America’s current economic downturn continued for so long, than many expected. Within one year from the current 9.6% unemployment rate dropped to 8% or less, little hope.

The origin of the recession in the real estate bubble. As financial institutions real estate mortgage loans can be packaged into securities for sale and profit, the consumer is allowed to be the case with no down payment buyers to drive prices up. When the housing and stock prices fall, financial institutions take huge losses to consumers and producers that can not provide sufficient liquidity to meet the needs of their purchase necessary.

As financial institutions collapse, recession followed, increased unemployment, decreased consumer ability to pay. Many buyers who were unable to continue monthly mortgage payments to the bank had to give up ownership of their homes, the number of 310 million people in 2009, 2010, rose to 410 million people. In that 410 million people, 350 million people in the house would be creditors to recover 60 million people will sell low-cost housing. Creditors to allow property owners themselves to sell low-cost housing is to eliminate from the premises and then sell the funds. It is estimated that funding of approximately $ 75,000 per household. Relative to the beginning of 2009 a total of 50 million sets of mortgage housing, loss of ownership of the homeowners, whether it is 2010 4100000 or 2009 3100000, the number is staggering.

Real estate market in China, especially Shanghai and Beijing markets, in recent years, very active, so a huge demand for rapid price increases. But China did not happen like the U.S. real estate bubble, the future is unlikely to happen, the reason is the economic system of two different countries: China’s financial institutions like the United States will not be packaged into mortgage securities arising financial risk; Chinese consumers do not have sufficient down payment in the case can not purchase; the Chinese government always careful attention to the real estate market, the Government has taken various measures to control the real estate market, such as raising the second suite down, not third Suites provide consumer credit to buy housing on the two-year resale tax and so on.

When the real estate bubble began, U.S. financial institutions and consumers is how it came to be involved? 20 years ago, financial institutions will not engage in such high risk securities investment package, consumers will not purchase no down payment. Behavioral change on this market, there are many interpretations. Some people think the Government should bear the main responsibility, because it does not fully and effectively monitor, including investment banks, financial institutions. By Fannie Mae, the government guarantees to provide consumers with low cost, enabling consumers to buy more property. These so-called misconduct prompted the U.S. government has recently developed a new financial management system, set up a new agency to protect consumers. There is also suggested that financial institutions and consumers should take responsibility themselves. But no matter who is to blame the economic downturn, the Government should take proper measures to deal with.

To prevent future financial crises and economic recession immediately from the current U.S. government to take measures to cope with these hard to conclusion. The 30s last century, the Great Depression prompted the Government to place the policy changes to increase government spending in response to insufficient effective demand, social insurance and unemployment insurance system has been established. But recently a severe economic downturn was due to “system failure” caused the Great Depression of the last century, after 30 years of preventive legislation does not foresee such a “system failure.” The response to the current economic problems and the development of laws, not necessarily solve the economic problems occur in the future. Therefore, we also need to deal with those who are now ready to unforeseen economic problems.

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