Global Financial Crisis - Subprime mortgage crisis 07-08

The subprime mortgage crisis is an ongoing financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the United States, with major adverse consequences for banks and financial markets around the globe.

The crisis, which has its roots in the closing years of the 20th century, became apparent in 2007 and has exposed pervasive weaknesses in financial industry regulation and the global financial system.

Approximately 80% of U.S. mortgages issued in recent years to subprime borrowers were adjustable-rate mortgages. When U.S. house prices began to decline in 2006-07, refinancing became more difficult and as adjustable-rate mortgages began to reset at higher rates, mortgage delinquencies soared. Securities backed with subprime mortgages, widely held by financial firms, lost most of their value. The result has been a large decline in the capital of many banks and USA government sponsored enterprises, tightening credit around the world.

The subprime crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. This crisis throughout the global financial system, Financial crisis of 2007–2009.

The subprime crisis has had a number of adverse effects on the overall American economic situation.
U.S. GDP contracted at a 6.2% annual rate during Q4 2008.

In the 12 month period ending in February 2009, the number of unemployed persons in the U.S. increased by approximately five million.There have been significant job losses in the financial sector, with over 65,400 jobs lost in the USA as of September 2008.The U.S. unemployment rate climbed to 8.1% in February 2009, the highest level in 26 years.

Declining house prices have reduced household wealth and the collateral for home equity loans, which is placing downward pressure on consumption.

The tightening of credit has caused a major decline in the sale of motor vehicles.
Between October 2007 and October 2008, Ford sales were down 33.8%, General Motors sales were down 15.6%, and Toyota sales had declined 32.3%.There is an ongoing global automobile industry crisis, and calls for some form of government intervention


Ref:http://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis