what caused the US financial crises?

This recession is caused by a series of events that created a snowball effect.

1. It started off with the housing bubble when mortgage companies are loaning hundreds and thousands of dollars to the working-class man that makes minimum wage that does not qualify and have no business in owning a home. This is were you get the term "subprime lending".

2. Several months down the road the working-class man realizes that he cannot pay the high interest the mortgage company is asking for in his new house, and since he did not put a down payment, it was easy for him to "walk out" of his house and hand the keys back to the mortgage company.

3. Imagine that in every town in America, there are 100 of this working-class man walking out of his house, this lead to a massive amount of foreclosure all across America.

4.The mortgage companies started going broke because they no longer have any business. Then banks start going broke because they made huge bets on the housing market, believing that real estate can never "go down" in value.

5. As the real estate prices started to tumble further, large financial titans such as Lehman Brothers, Washington Mutual, and Bear Stearns went bankrupt. Meanwhile AIG, Fannie Mae, Freddie Mac, Bank of America, and Citibank needed hundreds of billions of dollars from the U.S. Treasury and Federal Reserve to keep them afloat because they were "too big to fail".

6. As these large financial firms started to die, massive layoffs occured because they needed to cut expenses and labor is usually the first to be cut because it is the most easiest way to reduce cost.

7. This is where we are currently at, unemployment rate hovering around 9.8%

I hope you feel enlightened.

Here's a great video expalining the mess we are in. Easy to follow and understand.

http://vimeo.com/3261363?pg=embed&sec=&hd=1

Democrats.