This is the VOA Special English Economics Report.
look back at this year's bad economic news in the United States. Economic
growth was expected to slow in two thousand eight. Housing prices had been falling in the United
States since two thousand six. But few
economists predicted the financial collapse only a few months away.
Yet, Nouriel Roubini, a professor of economics at New
York University, did just that. In two
thousand six, he told economists at the International Monetary Fund that the
United States would likely face a housing crisis. He also predicted decreased consumer
spending, high oil prices and a deep recession.
year started with troubling economic news.
Countrywide, the nation's largest mortgage lender, was in trouble. It was one of the biggest holders of risky
subprime home loans. It had lost
billions of dollars in bad loans the year before. Bank of America offered to buy Countrywide
for four billion dollars in January. The
deal was approved in June.
the economy slowing, Congress passed a bill in February designed to ease the
economic slowdown. The bill returned
over one hundred fifty billion dollars to taxpayers, but did little to aid
first major sign of the financial crisis developing on Wall Street came in
March with the collapse of Bear Stearns.
It was once the fifth largest investment bank. But Bear Stearns was forced
to sell itself to J.P. Morgan Chase bank in a government-negotiated deal. Bear Stearns had invested heavily in
securities based on risky home loans.
During the summer, prices for goods such as precious metals
and oil set records. Oil hit an all-time
high of over one hundred forty-seven dollars a barrel on July eleventh. As a result, Americans started driving less. They rejected fuel-hungry vehicles that
Detroit carmakers had been selling profitably for years.
September, the government was forced to take control of America's two biggest
housing finance companies, Fannie Mae and Freddie Mac. The companies hold trillions of dollars in
mortgage-related securities. But
concerns about their value meant that creditors were unwilling to lend to
them. The rescue of Fannie and Freddie signaled
the start of a severe credit crisis that would shake world financial markets.
And that's the VOA Special English Economics Report
written by Mario Ritter. Listen again
next week for more about this year's economic news. I'm Steve Ember.