Caused by the sub-prime mortgage crisis in 2007, the American economy has experi

Question

Caused by the sub-prime mortgage crisis in 2007, the American economy has experienced the largest downturn since the Great Depression. After years of recovery efforts, evidences show that the US economy is gradually coming back to the right track. GDP growth rate is rising, the booming real estate market, lowering unemployment rate, and so on. Now, if we take a look back to the whole story, we see some painful pictures: banks went to bankruptcy, people lost their jobs and were forced to sell their houses, or even risked their life. But we also see some people are still able to continue to enjoy the life standard just like they used to, and all they did was making the rational & appropriate investment decisions even during the time of economic recession.

So please share with the class here that: what did you learn from the recent economic crisis, from the perspective of investment? You can tell the stories you witnessed, successful/unsuccessful cases regarding investing in the recession, or any opinions you want to share. You can also use financial or economic data to support your idea, just remember to cite.

Explanation / Answer

Normally what people do is they earn during week and spend their earnings during week end.As a resut they have to rely on loan for buying home. During crisis this people lost their job as a result were unable to repay loan and lost their house too. On other hand there were some people who kept part of their earning aside as savind and put it in bank. slowly their wealth grew and during crisis these people were able to survive. During crisis the prices of home went down. This was great opportunity for them to buy the house and thus they lead normal life. Thus through savings alone they were able to survive the crisis as they had their fixed source of income in form of interest income.

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