Economic Forecast Essay

462 Words2 Pages
At the beginning of 2008 the mortgage clouds loomed as the first of many sub-prime lenders started to fall. The positions that most financial institutions had in real estate were aligned with the theory that the housing boom would never end. Consumers moved under the same assumption and also looked for their American dream home. President Bush had led America through a horrible September in 2001 and in 2008 he had more widespread panic and an event that could have knocked America out of the super-power status that the terrorists could not achieve in 2001. “Already[October, 2008] this crisis has seen not just our enemies but even some of our closest allies wondering whether we are at the beginning of the end of both American-style capitalism and of American supremacy.” The swift $700 Billion bailout of October 2008 was preceded by a two major financial institutions unraveling and disappearing. Bear Sterns had a slow demise into the hands of JP Morgan Chase because of its real estate holdings and risky CDO’s. Lehman Bros. did not get the same treatment as it was quickly dismantled by the US government. It too had leverage positions that had it insolvent months before the announcement of its collapse. Even the solid Fannie Mae and Freddie Mac had to become public entities as more and more consumers could not handle the burden of housing prices and overall goods consumption. The presidential elections did give America some hope in the reshaping of the economy. The new president has been known to place the blame of the Wall Street woes on Wall Street and the lack of regulation by the previous administration. On the ssmae day the Dow Jones lost 500 points he commented , "Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to

More about Economic Forecast Essay

Open Document