Being In Debt Is Bad For Your Health

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Money & Happiness

The Financial Crisis: Getting to the Roots

by Laura Rowley


It's clear that the economy is in for a rough ride over the next two years -- and possibly longer. As unemployment rises and the credit markets tighten further, consumers will rein in their spending, leading to more layoffs and another downward cycle. Housing prices may continue to slide, and lines of credit shrink further.

This tumultuous week, amid the Lehman Brothers bankruptcy filing, Bank of America's takeover of Merrill Lynch, and the AIG bailout, Treasury Secretary Henry Paulson suggested a bright spot in the mess. The federal bailout of the government-sponsored entities Fannie Mae and Freddie Mac will make mortgage credit more widely available, he said, which could help stem the housing slide.

"The root of the problem lies in this housing correction, and until ... the biggest part of that is behind us and we have more stability in housing prices, we are going to continue to have turmoil in the financial markets," Paulson said. "That's why the actions we're taking with Fannie and Freddie are so important...that is the key to turning the corner here."

Where It All Began

http://finance.yahoo.com/expert/article/moneyhappy/108581