Credit Crisis Explained 11 minute video
This video shows in laymen's terms how we got where we are in the credit industry.
Before you watch this video, write down what you know about America's credit crisis (as it relates to mortgages).
After watching the video, with a partner, write a 1 paragraph synopsis of what has caused the credit crisis and how another crisis can be avoided in the future. This needs to be typed and turned in by Friday.
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The credit crisis has been caused by home owners, bankers, and investors who are in debt. The bakers buy mortgages from the investors so they can invest money, until the home owners sell their mortgages. The houses then go up for sale, and there's no money coming in for the bankers, so they try and sell the worthless mortgages to the investors. Some don't buy and others do. Eventually all are left with useless investments and a whole lot of borrowed money. They can't pay it back, so they are in debt and somehow can still borrow money to try and get out of their debt. This is what has cause the credit crisis. To avoid another crisis in the future, banks should use the money they EARN to but investments instead of borrowing so much money. Investors should be smarter about the money they lend out and investments they buy from the banks. Everyone should stop borrowing so much money and we won't be in debt.
ReplyDeleteThe credit crises has been cause by various things the past couple decades. Home owners, bankers, and investors whom are in debt. The bankers buy mortages from their investors, so they can attempt to invest money, but if the home oweners sell there mortgages then the bankers are out of money. What happens is the houses go up for sale, and they dont have any money coming in from the bankers, then they try to sell to the investers. Some end up buying some dont. What eventually happened is that they have investments they cant use and alot of borrowed money. then they have to borrow more money to try to get out of that one debt. This is how the credit crisis has started. To avoid this in the future I think banks should get the money they earn and use less investments. Investers should learn to become smarter about there money and only lend out and invest what they buy from banks. Everyone should try to earn money instead of borrowing!
ReplyDeleteDebt is the start of the credit crisis, caused by home owners, bankers, and investors. Bankers who buy mortgages from investors so the can invest into it until the house is sold, but there isnt any moneys comin in. Ending with everyone barrowing money that they cant pay back which puts them farther into debt. In the future banks should use their own money instead of barrowing it.
ReplyDeletei don't know to much about this credit crisis nor do i care. it started cause of bankers taking more then they had and pretty much society's greed. If you wanna fix this then go to somewhere less fourtanate then America and then that savings to spending rate will increase to the savings side
ReplyDeleteThe credit crisis is a world wide issue that involves sub-prime mortgages, collateralize debt obligations, frozen credit markets, and credit default swaps. The credit crisis affects everyone, it brings two groups of people together, Home owners and investors. The home owners represent mortgages which represent houses, while investors represent their money which represents large institutions, like pension funds, insurance companies, mutual funds, ect. Both the homeowners and investors are brought together by the financial systems. It all starts when then home owner gets a down payment and contacts a mortgage broker who connects to a lender, who gives the home owner a mortgage, which then the broker receives commission. The lender recives a call from an investment banker who then buys the mortgages and puts it in a box, for ever mortgage he buys he gets monthly payments from the home owners, when he collects enough money he can pay off all of his debt and still have a profit.
ReplyDeleteThe credit crisis all started by a guy names Allen Greenspan who lowered interest rates to 1 percent, on September 11, which investors then say no thanks, but Banks borrow money from feds for only 1 percent. Because intrest rates are so low it causes banks to go leverage crazy. Leverage means borrowing money to amplify the outcome of a deal, someone borrows money then invests in somethings until they get more money then they borrowed, then they sell their investment and pays off their debt, this is how banks make their money.
Partners, Cassidie Predmore and Landon Swartwood
The Credit Crisis is caused by a build up of debt, brought about by bankers, home owners and investors. The bankers buy mortgages from investors, but the homeowners sell the mortgages, so the bankers are left with alot of borrowed money and useless investments. Since the bankers cant pay off their debts, they borrow even more money to help pay it off. To avoid all of the Credit Crisis in the future, people should learn to value their own money, and only invest in things that they can pay off to avoid becoming overwhelmed with debt.
ReplyDeletePartner: Katie Fontana
The Credit Crisis is caused by bankers, investors and home owners brought up from debt. Bankers by mortgages hoping to end collect the money they invest hoping that people will end the payments and the bankers will reseave the money from the mortgages. Bankers then are in trouble and they have to invest in more money in mortgages to pay off the old debts. In the future i think banks should be better with handling money and they should not invest in so much money when they do invest........Casey and Harley
ReplyDeleteThe only thing I knew before about the credit crisis is that it was making a lot of big banks on Wall St. go bankrupt and people are losing a lot of money and jobs. I learned that there are bankers and investors that worked to get as much money as possible from the American people. The investors take money from the home owners to get mortgages, then sell it to bankers for more money. This whole cycle goes and gets more and more risky, but the investors and bankers make more money while the home owners lose their money. Eventually the American people cannot afford to make payments on their homes and foreclose. With no money coming into the banks, they lose a major amount of money and go bankrupt.
ReplyDeleteI knew nothing of the credit crisis, except the fact that it was caused by investments. The credit crisis was caused by bankers, homeowners, and investors. The investors usually went to the federal reserve for safe investments until the rate of return was reduced to 1%. The banks then went crazy with the return rate and went crazy with leverage to make them even richer. The homeowners then got the short end of the deal which caused them to pay mortgages on their houses, which eventually went bad when other homeowners lost their houses because they were unable to pay their mortgages. Which then lowered the houses with good payments so those homeowners moved away because their houses weren't worth the money. This in turn made it so the investors couldn't invest in the bankers so the whole system froze. The whole credit crisis could of been avoided if the bankers and investors didn't get greedy.
ReplyDeleteCredit crisis is caused by homeowners bankers and other people that are in debt. It is caused by investments and i don't know much about finacial stuff.Investors usually went to the federal reserve for safe investments until the rate of return was reduced. The investors couldn't invest into the banks so the system went hay wire.
ReplyDeleteThe credit crisis was caused buy homeowners bankers and investors. It is caused by investments, I dont know too much about financial stuff. Investors usually went to the federal reserve for the safe investments until the rate or return was reduced. The investors couldn't invest into the banks so the system failed.
ReplyDeleteThe credit crisis is mainly caused by bankers, investors and home-owners. Bankers buy mortgages from investors in order to create a flow of money to use for investors to put their money into. The money which home-owners pay goes straight to the bankers which is then used for the investors. When home-owners miss a payment on their mortgage, the money used for investors begins to tighten. This is when Bankers will kick people out of their home due to a certain number of missed payments. As people lose their homes, and their houses go up for sale thus begins the drop in value of homes. The remaining people living in their homes question the value of their own home as the ones around them decrease in value making them sell their homes as well. Now that the bankers have no mortgage money coming in they lose their investors who are investing money and cannot pay back the money they borrowed to begin with.
ReplyDelete