United States of America (USA) mortgage crisis: course of events, reasons and consequences

In this paper I will introduce the USA subprime mortgage crisis. It is the credit crisis with hit the most powerful economy in the world just a year ago and is still not over despite active FED intervention.
The crisis has evolved to a severe liquidity crisis and created worldwide uncertainty which hampered growth. The actual consequences have been much more severe than anyone could have anticipated. Even the most pessimistic prognosis underestimated the impact on the economy.
This event has been widely discussed and analyzed and this is fully understandable. USA economy is one of biggest ones and this implies that crisis in this country can influence not only USA economy but is likely to effect the rest of the world as well.
Moreover, even though the exact losses still can not be well calculated it is already called the worst banking crisis since the Great Depression of the 1930s.
Even though the crisis stroke just recently it is now clear that the warning sighs could have been traced much earlier. In this paper I will present how the crisis evolved and try to find the likely reasons.
Also I will look through the FED’s actions during the crisis: what were they, did it help, what were the consequences and likely future challenges.
Then I will analyze the consequences of the subprime mortgage crisis and the influence of it to the USA economy as whole.
Finally, I will find out what impact this crisis can have on EU and world economy in a few sentences.
What have happened?
The USA subprime mortgage crisis officially have started in August, 2007. Stock prices all over the world were coloured in red. Citi’s work suggests that a typical fall in world share prices in response to a US recession is in the range of 20 per cent to 30 per cent....

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