What Caused the Credit Crunch & What is a Recession?

As a novice to this kind of thing, can anyone give me a brief explanation of what caused the credit crunch? How come the banks are all in such a mess? Why could tax payers money be use to "bail the banks out" and what would happen if there is a recession?

Asked By: coco21 - 10/11/2008
Best Answer - Chosen by Asker
It's interesting that you separate the two, a lot of people think that the Credit crunch and the recession are the same thing, but you have correctly identified a difference... More
Answered By: soundman_jaybee - 10/11/2008
Additional Answers (5)
Recession is when you have negative national growth for 2 quarters
Answered By: cheekybear - 10/11/2008
Greed and economic decline. The government need to keep tabs on things.
Answered By: Go4it - 10/11/2008
One of things that contributed was the banks and mortgage companies were pressured by a group called Acorn. They demanded that high risk people/ low income get home loans. If you do a little reading on that it will give you one of the reasons.
Answered By: philinnwfla - 10/11/2008
banks lent money to people who couldnt pay back their loans (too many of them.) so the banks took the houses off these people and have tried to sell them to get their money back but because there are so many houses for sale, no one is buying them. the banks therefore are losing money big time and because they are... More
Answered By: juddys mum - 10/11/2008
Predatory lenders who offered sub prime loans to people who didn't deserve them caused the credit crunch, so banks & creditors are now more likely to be cautious in who they lend money to. There are now more higher requirements than before for people to open lines of credits and borrow loans b/c of it. The banks are... More
Answered By: thatguyoverthere - 10/11/2008
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