Hi, I need help with essay on Housing Crisis in the USA. Paper must be at least 500 words. Please, no plagiarized work!Housing Crisis in the USAQuestion 1One issue that comes out in both films is t

Hi, I need help with essay on Housing Crisis in the USA. Paper must be at least 500 words. Please, no plagiarized work!

Housing Crisis in the USA

Question 1

One issue that comes out in both films is the fact that banks and banking professionals are very careless with regard to how they deal with economic issues. This carelessness can be seen in how they gave subprime mortgages to high-risk customers, regardless of the fact that they knew that this was a risky business that could affect the economy in a very negative way.

Question 2

The main problem that gave way to the crisis was the fact that banks were deregulated. Prior to the crisis, the continued deregulation led to the creation of the environment where banks acted in a careless manner, regardless of the risks talked about. Alan Greenspan, as the leader of the Federal Bank definitely had a stake in this and in fact he and his team seemed to have too much faith in the theory of an efficient market that is able to regulate itself (Shiller 89). Yet, these ideas of a perfect market where competition in the context of demand and supply is supposed to create market equilibrium are fundamentally flawed. In such cases where deregulation occurs, it is always likely that there will be a time when the market will collapse under its own pressure.

Question 3

The increasing income inequality is a major factor that led to the housing crisis. Increasing poverty in America meant that many households are not able to have the proper income to own a house and this led to the creation of a huge market niche that the banks could not ignore. These people who make the greater majority of the pupation in the United States had to achieve the American dream of owning a house, yet they did not have the means because they could not access the normal mortgages. When banks, through the freedom afforded them by deregulation, discovered this niche, they started giving subprime mortgages. The subprime mortgages were a high-risk venture and as would be expected, they ended up having a negative impact on the economy because many of these subprime customers ended up defaulting on their mortgage repayments.

Question 4

In this case of the housing crisis and the adverse situations that followed, everyone is to blame in a different kind of way. The banks were to blame for being careless and also for misleading people to believe that these products (subprime mortgages) were good for them. People seem to trust banks very much and always believe that anything these banks offer is without any hidden agenda. When banks offered the subprime mortgages, it was easy for these people to believe that it was safe to engage in the investments. The individuals are also to blame because their greed overshadowed their rationality.

Question 5

In the American society these policies are made by people who are the biggest beneficiaries of the same policies. Most people in congress and any other institution that is involved in the provision of law and policies in the American society are rich people who end up benefitting the most from the policies. As a result these kinds of policies will continue to be there for a long time because these people not only implement them, but also fight to the tooth to make sure that they are not shot down.

Question 6

Several factors worked together and culminated into the crisis. One issue is the issue of the American culture such as the American dream. The American dream which every American chases is the dream to be successful financially and the height of this dream is the ownership of a home. Although owning a home is important, the fact that this is given too much importance over for instance renting a home, led to not only rising home prices but also the increased desire to take the huge risk of taking subprime mortgages which are usually characterized with high interest rates as well as high risks both for the providers and the consumers.

Other factors also come in. For instance, the American economy was coming from a long period of success since the Second World War. This, combined with the shock of globalization meant that there was a chance that there would be an economic destabilization.

Work Cited

Shiller, Robert. The Subprime Solution: How Today's Global Financial Crisis Happened, and what to Do about it. Princeton, NJ: Princeton University Press, 2012.