The Causes and Effects of Our Economy Essay

814 WordsJun 10, 20094 Pages
The Causes and Effects of Our Economy As of today people all over the United States people are facing the worst recession since the Great Depression in 1930. We have all just witness and waited for this economic crisis to hit us. Most people would say they predicted this to occur five years ago and others blame as early as The Clinton Administration for this crisis. With political changes occurring and a social unrest in the economy all through the wake of this crisis. The industrialized world suffered a horrible recession sparked by the financial crisis. Loans were becoming too risky and over inflated asset prices. Lending practices were losing and becoming in debt, mounting to a panic development in the inter banking lending. A rise in unemployment drastically skied up and at least 20 million jobs will be lost at the end of year 2009. A demand in food and raw materials became to rise and many large established investment and commercial banks in the United States and Europe suffered huge losses. With the rise of unemployment, lowing commodity prices, and international trade began forming a global recession. Fannie Mae and Freddie Mac are two names that have came up in recent since this recession. They are one of the causes why our economy is like how it is today. The Washington Post wrote: “Congress also wanted to free up money for Fannie Mae and Freddie Mac to buy mortgage loans and specified that the pair would be required to keep a much smaller share of their funds on hand than other financial institutions.” This act finally was ordered by the Congress for companies to keep more capital for support against downfalls if they were invested in riskier securities. Clinton Administration hadn’t set the rule and was put in nine years later. This could have been prevented by Clinton Administration which pushed for subprime lending. Fannie Mae had been

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