The housing market crash and the second great depression.
In the past decade, the United States has undergone an unprecedented housing boom.
The problem with booms is that they are usually followed by busts.
Now, it seems that the long-awaited US housing market crash is finally here.
Many experts believe that this slump will soon trickle down to other sectors of the economy and lead to the second great depression.
2. The housing market crash
The US housing market has been in a bubble for some time now.
This is because prices have been rising at a much faster rate than incomes.
As a result, many people have been taking out loans they can’t afford in order to buy homes they can’t really afford either.
Now, this house of cards is starting to collapse.
In the past few months, we have seen a sharp increase in foreclosures and defaults as people are finally starting to face up to their financial realities.
The result is that prices are now falling and this is likely to continue for some time.
3. The government policies
One of the main reasons for the US housing market crash is the government’s extremely lax lending policies.
For many years now, anyone who could fog a mirror was able to get a mortgage.
This led to a lot of people buying homes they couldn’t really afford and taking on debt they couldn’t really handle.
Now, the bill is coming due and the government is ultimately responsible for this mess.
4. Alan Greenspan
Another person who bears some responsibility for the current crisis is Alan Greenspan.
As chairman of the Federal Reserve, he kept interest rates at artificially low levels for many years.
This made it very easy for people to get loans and helped fuel the housing bubble.
Now that rates are starting to rise, many people are finding themselves in over their heads and are struggling to make their monthly payments.
5. Private spending
The current crisis is also being exacerbated by private spending cuts.
As home prices fall, many people are finding themselves “underwater” on their mortgages.
This means that they owe more money than their homes are worth.
As a result, they are cutting back on their spending in order to try and make ends meet.
This is having a knock-on effect on the economy as a whole and is helping to push us into a recession.
6. Dollar value
Another factor that is contributing to the current economic problems is the declining value of the dollar.
As the dollar falls in value, it becomes more expensive for foreigners to buy US assets such as shares and real estate.
This is leading to a further decline in asset values and is putting even more pressure on the economy.
7 Investment: One of The final piece of the puzzle is investment. When individuals and businesses become nervous about the future, they tend to cut back on investment. This further reduces demand in the economy and makes it even harder for businesses to survive. We are already seeing this happening as businesses close their doors and lay off workers. Sooner or later, this will lead to even more job losses and further reduce spending power. 8. Conclusion: The current economic situation is very serious. The housing market crash is just the tip of the iceberg. Unless something is done to address the underlying problems, we could be facing the second great depression.
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