After the Great Depression of the 1930s, the Global Financial Crisis of 2007-2008 comes second in worlds most significant financial dips. The crisis is recorded to have kicked off in 2001 and was substantially caused by the subprime mortgage market in the United States. The financial crisis can be said to have been brought about by the breakdown or lack of trust within the financial system. The use of derivatives contributed greatly to the subprime mortgage crisis. There were not so subtle early warning signs for those who had a keen eye. The United States Treasury and the Federal Reserve had also begun taking preliminary steps although they were not enough to prevent the 2008 financial crisis. The movie House of Cards gives a detailed series of events that led to the Global Financial Crisis as well as the Great Recession.
A house of cards is metaphorical for something that is not built to last. The subprime mortgage plan was designed for the credit challenged, and it was all about making dreams come true. Based on the terms and conditions of the mortgage plan, a lot of people signed up. However, the dreams were short-lived just like a house of cards. Since the beginning, if that particular summer, most of the United States citizens had witnessed their investments shrink and their property values plummet. However, to date, some people still cannot explain the correlation between the subprime mortgages and investment values. Although it sounds complicated, it is rather fairly simple, and House of Cards untangles it for you. After the sweet and tempting subprime mortgage offers, a lot of people ran to their banks to ask for loans to secure the deals. In return, banks lent hundreds of millions of dollars to clients who were not in a position to pay them back in a timely fashion (Jacoby, James, and Jill Landes).
The crisis developed gradually leading to the closure of Lehman Brothers after a year in September 2008. Although the effects of the financial crisis were felt worldwide, there were specific sectors that contributed directly to the crisis leaving some unanswered regulatory questions. Earlier that decade, President Bush had commended the positive change in the economy of the country while addressing his State of Union. Bush went ahead and commented on how the new home ownership was at the highest in 20 years. However, that kind of comments and interest in home ownership did not have the best results. It was hardly a month when the Federal Reserve Chairman encouraged more people to buy homes and mortgage industry to facilitate this through coming up with cheaper and affordable loans (Jacoby, James, and Jill Landes).
Nonetheless, that was the beginning of house of cards that rendered millions of people unemployed and widespread bankruptcies in the world history. Many countries were also pushed to the edge of insolvencies. The crash of September 2008 turned back the world clock to 1929. The amendment of homeownership policy affected the global market a great deal. First, the mortgage firms were very wrong for deciding that virtually anyone could qualify for a home loan like in the state of California. Consequentially, homes started mushrooming everywhere like a house of cards. The banks offering loans did not care enough about the qualifications of the buyers, and this was a huge mistake. In addition to that, it was an era of very low-interest rates and reduced bank regulations. The movie is a good watch for those interested in knowing the events of the Global Financial Crisis of 2007 (Jacoby, James, and Jill Landes).
Jacoby, James, and Jill Landes. "CNBC Special Report: House Of Cards." Msnbc.Com, 2017, http://www.nbcnews.com/id/29163182/ns/business-cnbc_tv/t/cnbc-special-report-house-cards/#.WgShbWiCy00.
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