Why do we have a financial crisis today? Apparently stable and profitable companies, banks and even markets begin to struggle. Where are the roots for this development? The financial crisis of today can be tracked back to the housing bubble and to the following
housing crisis in the USA. But who where the participants and what were their actions? The following chapters try to give some explanations and reasons for this.
The housing bubble in the U.S and the following financial crisis had got their own reasons and drives. It is important to know these explanations and mechanisms to avoid such developments in the future. Managers and leaders should know, which reactions
follow which actions.
The objective of this assignment is to explain the reasons for the U.S housing bubble and the mistakes made by the participants of this development. The work on the assignment started with a mind map of questions like: who are participants of the house bubble crisis, what are the connections between these participants, and what were their actions. All findings of this assignment are mainly Internet based and complemented by literature sources regarding topics like financial crisis, housing bubble, and subprime mortgage crisis. After providing a brief overview of the advance of the housing bubble, with a look to the Asia crisis, the premises of the housing bubble are explained. Following to that the housing boom is described in more detail. Afterwards, the focus will be changed to customer loyalty. Along with that the customer value and satisfaction is very important for a long term company-customer relationship. At the end of this assignment the conclusion sums up with the genesis of the housing bubble.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Problem Definition
- Objectives
- Methodology
- The Advance of the Housing Bubble
- The Asia Crisis 1997 - 1998
- The Housing Bubble
- Premises
- The Role of the Fed and the Oversupply of Money
- Lending Standards in the US
- Prices of and Supply with new Houses over the last Decades
- Securitization (ABS, MBS, CDO)
- Housing Boom
- Over financing
- Consumption by Credit
- Houses "Under Water"
- The Final Crash
- Premises
- Conclusions
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This assignment aims to investigate the reasons behind the US housing bubble and identify the mistakes made by those involved in its development. The analysis will explore the factors contributing to the bubble, the actions of key players, and the consequences of their decisions.
- The role of monetary policy and the Federal Reserve in influencing the housing market.
- The impact of lending practices, including subprime mortgages, on the housing bubble.
- The dynamics of securitization and the role of financial institutions in creating and trading mortgage-backed securities.
- The relationship between the housing market and consumer spending.
- The consequences of the housing bubble's collapse on the US economy.
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter establishes the context of the US housing bubble, highlighting its connection to the financial crisis and underscoring the need to understand its origins. The chapter outlines the key questions to be explored, such as the roles of the main actors and the driving forces behind the bubble.
- Problem Definition: This chapter delves into the specific causes of the housing bubble and the subsequent financial crisis, emphasizing the importance of analyzing these events to prevent future occurrences. The chapter highlights the need for managers and leaders to understand the dynamics between actions and reactions in financial markets.
- Objectives: This chapter clarifies the main objective of the assignment: to provide a comprehensive explanation of the US housing bubble and the mistakes that contributed to its formation. It focuses on understanding the motivations and actions of the key players involved.
- Methodology: This chapter describes the research approach taken for the assignment, starting with a mind map to identify the participants, their connections, and their actions. The chapter highlights the reliance on internet-based information and relevant literature sources, including works on financial crises, housing bubbles, and subprime mortgages. This chapter sets the stage for the subsequent chapters, which will delve into the details of the housing bubble.
- The Advance of the Housing Bubble: This chapter introduces the origins of the US subprime crisis, tracing its roots back to the mid-1990s. It discusses the lax monetary policies of the Federal Reserve, particularly under Alan Greenspan's leadership, and their potential role in fostering financial instability. This chapter also provides an overview of significant events like the Gulf War, the Mexico Crisis, the Asia Crisis, and the Technology Bubble, highlighting their potential impact on the US economy.
- The Asia Crisis 1997 - 1998: This chapter focuses on the Asia Crisis, one of the pivotal events preceding the US housing bubble. It examines the causes and consequences of the crisis, including its impact on the US economy and its potential parallels to the housing bubble. It delves into the role of investments, current account deficits, and foreign debt in the crisis.
Schlüsselwörter (Keywords)
The key concepts explored in this assignment include the US housing bubble, financial crisis, monetary policy, Federal Reserve, subprime mortgages, securitization, mortgage-backed securities, consumer spending, and economic consequences.
- Citar trabajo
- Michael Kemmer (Autor), Dirk Herfurth (Autor), 2009, The Economics of the US House Price Bubble in the early 21st century, Múnich, GRIN Verlag, https://www.grin.com/document/197109
