week 9

    My father and I talked about the recession in 2008. At the very beginning, banks offered people or company to lend money in a very low interest rates. The banks eventually bust up because they found out the properties' actual value is much lower than what they had paid for. The land price fell. Not only did the banks disintegrated but also the mortgage-backed securities. Also, people stopped buying houses, and the economy finally collapsed. The same thing happened in Japan, too. Stocks and speculation in land led to bubble economy. In addition, Inflated land price and low interest rates result in excessive loan. In order to bring the economy back to normal again, the government adjusted the interest rate into a much more higher one. However, the situation didn't get better and consequently came to debt crisis.