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The economy of words and recession have become common terms since the collapse of Lehman Brothers Group in the United States. A destroyed the consequences Many businesses and left millions of poor, unemployed and homeless. The impact of this global recession has raised many questions in mind people. Even those they had no idea what the words mean economic recession and suddenly ask questions. Unfortunately, not much answers to come, and those involved in financial jargon high forehead. This article is an attempt to explain to the layman the causes of economic recession present in a simple, clear English.

What is a recession? Consider first the term is little more if these new days. A recession is defined as a prolonged economic downturn. This deceleration is characterized by a decrease in the purchase of consumer goods, a decline of commodity production, increased unemployment, lower wages and incomes, and a market Fellow in good health. These conditions must prevail for at least six months of an economic slowdown is considered a recession.

What is the cause of the current recession? There are many different factors actually trigger a recession. The identification of these factors takes much time and research. However, one of the triggers that led to the closure of at least 16 major U.S. banks, Lehman Brothers, is the practice of issuing home loans to high risk. This just happened. Over the years, many banks in United States began the practice of offering mortgages to high risk, namely, those who had a high probability of not reimbursing loans. The banks justify this decision by saying that although these individuals meet their payments, the amount could be recovered through sale property.

Over time, many of these people have failed in their payments, as expected, and banks put the new properties on the market. However, when so many properties have been sold at the same time, housing prices, which were already over inflated to begin with, collapsed. The unprecedented decline in rates of home ownership has been fatal for banks that had invested most of their money on these speculations, and were forced to close.

The collapse of these banks has a indicative of the causes of the current recession. The roots of this recession can be said in real estate prices more inflated the price of oil and raw first. Artificially inflated prices are typical of a profitable market. When the market goes, the sellers end greedy and raise prices. All goes well, as buyers are still able to pay inflated prices. Without But when prices reach a level where most buyers can not afford a down prices, and thus a recession is inevitable.