Ali Alshaikh
Econ 111
11/30/15
Discussion Paper #2
The Causes of The 2008 Financial Crisis
According to Wall Street Journal six members of the Financial Crisis Inquiry Commission
sees that there are three reasons that caused the financial crisis in 2008, the first reason was
the housing bubble and the government intervention in the housing market. Second, are
Wall Street and its influence in Washington and the greedy bankers manipulated the
financial system and politicians to take advantages of mortgage investor and homeowners
to make personal benefits. Third reason is the global economic force and the U.S policy
and supervision.
Mr. Thomas provided some factors that led to those three reasons, some of these factors
are: the credit bubble in the U.S that started late in the 1990s, which led to excess of
liquidity, which in many cases was confusing because some of the borrowers weren’t able
to payback. Another factor is firm failures and mergers and restructurings in September
2008 caused a financial shock and panic, which led to decrease in trust in financial system
and caused a financial shock and panic in the society and severe contraction in the real
economy.
According to Mr. Wallison article, he sees that the cause of the 2008 crisis is the
government’s extraordinary role, since the government is partially part of the capitalist and
the free market system.
The writer argue that the housing policies of the US government during the Clinton and
George W. Bush administrations were behind the crisis as well as the privet sector which
