The origin of financial crisis

As the world is going through the first months of 2010, the memories of last year’s recession are still guiding the financial commotion of the world in a ghost like manner. If we dig deeper into the origin of financial crisis, we see reasons like high corporate debt levels, international trade imbalances, the collapse of the real estate bubble and other such reasons implying that the financial crisis has been a direct result of some grave misdirections of the world money economy, predominantly controlled by the US economy.
However, unfortunately, since the US was the major center of the financial crisis, it is the US economy that had to suffer the most. The US administration announced the Financial Crisis inquiry Commission to categorize the origins of the financial crisis. This committee is expected to submit its report by end 2010.
Before discussing the origins of the financial crisis, it will perhaps not be irrelevant to check the implications of the financial crisis. The economic recession of 2009-10 had profound impact on the world economy and also the world political calculations. In fact, the huge mandate that worked or Barrack Obama had its origins in the promises Obama made about resolving the financial crisis scenario.
The list of companies that failed during the two year period between 2007 and 2009 alone is sufficient to stress the impact that the financial crisis had. The big names of failures include the Lehman brothers, the American freedom Mortgage, American Home mortgage, Sentinel management group and most recently the reputed Goldman sachs.

When we set to decide the origins of financial crisis, it is easy to categorize the reasons of recession into points like the collapse of the real estate bubble, the predatory lending practices of financial institutions to create huge amount of national debt and also the mismanagement of public funds by wall street top honchos. However, if we dig deeper into the origins of the financial crisis, do we see an unscrupulous and thoughtless gathering of money by a group of people and the encouragement to buy the gods manufactured by these handful of corporations? This was the basis of national debt, was it not?
People were being encouraged to take credit cards and buy the goods and financial plans, although the banks and the institutions providing credits that was well beyond their limits. This disbalance in the money system manifested itself in the financial crisis. So, when we are trying to find the origins of financial crisis, we should look into our own wallets and think on what basis did these companies issued the credits if there was no money support behind the credits? The unanimous government support behind the corporations also paved the way to financial crisis.
The real estate bubble and the home foreclosure deserve special mention in this respect.   This can be explained as following. The real estate laws at first allowed the home prices to go up and that directed homeowners to engage in adjustable rate mortgages. With so many going for the adjustable rate mortgages home refinancing, when the real estate prices began to fall, then naturally there are a great many incidents of foreclosures and negative equity. The mortgage frauds and all other types of frauds also played their roles in the origins of financial crisis.
The financial crisis is far from over and if still faulty budget promises like the Schwarzenegger California budget proposals 2010 will continue to be made, there is no scope that the economy will recover again.