The Sub Prime Crisis: The Crisis of Over-Spending

The subprime crisis refers to the collapse of subprime mortgage markets in the United States due to the sharp rise in foreclosures beginning in 2006, which led to the failure, merger, and government bailout of leading American financial institutions and enterprises.

This report examines the causes and impacts of subprime crisis. The report examines the elements causing the crisis, particularly the over-spending behaviors of both governments and individuals and deregulation and lack of monitoring.

The over-spending beyond the income/revenue capacity leads to the imbalance between income/revenue and spending and eventually causes the sub-prime crisis and further the global financial and economic crisis.The report then examines the impacts of the crisis.