So I recently read articles talking about the recession of 2008 and how severe it was, but because I have no knowledge on economics and finance, I can barely understand what happened during the recession. I only know that it has something to do with mortgages. Would anyone care to explain the 2008 recession with some sort of analogy? Like in terms of slices of cake or something easy to understand? Thanks.
In: Economics
started a few years before 2008, way back in 2005. banks offered NINJA loans (No Income? No Job? Approved!) because they thought the stock market would kick ass after Bush admin cut regulations. But the stock market did not kick ass, almost no one could pay the banks back, real estate market collapsed & since most people’s money is tied up in their property value.. well… all their money collapsed.
An analogy would be: everyone at the party told the birthday boy that he gets sick every time he eats too much cake. But every 10-15 years the birthday boy forgets, or doesn’t care, and eats all the cake anyways. Then he gets sick and vomits on everyone, ruining the party for everyone 🙂 only way to fix it is have the parents come in and spend money to fix it until it happens again, because money is ultimately made up
Latest Answers