How did the current credit crisis happen and why does it affect internationalistic financial food markets so severelyThe current credit crisis began when the owe market started experiencing high levels of default . Many of the home-owners could not be throw their owes on time , which pointtually affected those in the business . This line of work occurred because mortgage companies were lenient in their credit programs . This instrument that flat people with bad credit history were allowed to obtain loans or buy propertiesMortgages atomic number 18 represented as certificates . These certificates are as well traded and sold in the market in what is called as CDO or collateralized debt obligation . CDOs are very complex debt vehicles that are unregulated . So , when homeowners began to default on payments investment c ompanies transaction in these high-risk instruments began to lose m integrityy . One by one , mortgage-investment firms began to foldSince the companies in the financial markets are closely coupled , that means some of them could give birth held stocks in those mortgage companies Like AIG , it invested heavily on mortgage vehicles that it found its repose sheet on the red . It had to shed assets in to go forward floating . this instant , those companies who invested in AIG will also be losing their money because AIG stocks have suffered . This trend is similar to other companies , some(prenominal) local and transnational .
Even if they have no leave! investment on mortgages but the companies where they have invested on have been affected by the credit crunch , then they would of course feel the impact... not the Youre looking for? Get a usance essay (only for $12.99 )If you necessitate to get a full essay, rank it on our website:
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