The Reaction Of The Housing Market In Big Short

The housing market crashed in 2008, and was an event that that has marked the United States today. “Mortgage crisis. Credit crisis. Bank collapse. Government bailout. Phrases like these frequently appeared in the headlines throughout the fall of 2008, a period in which the major financial markets lost more than 30% of their value. This period also ranks among the most horrific in U.S. financial market history. Those who lived through these events will likely never forget the turmoil” (Kosakowski). This happened because of the mortgages that the government thought the people could pay, but they actually didn’t and since they did not had money, the government started to take their houses, and became homeless, and lost many things. 

People may know to ask if this could happen again in 2019, but there's is a probability that could happen in the future, but in 2019 the probability is really low. “we have a president who favors higher defense spending, lower taxes and continued entitlement growth” (Ponnuru). Trump is using the expansionary policy, in his presidency meaning that he is reducing taxes, so people in this case have more money for themselves in their pocket.

Trump is doing this because after the tremendous market crash of 2008 people were left with no money in their pocket, so he is trying to fill these people that lost all their money and literally were left with nothing, no house, no retirement savings, no jobs, etc. To reconstruct all these things and stop suffering from this event, something really important is the value of the dollar. The value of the dollar can affect the people because if the United States economy has more than 2% of inflation, the economy can lower and make it slower. ”Some amount of inflation (usually around 1 to 2 percent) is a sign of a healthy economy. If the economy is healthy and the stock market is growing, consumer spending increases. This means that people are buying more goods, and by consequence, more goods are in demand” (Tilokani). Government institutions are working and putting a big effort, to make the dollar keep having it’s value and that in some point, it doesn't lose the value it has. It is really important that the dollar keeps its value, to prevent inflation and further economic downfalls. Something that could make a repetition of a market crash is that people use the money for personal things and there's little investment in the country and this can make the economy grow fast in a short period of time. When Contractionary policy needs to be implemented it is going to be very hard, to take money to the people meaning it is going to take a lot of time and could lead to the United States loses its economic worth. Something that can be done is to manage the US dollar as best as it can be, assure that the dollar value can be used internationally, to keep commerce international relationships.

I think that my classroom government Direct Democracy does have the ability to fix this type of issues better than my group's competitor, because since we are a direct democracy we work for decisions together, so everyone's voice can be heard. This way we can make people vote, to know what our citizens think, or give us their opinion and ideas of possible solutions to fix this problem and prevent another market crash. In the other hand, a Confederation doesn’t take in count the voice of all their citizens, just of their representatives.

To this day, government officials have not put in any regulations that have made a drastic help. They need to put attention to the federal debt and that is is increasing fast. With such a fast economy, inflation rates can go up. The fed should keep an eye on inflation rates and manage them wisely. So, interest rates need to be managed wisely in accordance. Trade policies affect worldwide economy, for example China and the United States. “The U.S in 2013 as the largest trading nation in the world. China accounts for a significant proportion of global trade in natural resources such as aluminum, coal, copper, and iron ore “ (Pines).