Fixing the Economy
Subprime Mortgage Crisis
In 2006, the subprime mortgage crisis erupted. Experts said low interest rates and the strength of the U.S. economy would restrict it to the housing industry. Instead, the subprime canary flew out of the coal mine, spreading seeds of crisis everywhere.
- Nov 06 - Downturn in Real Estate Could Threaten Economy
- How Real Estate Affects the U.S. Economy
- Could Mortgage Crisis Have Been Prevented?
- Understanding the Subprime Mortgage Crisis
- Causes of the Subprime Mortgage Crisis
- Fannie Mae, Freddie Mac and the Subprime Mortgage Crisis
- Did Fannie and Freddie Cause the Mortgage Crisis?
- How Hedge Fund Mortgage Losses Led to Bank Crisis
By August 2007, the Federal Reserve realized that bank lending was slowing down. It began expansive monetary policies to add liquidity to the economy. It didn't realize that the problem was credibility. The banks stopped lending because they didn't want each other's defaulted mortgages.
- Aug 07 - Federal Reserve Bailout Begins
- Feb 08 - Bush Economic Stimulus Package
- Mar 08 - Fed Lends $200 Billion to Bond Brokers
- Fed Bails Out Bear Stearns
- Fannie & Freddie Take In $400 Billion in Toxic Debt
- Sep 08 - Lehman Brothers Goes Bankrupt
- Feds Nationalize Fannie Mae and Freddie Mac
- Fed Buys AIG
- Money Markets Freeze Up
- Oct 08 - $700 Billion Bailout Bill
- Bailout of Credit Card Market
- Citigroup Bailout
- Auto Bailout
- Chronology of Fed Actions to Stem Bank Crisis
The Great Recession
The economy shrank .7% in the first quarter of 2008, signaling the start of The Great Recession. Unfortunately, experts didn't realize it until the third quarter, when the economy start a slump that lasted for four quarters in a row. The last time this happened? - The Great Depression of 1929.
- What Is a Recession?
- What Caused the Recession?
- How Much Did the Economy Shrink?
- Housing Prices Dropped 28%
- Foreclosure Rates Doubled
- Banks Hoard Cash Even as LIBOR Falls
- Banks Wrote Off $1 Trillion
- Unemployment Rose to 10.2%
- Where Are Toxic Assets Now?
- Recession or Depression?
- Could a Stock Market Crash Cause a Recession?
- Is Gold a Good Hedge Against a Recession?
Obama's Economic Stimulus Program
Even before he took office, Barack Obama had a well-formulated plan to fix the economy. As time went on, he and his team were challenged to creatively address one of the worst economic crises in modern times. But economic stimulus alone is not enough. Banks must revive lending to spur the small business growth needed to create new jobs.
- Obama's Economic Team
- Obama's Economic Stimulus Plan
- Economic Stimulus Plan in Detail
- Stimulus Checks
- Understanding the Budget
- Homeowner Stability Initiative
- Making Home Affordable Program
- Banks Must Stop Record Foreclosures
- Financial Stability Program
- Health Care Reform
- Obama Campaign - Economic Platform
- Obama Campaign - How a Win Affects the Economy
The cause of the meltdown was deregulation of derivatives that were so complicated that even their originators didn't understand them. Find out what they are, how they work, and how they will muck up the economy for years to come.
- Mortgage-Backed Securities
- Preferred Stock
- Secondary Mortgage Market
- Subprime Mortgages
TARP, TALF, TAF - Throughout 2008, the Federal Reserve and the Treasury Department created many new programs to stave off financial collapse. Find out what these programs do. Learn how they have made the government the nation's bank - at least temporarily.
- TAF - Fed's Term Auction Facility
- TARP - Bank Bailout
- TALF - Fed's Credit Card Bailout
- MMIF - Fed's Money Market Bailout Program
Other Economic Crises
The U.S. economy has suffered from many other economic crises. This gives us hope, because we learned more about how the economy works and became smarter about managing it. Without that knowledge, we would be in much worse shape today.
- Long Term Capital Management - 1997
- Savings and Loan Crisis - 1987
- Is the Current Crisis Like the S&L Crisis?
- Great Depression of 1929
- Is the U.S. Headed Towards the Second Great Depression?
- Why the U.S. Is not Headed for a Japan-Style Recession