What are the reasons due to which we are in such a position?
Let us analyze the problems which led our economy to this situation.

Main reason behind current US economic crisis is our over dependence on credit. Growth in US economy during the 1990s was mainly due to credit driven consumption by American people. Economic data shows that National Consumer Debt has more than doubled from $789 billion to $1.6 trillion between 1990 and 2001. Mortgage loans and credit card debts increased tremendously. Debt-Income ratio shot up from 67% during 1960s to 95.6% during 1990s.

The US economy received the first shock during the dotcom bubble burst and subsequent stock market crash in 2000 which led to a severe recession in 2001. Finance capital flew out from the IT stocks but soon found resort in the housing market. More and more investment in the housing market led to real estate boom and helped the US economy to recover.

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