US Financial Crisis vs. Economic Crisis

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Executive Summary

The U.S. economy is currently in its worst crisis since the Great Depression. The crisis began in the home mortgage market, particularly the market for so-called "subprime" mortgages, and is spreading beyond subprime mortgages to commercial real estate, junk bond business, and other forms of debt. Total losses for U.S. banks could reach the highest one-third of total banking capital. The crisis has led to a sharp reduction in bank loans, which in turn is causing a severe recession in the U.S. economy. This paper analyzes the underlying causes of the current crisis, it is estimated how the crisis is likely to be, and examines the government's economic policies so far (both by the Federal Reserve and Congress) to address to the crisis. The final section makes recommendations for government policies are more radical than the left, should promote and support in response to this crisis.

Table of Content

Introduction 3

The current crisis 4

Bank losses 6

Government policies 7

Federal Reserve 7

Congress 9

Nationalize the financing 12

Conclusion 13

Work Cited 15