What do you think about our current financial crisis in US?

Subprime Mortgage Crisis is the main reason behind current financial crisis. Subprime mortgage loans are usually Option ARMs whose repayment amount remains fixed for a certain period of time (say, 2 years) and then resets to a huge amount. Most subprime loan borrowers default due to this high repayment rate. This has led to foreclosure of houses.

Now, the housing market witnessed excess supply of unsold houses coupled with decreasing demand for them. This led the price of houses to fall dramatically.
Downturn in the housing market caused Mortgage backed securities market to perform poorly. Many financial institutions became bankrupt (for example, Lehman Brothers). Our economy is now in deep recession.

But I sincerely feel that we can come out of this mess through proper policy implementation: -
I. Bailing out financial institutions
Financial market is the only source of finance for industrial expansion. Financial institutions, in turn, are the backbone of this market. So, for the sake of unhindered money supply to the industries, these financial institutions need to be bailed out.

II. Creation of more jobs
Purchasing capacity of the people will increase. They will spend more and thus demand for goods will be created. Market will thus expand.

III. Bailing out automobile industry
Automobile industry employs thousands of people. Bankruptcy of the big 3 (Ford, General Motors, Chrysler) will lead to increased unemployment, which in turn will cause decrease in demand for goods. Oversupply of goods will only help to push the economy towards depression. Thus, bailing out the big 3 automobile companies has become very important.

Here are some Updates on our Economic Crisis: -

1. In USA out of every 100 workers, 7 are jobless. That means, 7% of total workers in USA are jobless. (Alarming!!!)

2. November'08 was the cruelest time for workers in 34 years. More than 530,000 jobs vaporized in this month.

3. Fed rate has come down to almost Zero%. ie. If you put $100 in US bank then you'll get back 25 cents after 1 year.
Can this rate cut help? Probably not. Because investor confidence in the financial market is at the all time low. Hence, only rate cut will not induce investment. Our economy has entered a deep recessionary phase where rate cut will not be able to kick start the economy. This phenomenon is known as Liquidity Trap, where liquidity in the economy can't prop up the economy.

ENLIGHTENED YOU REALLY ARE GREAT FRIEND.THANKS!!!
PLEASE WRITE MORE POSTS FOR I LEARNED MORE THINGS
WITH ALL GREAT MEMBERS HERE LIKE YOU.
8) :lol:

Hey Enlightened don????????t be irrational by supporting automobile bailout. Are you crazy or what? What the hell are you guys up to? Think about some productive use of the taxes given by us. Don't waste them on bailing out the BIG 3 when they have no future prospect. Billion $ bailout will only help these companies to remain floating for some more time. But they will go down anyway. Why? Let me tell you.

Financial health of the Big 3 (Ford, General Motors and Chrysler) is terrible. These companies lost billions of $s in the last few years they are invariably going to end. Why am I saying so? Because they mainly produce SUVs, which inturn has lost most of its market during the period of rising gas price. Consumer preference has now shifted from these gas guzzling monsters to fuel efficient cars. So, their future is bleak to jump back to normalcy after this billion dollar bailout. Thus, bailout of automobile industry is an economically irrational proposition.
That????????s why Cerebus, a private equity player and the main shareholder of Chrysler, is planning to move out of auto manufacturing business.
GM hasn????????t profited in auto production business. Its auto credit business arm, GMAC, which has earned money for it.

So, what on earth do you Democrats wanna bailout these industries from? People, give a thought to it. I????????m gonna answer this, don????????t worry. But you people should know, what????????s cooking behind this automobile industry bailout drama. Is there any vested interest going around? Use your brain for God????????s sake instead of your heart. Think, Think, till I answer???????

All done