How We Hit Rock Bottom

Irresponsibility caused the U.S. economic crisis. People agreed to pay more than they could afford, while banks invested in companies using the money these people could not afford to pay - which resulted in disaster.

The sources that I have utilized discussed the crisis in terms of the housing market, thus I will do the same in this post. 

A mortgage is the money you owe to a bank in order to purchase a house. 

A security, also known as an investment, is the money a bank gives to a company in order to help it start up. 

Congress passed the Gramm-Leach-Bliley Act in 1999, which allowed banks to handle deposits as well as investments...

This caused banks to use mortgages as securities in order to invest in companies. 

Things were looking pretty good at first - this caused more people to buy houses.

A housing bubble occurs when the prices of houses go up due to increasing demand. This happened after more and more people began buying houses. 

The irresponsibility of some people, who bought houses they could not afford, led to disaster as their mortgages, which banks were using as securities, were not paid off. 

Banks then had to pay companies they invested in with their own money, which led to monetary depletion and thus the closing of banks. 

How can we solve this problem and ensure that this never happens again? 

Sources:
www.fotopedia.com

http://www.investopedia.com/terms/h/housing_bubble.asp
- Well known resource about economic transactions

http://www.youtube.com/watch?v=h4Ns4ltUvfw
-Viewed in class