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Historic Inqury Paper RevisedEC

Historic Inqury Paper RevisedEC

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Published by Eric Camarata

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Published by: Eric Camarata on Apr 27, 2012
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Camarata 1
Eric Camarata02 February 2012Mrs. CarusoEnglish 1102Historic Inquiry Paper: The Great RecessionOver the course of the past few weeks I have come to know more and more about the
 
Great Recession and, its causes and effects on people living through such a hard time. The GreatRecession was brought on by a series of loans and
 
deals made by mortgage companies andlenders. The problem was companies were giving out more money than they actually had. Insome instances the companies were borrowing in ratios of 30 to 1, meaning that they only had $1for every $30 they gave away
1
.(clearFinanceBlog 1) Money was becoming a scarce resource, thefear of a recession was lingering in the back of 
 
 people’s minds;
unemployment was the first thingthat would hit home. When people begin to lose jobs everyone becomes fearful of the fact of arecession. Americans have a problem that it only matters when it affects them. The GreatRecession caused a period of turmoil and disperses among the United States
 
, many Americans
 
lost everything.One of the reasons why people were losing so much money during the Great Recessionwas because flipping houses became a profitable
side business. In early 2000’s and to the
pointleading up to the Great Recession, flipping houses was a great way to make money because of the thriving housing
 
market
in America in the early 2000’s
. Flipping a house is when you buy acheap house and fix it up to then sell it again for more money.
2
This became a cause to the GreatRecession, because many families and companies had to take out loans to pay for the houses thatthey wanted to flip.
 
It became a problem because many of the families and companies had intentto pay
 back the loan but if the house won’t sell then they don’t have the money
to pay back the
Comment [E1]:
I need to change this to properMLA
Comment [E2]:
Needs a period at the end.
Comment [E3]:
I can take this out or put it somewhere else.
Comment [E4]:
deals, made
Comment [E5]:
minds.
Comment [E6]:
I could take this out unnecessary
Comment [E7]:
time
Comment [E8]:
market. Delete the rest of thesentance
Comment [E9]:
this beacame
 
Camarata 2
loan. This caused the houses to foreclose and become property of the government. A fore closer
is when you can’t pay your mor 
tgage and the government has to step in a reposes the home. Thefamilies still owe money for the loan so they have to sell what they do have and they becomebankrupt. This became a huge problem in late 2008, but this was not the main cause of the GreatRecession.The banking system in the United States is just a big propaganda market on trying to getpeople to bank with them so that they can use that money to invest in: stocks, other businesses,and any other subjects they can make money off of. The banking system has a series of back-upsthat will help the banks and other companies in case the companies need them because they runout of money or get in a slum
. The order of the reserve bubble is: Central banks’ gold reserves,
MO (paper money), traditional banking assets, shadow banking assets, other assets, bail-outmoney.(clearFinanceBlog 2) When banks went under it was because they were giving out tomuch money to private companies or families for flipping houses,
 
vacations, or car. Theeconomy before the Great Recession was great which could justify the reasoning for all the loansthat were being given out. Banks were becoming very prosperous, and banks would give outmore money than they had in their reserve this would make the banks have to get money fromthe next level in the reserve if they
 
were to go under.The Great Recession was said to have ended in 2010 but we still feel the effects today.The average income of a family in 2010 was $49,445 in 2007 the average income for a familywas 52,823. (opendemocracy 1) This was a huge decrease for family income for just three yearsto have gone by. The Great Recession was the biggest hit to United States financial system sensepost World War II. The GDP of the United States in the third quarter of 2008 was equal to theGDP of 2006; it
 
dropped 30 points in 2008. The Great Recession has affected hundreds of 
 
Comment [E10]:
Because of the way that thegovernment is set up houses had to be foreclosed.
Comment [E11]:
I should explain that at thattime it was okay because the market was so well.
Comment [E12]:
Also I need to clarify that thiswould be the start of the great Recession.
Comment [E13]:
Here I should show that beforethe great recession family income was on steadyrise.
Comment [E14]:
I could clarify that 30 points isa lot!
 
Camarata 3
families, in most cases the debt was manageable and it was just a matter of finding financeoptions that would allow the person or group of people in debt to get back on their feet. Thebanks came up with a system that would be used if deals were going to made between twoparties these systems were called derivatives. These derivatives were beginning to be monitoredby the Commodity Futures Trading Commission which ultimately lead to the destruction of thesystem of back-ups and the U.S. economy. (opendemocracy 1) some cases though an extreme tothe situation, riots broke out to revolt
 
against the recession.
3
 Families were greatly affected during the period after the start of the Great Recession.Working class Americans got hit hard because of the decrease in jobs available after the
recession in the late 2000’s. The IMF started in September 2010, the IMF was a group of people
that were looking out for Americans, and they knew that with the recession the number of jobsavailable in America would fall. They planned to help out by getting more social safety nets forunemployed Americans. By applying more safety net for the unemployed when people lose their job or need money to help their families they will have someone or some place they can turn toand feel safe knowing the wont be forgotten. The Great Recession did not affect everyonethough, some people went the year of 2008 without hearing a word about it. One American,
 
Timothy Geithner
, said “
I personally believe that there's going to be a good case for the
 
government preserving some type of guarantee to make sure that people have the ability toborrow to finance a house even in a very damaging recession. I think there's going to be a goodcase for that.
 
4
(brainyQuotes, 3) The mind of an upper class figure would see the GreatRecession a mere stepping stone in their path. Although the Great Recession had a huge impactin working and lower class Americans the upper class failed to feel what happened. The facts are
Comment [E15]:
Showing that it
wasn’t
as badas say the great depression.
Comment [E16]:
Here I could give moreexamples of those riots.
Comment [E17]:
I could explain how there weremultiple companies that were started because of the great recession the IMF just be one of the morewell known.
Comment [E18]:
I could explain that this is aquote from a real person that lived through thegreat recession and knows that it can ruin yourfuture.

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