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Sometimes , I want to know the cause of the financial crisis. But I cann’t get the result. From network, I see, someone told that, the financial recession is caused by the high estimated real estate. As we know, everyone want to get good life and beautiful future also want to show his or her property to others. Maybe, this is the key for the economy to expand actual value. In the following, I shall analyse the cause in my opinion.|
In America, in the early of the 1980s, many people want to go to America for living they desired the style. So we can imagine that the place is limited but people ongoing. So the local government must to manage to solve the stomach and sleep. Of cause the stomach is easier than living to solve. Because many people want to reside beside the crazy city. I know floor can be high and get many floors. But the high is limited for building to construct. The wide is limited by the government to expand or control. So the house price is gradually lifted by the cooking dealers. That will produce a result that is many people can not afford the price for his house that he or she want to get. Of course, to some money holders, they can buy it. But the high price for real estate is beyond her or his afford.
So, some financial institution initiate to make some loan plan for someone that want to buy building through lending loans. In this way, some people can get house, but he or she must to return a certain quantity every month for several years. That is likely that he will have use the following several years income now. people, whenever is place his side on face. When the soil is out, some financial institution make other encouragement loan plan again. For example, now you have got the house, why not get car? Parts of people have not returned the loans. But he or she desire that life. But where he can get the money. Meanwhile, the sales told them that you can use your house for mortage. You think, the price for real estate is increasing. Your house must be get a high price, if you can not afford the car, you can sell your house for this, but you have salary now. so I think you can afford this. In this fly. Some many people lend much loans.
With the price gradually become high for the consumption, many household can return the loan regularly, so that lead to many bad account for bank or investment institution. In the chain respond, the performance of the bank is very bad. If serious, the bank or investment institution will be bankrupt. Why bankruptcy? There is now cash to current. Result to the finance chain break down. If the performance does not reach target that setting by the predict organization, the list company stock will decrease. Performance will effect the stock . stock is the stock. It can increase much when the performance is good, otherwise not. If the stock in this situation is fall down, the net market value will reduce much for company. In this way, if the company have not cash current to flow, the dead will waiting for it.
In this, the financial crisis happen that leads to recession for the whole industry.