Anonymous
Anonymous asked in Business & FinanceInvesting · 1 month ago

was the real reason for the 2008 financial crisis due to banks intentionally crashing the stock market?

causing mass layoffs of jobs, and THAT is why people could not pay their loans, causing mass foreclosures and sell offs, and that is why the prices of housing went down so much due to LACK OF JOBS, due to STOCK MARKET CRASH?

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  • Who
    Lv 7
    1 month ago

     Nope

    the crash actually started in 2005 - ir only came to a crisis in 2008

    The reasons are easy to understand IF you knew what was happening in the housing and bond market in 2002-2005

      (the trigger was that people could not pay their mortgages (cos they had overborrowed) and that started to happen in 2005. THAT led to a crash in the bond market for bonds backed by mortgages or loans (such as credit card debt)

     It just took 3 years for the financial mess to unwind

    NOTE - it WASNT the mortgage defaults themselves that caused the crisis . If it had stayed there then yes they would have been a crisis, but a relatively minor one - IT was the fact that millions of what were actually "bad" loans had been bundled together to create bonds that turned a crisis into worldwide financial armagedon. And it was only the result of  the actions of many governments that prevented a total collapse of the financial system (i.e money would have become worthless because NOBODY would have been able to trust that the money they had would hold its value from 1 day till the next.

    (in the UK the 2nd biggest bank in the UK came within 20 MINUTES of collapse

     But if you DONT then explaining it would take far too long (cos it would have to be explained in simple terms for you to understand)

    (If you really want to know then read the book "the big short" or watch the film of the same name

     BUT BE WARNED - most likely you will have to read the book several times before you understand what its telling you

  • Anonymous
    1 month ago

    The crash was caused by U.S. Senators, U.S. Representatives,  banks, real estate brokers  and appraisers who deliberately conspired to defraud the FDIC.  Not one  of these dirty bastards spent one day in prison.  All of them kept the hundreds of millions they stole.  Both Republicans and Democrats.  Some of them even publicly admitted all the dirty tricks they pulled in filmed interviews which still exist.  Look up the story of CDOs on line.  That's Collateralized Debt Obligations.  They created fake mortgages for dead people, drunks and druggies off the street, cartoon characters, even dogs.  A realtor in LA even bused in all the old folks in retirement homes and had them sign off for homes said to be worth millions.   Appraisers helped by assigning huge value to property that either did not exist or was nothing more than a junk pile.  Then they sold off all the mortgages and kept the money.  It is still possible to publish all their names and list the crimes they committed.  Don't hold your breath because the people in Washington today are just as dirty and just as dishonest.

  • 1 month ago

    No. It was the banks themselves that lowered their lending standards and issued a lot of bad loans. All those bad loans eventually came back to haunt the banks once the housing bubble was over. 

  • kswck2
    Lv 7
    1 month ago

    When banks started writing huge mortgages to people that couldn't afford them, I sold all my bank stocks, since this just didn't make any sense to me and I knew Judgement Day would be coming. And as far as I am concerned, if I could figure it out, those bank executives that didn't or couldn't, all belong in jail. I mean, in what world does a bank write a $350,000 mortgage to a day laborer that makes $35,000 per year and is trying to buy his first house for him, his wife and 6 kids?  

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  • 1 month ago

    No.  The crisis started before the stock crashed.  The price of housing already went down, before the stock market crash.  The stock market did not crash until after the price of housing had already gone down.

  • 1 month ago

    No, it started because the Democrats wanted fair housing so the Republicans retailiated by creating Predatory Lending. Then the rest. And for the record, Obama took office January 20, 2009 and saved the economy from its freefall. 

  • ennui
    Lv 7
    1 month ago

    No. It began with the subprime mortgage crisis.

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