Kailin
Why was the US housing market booming so rapidly before 2008 crisis? When talking about the financial crisis, people would say "subprime loans", but I am also interested why the US housing market expanded rapidly before the crisis. I did some research, not sure whether the result is right or not. Please correct me if you find anything strange or wrong. It actually dates back to 1990s when the information reform started in the States. The information superhighway became a new growth point at that time, attracting worldwide capital until the Nasdaq index peaked at 5048.6 in March 10th, 2000 and then collapsed in one month(April 14th). It was also called the dotcom bubble, causing a mild recession in the early 21st century. Then the States is no longer a investment paradise. The capital switched to Europe. What is worse, 911 event destroyed the confidence in American economy. And then the US government launched the Iraq war to redirect the attention and rebuilding its economy. However, the budget was greatly overspent. The war budget was 50 billion Us dollars while the States spent 800 billion throughout the six years in Iraq. The US government was in dire need of money, therefore they went to housing market, encouraging the poor people to own a house. People also commented that US was creating another bubble to compensate for the last one. Write about the subprime loans next time. Thank you!
Jul 17, 2014 2:14 PM
Corrections · 6

This is not a correction of English, but comment on the contents of the essay.

 

First, I’d like to summarize the flow of the US economy.

 

Dot-Com bubble

Housing bubble

Expansion of subprime loans(A) -- Housing bubble(B) -- Bursting of housing bubble(C) --

Collapse of US financial market(D) -- Global financial crisis(E)

 

Second, I want to analyze the first sentence as follows:

When talking about the financial crisis(D and E), people would say "subprime loans"(A), but I am also interested why the US housing market expanded rapidly(B) before the crisis(D and E?).


Comment: You mentioned that you want to find the relation of A and B, but I think the relation is only apart of the chain and too simple. I mean, the poor bought house with low-interest loan.


Third, I can not understand following sentence: "The US government was in dire need of money, therefore they went to housing market, encouraging the poor people to own a house."

Comment: I think the US government wanted to stimulate the economy, not to earn moeny (through tax?).

 

I think it is a very interesting topic, and I want to read your next essays.

 

July 18, 2014

Why was the US housing market booming so rapidly before the 2008 crisis?

When talking about the financial crisis, people would say "subprime loans", but I am also interested in why the US housing market expanded rapidly before the crisis. I did some research, not sure whether the result is right or not. Please correct me if you find anything strange or wrong.

It actually dates back to the 1990s when the information reform started in the States. The information superhighway became a new growth point at that time, attracting worldwide capital until the Nasdaq index peaked at 5048.6 in March 10th, 2000 and then collapsed in one month(April 14th). It was also called the dotcom bubble, causing a mild recession in the early 21st century.
Then the States is was1* no longer a investment paradise. The capital switched to Europe. What is worse, 911 event destroyed the confidence in American economy. And then the US government launched the Iraq war to redirect the attention and rebuilding its economy. However, the budget was greatly overspent. The war budget was 50 billion Us dollars while the States spent 800 billion throughout the six years in Iraq. The US government was in dire need of money, therefore they went to the housing market, encouraging the poor people to own a house.
People also commented that the US was creating another bubble to compensate for the last one.
I'll Write about the subprime loans next time.

Thank you!

 

1* you can use present for this time of chronologicla explanation but the rest of the paragraph is in past so it seems a bit inconsistent.

July 24, 2014
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