Because the leverage ratio of American finance is too high, financial leverage doubles the losses of investors. In addition, the subprime mortgage crisis in the United States is also beginning to emerge. Is the American housing ownership rate close in 2004? 70%。 In addition to meeting the normal housing demand, more and more people began to join the ranks of real estate speculation. The rising default rate makes the price of financial derivatives related to subprime mortgage fall.
The subprime mortgage crisis began to spread to the fundamentals of the American economy: the unemployment rate rose and consumption fell. In the last quarter of 2007, the American economy experienced a sharp decline. In July 2008, the financial market in the United States was tense again: investors began to worry that Fannie Mae and Freddie Mac, the giants of the American mortgage market, might be in trouble. ?
However, the problems of Fannie Mae and Freddie Mac are only the prelude to the second high-risk period. In less than a month, many American heavyweight financial institutions were in trouble and the situation turned into a full-scale financial crisis. BNP Paribas, France's largest bank, announced the freezing of its three funds, which also suffered huge losses due to their investment in American subprime bonds. This move led to a sharp drop in European stock markets.
Extended data:
A Summary of the 2008 American Financial Crisis
As early as April 2007, the bankruptcy of New Century Financial Company, the second largest subprime mortgage company in the United States, exposed the risks of subprime bonds. Since August 2007, the Federal Reserve has increased market confidence by injecting liquidity into the financial system, and the US stock market has remained at a high level. It seems that the situation is not so bad.
However, in August 2008, the share prices of Fannie Mae and Freddie Mac, the two mortgage giants in the United States, plummeted, and financial institutions holding Fannie Mae and Freddie Mac bonds suffered huge losses. The US Treasury and Federal Reserve were forced to take over Fannie Mae and Freddie Mac to show the government's determination to deal with the crisis.
A series of sudden "changes" such as Lehman Brothers' application for bankruptcy protection, Merrill Lynch's "commitment" to Bank of America and AIG's emergency shocked all countries in the world. Wall Street's "abuse" of financial derivatives and underestimation of the subprime mortgage crisis eventually brought bitter results.
References:
Baidu Encyclopedia: American Financial Crisis