-Applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value.
How do you know there is an Economic crisis?
-From news,rate unemployment drastically increase,high inflation,liquidity occur(people want to borrow the money,but it cost to much)
-from GDP(growth domestic production) which is shows negatively GDP
Why economic crisis occur?
-There is low cash in US.
-As recently as a year ago a conservative estimate of US debt ran into 5.5 trillion dollars. Since most people can't really work out how that is or what can be done about it, it is swept under the carpet.
Before this because of deregulation, banks went wild and dished out housing loans to those who had no ability to repay them. Eventually these debts were sold by the banks to other banks as investments!
So when the people could not pay back the loans the whole thing began to unravel.
The government can only handle smaller chunks like 700 billion, and then vaguely hint that even this might not be enough, as if to prepare us for the next shock. The truth, which most Americans cannot admit to because it is too horrific to contemplate, is - America is bankrupt!
The party was over some time ago.Your fat cat bankers were only a small part of the problem.Over the years America stopped making exportable things. The companies shifted their production to places like China where workers were cheap. US workers lost out.
The entire country was living on the money that the developing world invested back into the US while Americans were under the misconception that US aid was actually keeping them alive. Now that money has run out,
Politicians could not conceive how this happened because they did not want to hear complicated analyses from advisors. They thought, wrongly that things would just turn out right by themselves. The buck was passed.
Until now when it can no longer be dodged.
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