ABSTRACT
This chapter shows that the financial crisis is mainly the result of forces within the American economy. There are many factors contributing to the financial crisis. The factors are the financial deregulation pushed by the bankers, the housing crisis, and the worldwide downturn in trade. All of these causes, plus the single most important factor of increasing inequality, led to the Great Recession. The fact that housing prices rose without sufficient effective demand may be called a bubble. Most of the Democrats in Congress have argued that the financial crisis happened because some bankers were both greedy and irrational in their expectations of the returns from financial speculations. Some of the political leaders of Europe laughed behind the scenes at the American financial crisis and commented loudly about their own continuing good economic performance. Three types of economic processes —trade, investment, and finance—spread the recession and financial crisis throughout the global economy.
