The Subprime Mortgage and its Effects

Seminar paper from the year 2017 in the subject Economics - Finance, grade: A, , language: English, abstract: In late 2008, the U.S. suffered one of its greatest disasters in quite some time, the subprime mortgage crisis. It affected not only the housing market but the whole financial system as a whole. Cheap methods and greed are very possible motivators, leaving lenders, investment banks, and investors bankrupt. The whole system was going to fail from the beginning and could have been stopped or altered to have less damage, and yet only a few were able to see it’s great flaws. This caused thousands, and possibly millions of Americans to go homeless and unemployed. It gave more debt to the U.S. government worsening its ties with different countries. Since America has millions of international businesses and pledges, other countries were affected by its financial collapse. The actions and responses of the government, banks, and citizen themselves helped America to get up on both feet. This paper will explore the subprime mortgage to better understand the reason of its effect and collapse, to help others understand what it is and what can be done about it. Even if it had been almost a decade since the collapse, the subprime mortgages’ effects still affect us to this day. It’s also very likely that another similar event can strike anytime soon, this paper will help those keep a look out for tragedies and systems that he/she could avoid and potentially survive.