The American real estate bubble - Trigger for the biggest financial crisis in the last century

Vasilka Gaber, Stevan Gaber and Ilija Gruevski

Perspectives of Innovation in Economics and Business (PIEB), 2014, vol. 14, issue 1, 21-27

Abstract: In the last years the world was faced with the worst economic crisis since the 1929-33 period which led to a significant decline in the global economy, tumultuous aftershocks of the financial and the real sector, significant shaking of confidence in financial institutions and the stability of the global financial system. This paper focuses on the crisis that began in the summer 2007 in U.S. when increased delinquency on the secondary market for mortgages created turbulence in the secondary market of securities covered by residential credits. The turbulence was then expanded to other markets securities, money market, financial institutions, with knock-on effects that are transmitted to all market segments, by involving the real sector. Under its global effect, this crisis was characterized as comprehensive, complex and global. This paper intends to detect the origin of this crisis and to analyze the potential government mistakes that led to the current world economic state.

Keywords: Financial crises; regulation; securities; real estate markets; government (search for similar items in EconPapers)
Date: 2014
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