What caused the economy to go bad?

I'm doing a project in my Government class and i need information on the economy and what cause all the job losses and raised prices. I've been having trouble finding that information...help?|||Search on the "Community Reinvestment Act"





Basically it was a government program that forced mortgage lenders to loan money to people to buy homes whom normally wouldn't be able to afford them. This ultimatly led to an massive increase in the foreclosure rate putting a huge stress on banks resultin in them reducing the number of loans they give out which led to business not being able to expand causing an increase in unemployment.|||I believe the cause of poor economic conditions is the mental capabilities of the world, evolution is the cause of the economy going bad. Economics is always the start or the end of the deadly economic cycles of Inflation and Deflation. There has never been a lot of foresight in the passed only fix it after it happens. Saturation of product, new products, two types of occupations one growth with the total population and one growth with the year to year increase in the population and the supply and demand of product. Raising price or inflation is good if it can be controlled and bank accounts compensated. The economic cycles of having only borrowed money in the economy has always been the major reason poor productivity All the money goes back to the bank which is imposable. People are insecure when preparing for their retirement, they are hoarders. Try reading all my questions and answers.|||Mostly the housing market crash. President Clinton (at the urging of Acorn) made it extremely easy for people to buy houses even though they couldn't really afford them by issuing variable rate loans, reverse mortgages, etc. When the interest rate went up, these people could not afford to pay their mortgage any longer, so banks started foreclosing on houses. Now, when a bank forecloses on a house, they lose tons and tons of money because they financed it for, let's say 250,000 and after foreclosing they have to sell it as quickly as possible to get back as much money as possible. So they auction off that $250,000 house for $95,000. A side-effect of this is that neighboring houses lose value. When you buy a house or get your house appraised, they look at similar houses that have recently sold and use that value. So your $250,000 is now worth only $95,000 because of all the other $250,000 houses around you selling for $95,000. When your house is appraised for much less, the property tax goes down, so the government is now getting less money from you every year. Less government money means less money budgeted for schools, street repairs, etc. When banks start losing money, they start making it really hard for everyone else to get money (loans) because they want to minimize their loss. This means less money going around in the private sector. Less money = people spending less money = businesses closing down, government debt, people losing jobs due to layoffs (businesses trying to stay afloat), etc etc etc it just keeps going and going and going. Now look back at the beginning of my post, and who was responsible for this? Who was demanding that "everyone should be entitled to a house"? ACORN. And who was in charge of ACORN at the time?





Obama.





And now you've all made him our leader.





Thanks, @-holes.|||There are business cycles in capitalist economies and many theories about what causes them. The reason you can not find an "answer" is that there isn't any, there is just arguments about what caused this one, and recessions in general. You should probably not talk about " causes" but just describe what happened. That is- there was an unsustainable increase in housing prices, and then in 2006 prices began to fall etc. http://www.google.com/imgres?imgurl=http鈥?/a>|||I think you can lay a lot of the blame on deregulation of the banking and finance industry. Freed from constraints, companies became very inventive in an effort to maximize profits and ended up making very bad choices.



http://en.wikipedia.org/wiki/Enron

http://www.sec.gov/news/press/2007/2007-鈥?/a>

http://www.businessweek.com/magazine/con鈥?/a>

http://en.wikipedia.org/wiki/Bernard_Mad鈥?/a>|||easy.. it's all over the net but the bias and short term memory... gives opinions that are incomplete and inaccurate..





we had a BOOM in the bush administration which wasn't controlled... too much spending and too many projects in many feilds such as development in housing and production of business franchises... along with spending.. loans, credit and other spending wasn't supressed..





we ran out of funds.... now we're broke and got to recover...





it's basic common sense.. too much no moderation.. we go bust.. this is age old wisdom.





look at the crash of '29 (1929) same thing.





we went BUST before the end of bush's administration... soo much production went on.. we lost our grip on spending and in order to catch up you gotta cut projects.. which means jobs are lost.. money is lost and many companies, tax payers... projects... funding available wasn't available to recover and was terminated in many cases... homes lost, banks closing or merging to recover and people sacrafice what they can until the AXE falls.





this has happened soo many times before.. look at the carter administration!