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International Ripple Effect of the US Subprime Mortgage Crisis Essay

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Below is an essay on "International Ripple Effect of the US Subprime Mortgage Crisis" from Anti Essays, your source for research papers, essays, and term paper examples.

“Given the complicated financial links among nations, it’s not just a question of projecting a modest decline in exports for fast-growing nations like China. Rather, it’s a matter of understanding how the world’s economies are bound together in various ways and avoiding a self-fulfilling decline in investment due to conservative banks and diminished growth expectations.”(YaleGlobal)
Starting in the mid 1990’s, sub-prime mortgaging became the new approach for selling loans and mortgages to people with risky credit and low financial means.   Targeting those who otherwise would be unable to secure a conventional “normal” loan, sub-prime loans come with high interest and future adjustable rates.   While attractive to lenders looking to extend their operations to another class of working class families and individuals, these loans carry higher risk of default and possible write-offs.   To make up for this risk, lenders packaged these higher-risk loans along with conventional loans and sold them as securities, believing that even if the higher-risk loans defaulted, the more conventional loans would carry the weight and make up for the losses, thus creating no long-term problems.   Unfortunately, with the increase of subprime mortgages being sold to people who were not qualified to take on the resulting monthly payments, and/or were unaware of the possible exploding future adjustable rates, many fell into debt and were unable to keep up.   This failure to make monthly payments turned into a downward tumbling situation, and eventually resulted in millions of homes being foreclosed, families’ losing everything, and financial institutions feeling the wrath from years of greed, lack of regulations, and the unethical targeting of low income families to take on mortgages that financially were close to impossible to pay back.   This crisis, or “credit crunch”, had rippling effects for the domestic market, but also had negative effects for international markets.   Affecting all...

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MLA Citation

"International Ripple Effect of the US Subprime Mortgage Crisis". Anti Essays. 18 Dec. 2018


APA Citation

International Ripple Effect of the US Subprime Mortgage Crisis. Anti Essays. Retrieved December 18, 2018, from the World Wide Web: http://cassandralynndesignllc.com/free-essays/International-Ripple-Effect-Us-Subprime-Mortgage-25412.html