The last financial crisis that began on 2007 affected most sectors of the economy. It affected the housing sector, agriculture, motor industry, banking industry among other and the result was closure of many businesses, reduction in the consumer and decline in the global economy hence making it the worst financial crunch since the great depression that occurred in 1930s.
As Rubin puts it, “the sharp mid-decade run-up in interest rates that burst the bubble and caused the collapse in U.S. housing prices” (Rubin), thereby making the prices of the housing began to drop since this was preceded by increased loan and rise in long term increase in the prices of housing. The bursting of the housing bubble in theUSeconomy subsequently made the interest rates to rise thereby making it difficult for borrowers to service their loans. According to Carbaugh “By 2008, theUSeconomy was falling into severe recession.” (Carbaugh, p.255).
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