The reason for the crisis Essay Example | Topics and Well Written Essays - 500 words

The reason for the crisis - Essay Example It can be said that the United States government failed and one of the reasons why the crisis happened is on the policies that they had engaged. The â€Å"easy money† policy can be said to have contributed to the U.S. crisis but cannot be blamed solely for what happened. â€Å"Easy money† policy created the U.S. housing bubble that can be said to have a very important effect on the U.S. economy. The United States housing bubble is an economic bubble which affects many parts of the United States housing market. In early 2005, the housing market reached its peak. There has been unprecedented rise in the average price of housing globally. There was a huge price hike of the housing. Though there were intermittent cooling effects of prices, these were not enough to off-set the price hike. This can be said to have contributed to the financial mess of the United States. Any collapse of U.S. housing bubble has a direct effect not only on home valuation but also on the nationâ⠂¬â„¢s mortgage market such as real estate. The lower interest rates for the long term, fixed-rate mortgage also contributed to the U.S. financial crisis. I dissent about how Mr. Greenspan blamed the outside forces, which the government cannot control, as the reason of the U.S. financial crisis. Interest rate is a very influential and dominant factor in economics.