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Escaping the Great Recession

Two triggers that go hand in hand in their reputation as proximate causes of the financial crisis include the collapse of the subprime mortgage market and the housing crisis. A subprime mortgage is a mortgage that is given out to borrowers with less desirable credit ratings. Since these borrowers have lower credit ratings than the average prime mortgage borrower the lender views them at higher risk of defaulting on their loan and thus charges a higher interest rate to compensate for that risk. Subprime mortgages became more and more common causing the housing market to balloon as more and more people could afford housing. House prices were soaring as were the number of newly constructed homes. This was promising at the time as all those homes added to growth in our GDP. The various vulnerabilities that came into play are when things began to turn south. Some of these interconnected vulnerabilities include loose lending practices, excessive leveraging, and aggressive marketing of complex financial instruments that concealed risk (Bernanke 1-2). Traditionally if someone wanted to take out a mortgage on a house they would go to their local bank and apply for one. As subprime mortgages increased in popularity local banks became replaced as the place to secure a mortgage by various shadow bank institutions acting as mortgage brokers. Shadow banks act like traditional banks in the sense that they give out loans but they do so without the federal regulation traditional banks must adhere to. Due to the loose regulations imposed on these institutions, these mortgage brokers began selling as many mortgages as possible. Rather than the traditional originate to hold policy in which banks lending out the money would hold that mortgage and receive money from the borrower, the policy shifted towards originate to distribute in which the mortgages were packaged and then sold off as securities (Krugman & Wells 5).


Essays Related to Escaping the Great Recession

1. Cause And Effect Of The Great Depression

The Great Depression had the highest, worst and longest period of high unemployment ever recorded to date. ... (The Great Depression, Pg. 3) The core of the Great Depression can be traced back to the New York Stock Exchange, and the year 1929. ... (The Great Depression, Pg. 8) Another major cause of the depression was over-production. ... The cartoon shows the seriousness of the depression because it got to the point where people were willing to take their own lives to escape it. ... Also, if the government had helped, the traditional wisdom of the 1930's said that if a government borrowe...

  • Word Count: 1704
  • Approx Pages: 7
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2. Great Depression

Possibly the greatest crisis faced by the United States since the Civil War, the Great Depression completely changed the nature of American government. ... This made it even more difficult for the European countries to recover from the devastation they encountered in the Great War. ... The industrial countries were already poised for a recession due to the cyclical structure of their economies. The war did, however, make recovery from this recession more difficult by depressing productivity. ... The nature of the primary products trade system also made it prone to a difficult to escape cy...

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3. The Boom of the Roaring Twenties

As one of the many reasons for Canada's prosperity "Technology played one of the most vital parts in bringing the great economic and cultural prosperity that Canada experienced during the 1920s.... After the war, people were excited to start enjoying life once again, in order to escape the painful memories. "They were an escape from the horror of war, and an opportunity to release pent up emotions created by the restricted lifestyles forces on the public by the war effort.... The post-war recession was forgotten as everyone went on a spending spree."(Business and Economy, p...

  • Word Count: 735
  • Approx Pages: 3
  • Has Bibliography
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4. Every End is a New Beginning - Finding God

In the words of the great children's author, Dr. ... In 1975, Britain was in recession. ... She and her friends escaped safely. ... However, it was in her youth that she and many others found something great. ... She met great people that she promised herself she would never forget. ...

  • Word Count: 879
  • Approx Pages: 4
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5. C. Wright Mills and Sociological Imagination

People often feel trapped in their own lives and circumstances, thinking that their troubles are not escapable thus making them extremely depressed and unhappy in their lives. ... In order for people to escape the traps they have created for themselves, they have to understand the larger history (Mills, 1959). ... In such an economy where recession has hit the markets, blaming only my friend is an insufficient diagnosis of the problem (Witt & Hermiston, 2013). ... Mills had made a great attempt to let the society think outside the box. ...

  • Word Count: 887
  • Approx Pages: 4
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  • Grade Level: High School

6. Identify and evaluate immigration trends from 1800 to 1920

The failure of the potato and other crops had produced famine in Ireland and English rule was so oppressive and unpopular that many Irish left the country to escape it. Similarly, other immigrants such as the Jewish, English, Italian, and Asians escaped from their homeland because of poverty, famine, land shortages, or religious or political. ... On the contrary, today's immigration is very different from the last great wave of immigration. ... In fact, administrative data from the immigration service on the arrival of new immigrants show that although there have been a number of reces...

  • Word Count: 1083
  • Approx Pages: 4
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7. Essay on the Mexican Revolution

An economic recession caused people to lose their jobs. ... Villa and Huerta did not get along but managed to get Orozco away from Madero, causing Orozco to escape to the United States. ... Obregon still kept connections with the military, and when it became known that some unknown named Ignacio Bonillas was going to be the next president, Obregon gathered up a great militia and came to Mexico City. Carranza escaped the capital, but was assassinated by one of Carranza's men on May 21, 1920. ...

  • Word Count: 1524
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8. Latin America Colonization

Goods such as sugar, cotton, coffee, indigo, tobacco, silver and copper were produced and exported in great quantities. ... When excavating for the subway system near the cathedral square of the colonial capital the Great Temple of the Aztecs was unearthed. ... The great depression, for example, affected Latin America hardest of all; Chile lost 80 % of its export income. ... When the oil embargo of 1973 occurred Brazil decided to not enter into recession like the rest of the world, but to borrow large sums at variable rates in an attempt at debt-led growth. ... Interest rates roe to twenty per...

  • Word Count: 2984
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9. History of Politics and Poverty

Most often, poverty is a situation people want to escape. ... In 1929, the Great Wall Street crash plunged the economic markets into decline placing a stoppage on American credit and countries adopted an emergency response by eradicating trade barriers. As a result of the crash Britain found itself in The Great Depression of the 1930s. The Great Depression hit everyone hard but more so those in the industrial and mining areas of north England, Scotland, Northern Ireland and Wales. ...

  • Word Count: 2289
  • Approx Pages: 9
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