Reasons Of American Subprime Loan Crisis And Development Of Real Estate And Financial Market In Our Country

In February of 2007, the second largest American subprime loan institution, New Century Financial Corporation, proclaimed a deficit in the forth quarter of 2006 and subprime loan crisis emerged. In the following one year and more, subprime loan risk was completely exposed with housing mortgages and loan corporations close to bankruptcy, hedging funds forced to be liquidated and investment banks proclaiming their losses. Moreover, commercial banks and insurance institutions also suffered great loss and global stock market declined in response. Trust risk aroused by subprime loan, eventually, evolved into a global financial crisis. A probe into the causes for this round of subprime loan crisis can make us absorb the lessons from the crisis, deal with risks accumulated in real estate and financial markets rationally and prudently, enhance our awareness of risk prevention, and improve our ability to manage risk so as to guarantee the stable and healthy development of China's real estate and financial markets.This paper conducts qualitative analysis to American subprime loan crisis. It begins with the detailed introduction of the evolving and developing process of subprime loan crisis as well as its influence upon world economy. Then, it expounds from micro perspective that subprime loan crisis is the result that overheated real estate and capital market commonly produced. The paper, afterwards, reveals from macro perspective that this crisis is the inevitable outcome of American liabilities-based economic growth pattern. It finally reflects on the enlightenment brought about by subprime loan crisis.The paper gradually reveals the causes of American subprime loan. Using comparison and data analysis, by comparing domestic and foreign real estate value estimation, the paper makes judgment on whether there is overheated trend in China's real estate market.The paper, from the perspective of American macroeconomic growth pattern, probes into the causes for subprime loan crisis, using which for reference to address the hidden trouble existing in the development of China's real estate and financial markets. Through using foreign experience and lessons for reference, it tries to make breakthroughs and innovation.