either "no one" has money, or "no one" is confident enough to spend.
- Stock market value cut in half. (caused by 3, 4, 7)
- Terrible Bank Management - Wamu, Lehman, Citigroup, Bank of America, and Wachovia. Simply put: "Citigroup’s downfall: bad investment policy; over-expansion, which overwhelmed Citigroup’s management; and an inadequate capital base." (New York Times)
So whats next?
