The Financial Crisis of 2007 – 2008.

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The financial crisis of 2007 – 2008. The financial crisis of the beginning of the 21 century was a major financial crisis, the worst of its kind since the Great Depression. It's a severe global economic problem that began in December 2007 and took a particularly sharp downward turn in September 2008. There are many reasons economists think this had happened. Most economists believe that it started in the United States. From 1997 until 2006, people bought expensive houses, even though they did not have enough money for it. Since the money had come from other countries, it was easy to have good credit. People used this credit for expensive home loans. This created a housing bubble which caused the houses' prices to raise. Because they had a lot of money, the loaning companies made it easier to get a loan, even if the borrower didn't have a good credit history. These loans are known as subprime loans. During this time, many homeowners refinanced their homes. This caused their mortgage to change, giving them lower interest. After they refinanced, homeowners could take out another mortgage to use as spending money. The loaning companies changed their loans so that they had low interest at first, which would increase later. This is known as adjustable rate mortgage. The companies did this to try to convince more people to take loans. Many people with subprime loans also took these adjustable rate mortgages, hoping that the good price of housing would help them refinance later. While the housing prices were still high, many American and European companies, including banks, invested in subprime loans. These investments gave more money to the loaning companies, who used it to give out more subprime loans. These investments would make a lot of money as long as the prices of housing were high. However, the housing companies built too many houses. This caused the price of

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