Table of Contents:

• A visual guide to the financial crisis
• A brief summary of the US financial crisis
• Articles & Links to more resources on the US crisis

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US Financial Crisis Summary:

1. The US Economy needs to be revived after the Dotcom crash and economic slowdown in 2000/01
2. The US Government embarks on era of providing cheap credit via low interest rates to stimulate the economy
3. The focus was to boost the US real estate market via low rates and policies to encourage home ownership
4. The cheap credit caused an unsustainable bubble in the housing market and other asset classes
5. The increase in asset prices caused further greed, speculation and highly leveraged borrowings
6. People were buying properties at massively inflated prices with money they did not have
7. Banks continued to give loans and mortgages to consumers who could not afford them
8. The cheap credit also fuelled huge speculation in the capital markets with stocks and commodity prices reaching record levels
9. Hedge funds and investment banks used financial products for even greater leverage to magnify the effects of the cheap credit
10. When everyone was full of debt and asset prices had risen to unsustainable levels, the inevitable happened
11. People who had taken loans which they could not afford, started defaulting on their home loans
12. This caused credit to tighten which had a negative effect on property prices and resulted in more loan defaults
13. As the banks started to be more stringent in approving loans, the cheap money which had driven the market rally suddenly disappeared
14. This caused a spiraling downturn in housing prices which amplified the number of defaulting mortgages and home foreclosures
15. The situation finally led to the collapse of a few banks and financial institutions which needed to be bailed out by the government
16. This created a greater loss in confidence in the financial system and economy which depressed asset prices even further
17. The credit crunch, falling markets and negative sentiment dragged the US economy into an economic crisis
18. The economic slowdown caused more companies to collapse, resulting in massive joblosses and a US economy deep in a financial crisis