Reaction Paper on “The 2008 Financial Crisis- Five Minute History Lesson

Name: WILFREDO Y. DURAN JR. Total Points: /50

The video is a portrayal of the financial crisis the world had underwent in the year 2008. Although
the entire story is brief, it is concise and informative narrative o what took place during the crisis.

The 2008 financial crisis was an epic example of recklessness and laxity of the world's policies on
mortgages. It was sowed by the financial predators who only considered their own interests. The
September 11 attack was however one of the contributors of the said crisis.

The crisis was the aftermath of all of flawed policies on mortgages. The lenders, which include the banks,
lends too much to their borrowers, even though, those borrowers have no capacity to pay for their
loans. The Fannie Mae and Freddie Mac are the mortgage companies who mostly lend to the borrowers
who want to have their dream homes.

The laxity of the mortgage policies resulted into bubbling of the housing loans. This resulted to the stall
of the value of the houses. The mortgagor had then to pay for the prices of their homes at high cost,
while the value of their homes stalled.

The problem had domino effect to the entire sector of the economy. Giant banks and companies
collapsed, and the Lehman Brothers, the world's leading financial investor went bankrupt. This
eventually led to the stall of the entire world economy.