The year that was 2008 - the Housing meltdown
The biggest thing that happened in the year 2008 was the housing market meltdown and that caused a hell lot of issues for everyone and it had and impact on the economy as well the outcome of the US elections (well that is debatable :-)
The foundation of the crisis
When the going was good then every one at that time starting lending to every Tom Dick and harry and hence gave some absolute good money away to folks who do not have the ability to pay.
Small business companies mushroomed overnight who were ready to intermediate and get housing loans for an endless stream of buyers. Now whether these were worthy or not is the question.
On the other side good and smart investment bankers started packing these loan receivables into the what they call as CDO where the underlying receivables of the loans was the main security for the firm who bought these CDO's .
Update 2009 : If you need to know more about Short refinance then here is the excellent resource for HAFA Streamline Short Sale Program
Everyone Got greedy and that was the nemesis.
Everyone got greedy and nobody wanted to be a whistle blower even though there were firms who absolutely never wanted to get into this business but seeing how much money other firms they went right ahead.
Even the rating agencies got ahead and never checked if this all thing had the basis and in fact gave AAA ratings to all the spurious looking bonds.
hell Broke loose
Then one day all hell broke loose as there were no way for a lot of people to repay their loans as they had taken home loans to buy property for investments and there were no buyers for the property.
the real estate market went bonkers and in turn all CDO's turned into worthless sheet of paper.
There was no one who knew how much they lost.
Look at AIG they thought wanted a bailout to the tune of $20 billion but then they were bailed out at $75 and then they finally settled they wanted another $75 billion and even now that final is not final.
The year 2009 is appearing to be not rosy picture from president Barack Obama being put into the presidential chair. What him and his team will do is not known at this time.
here's hoping Obama and Summers and several others bring some light and cheer into the houses where jobs have been lost.
Tip: For some humour during these tough times enjoy some recession humor
Cheers and welcome to year 2009. Welcome year 2009 from Ritiesh and here is hoping for a very good economy.
Monday, December 29, 2008
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