If we were put things in perspective and chronologically enumerate the actions they would be like ..
• THE GLB Act of 1999 allowing commercial and investment banking to merge which in turn allowed risky investment vehicles to start running at full speed ( the birth of CDO and MBS)
• 2001 – 2002 Historically Low interest rates by FED to spur easy credit and interbank loans
• With all the above things and media promotion and an average Americans dream of owning a home which was construed as safe investment finally led to subprime crisis
• Finally when the bubble crashed ,t he excess inventory started showing up with home prices declining and inability to refinance led downward spiral with banks failures leading to liquidity crunch and high unemployment
Savings– In 1960 average American saved 11 % of paycheck , in 1990 decreased to 5 % and in 2003 fell to 2.5% but due to economic situation its increased to around 6%
Investment- 401K and IRA have been affected by the crisis but if we look at it from long term we have seen growth in this investment, The house which was supposed to be the safest of all has declined substantially Unemployment The drastic rise in this area averaging about 4% in Q1 2000 to 6% in 2003 and 9.1 % present is probably the biggest indicator of economic crisis and can be linked as directly proportional to savings and investment combined
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