Likewise each investor in the financial market tries to predict what the other investors would do. Due to the many cases which have occurred previously, it is being debated that if the entrepreneurs or the firms develop a strong intention to repeat what others have done, than it leads to self full-filling prophecies. One of the financial crises is termed as housing bubble, which was identified by an analyst called Dean Baker in 2002.
He described it as from the time period 1953 to 1995 the housing prices were following the course of inflation, but it showed a greater increase in prices which was over the inflation rate when the housing prices were adjusted and this was in the period after 1995. For which Baker concluded that a housing bubble existed in the US housing market. At first it was being assumed that the financial crisis was solely due to the subprime lending but later on it was discovered that it was just a segment of the total $20 trillion US housing market. The housing crisis was considered to grow with the rising stocks in 1990 as the people with higher capability of spending started buying new and better homes from the income gained from the stocks.
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