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Debt Relief – Insolvency – Bankruptcy Information » Bankruptcy Help » What are the events that led to the current state of the financial market?

What are the events that led to the current state of the financial market?

Over the last several months the world financial system has been in a state of great turmoil. Dozens of banks-including some of the leading financial institutions-have been forced to declare bankruptcy.

While the solutions to the current crisis are far from being certain, its underlying causes are becoming apparent.

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2 Responses to "What are the events that led to the current state of the financial market?"

  1. marinesrock says:
    Here’s the answer. After you watch this watch part 2.

    http://www.youtube.com/watch?v=-wFFCtx7UhI&feature=related

  2. CrustyCurmudgeon says:
    To summarize marinestock’s excellent answer:
    Greed
    Esoteric securities such as derivatives (wagers on the direction and extent of market movement).
    Credit default swaps that insured against default on mortgage loans.

    All of these, along with the low quality of the sub-prime loans themselves, trace back to the rush to deregulation that began in the Regan administration (evidenced by the Savings and Loan crisis during that time). Deregulation became a Cannon of the Republican Party, and has been pursued by that party since that time.
    It would really hurt me if the Secretary of the Treasury began to buy Credit Default Swaps and Mortgage Related Derivatives as part of the $700Billion bailout legislation.

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