The Domino Effect

1. How is the domino effect affecting the global economy?
-The domino effect is affecting the global economy because as one event triggers another event, and that event causes another one, it causes a ripple of movement-like a row of falling dominos.

2. What caused the U.S. housing crisis?
-The U.S. housing crisis was caused by lenders giving high-risk loans to people with low incomes. People could not pay back their loans. Then home prices fell. With homes worth less, some borrowers could not sell their homes to pay their loans.

3. Why is the cut in consumer spending a serious problems?
-The cut in consumer spending is a serious problem because with fewer jobs and less income, consumers have cut spending. Consumers account for more than two-thirds of the nation's total economic activity.

4. How is less spending affecting local and state governments?
-Less spending has caused a drop in sals tax revenue. Local and stategovernments are cutting programs. More than half of the 50 states have cut spending, raised taxes, or used emergency funds to balance their budgets.

5. What trend does expert Brian Sack predeict for the economy?
-Brian Sack predicted that we are going to be caught in a recession and that its going to be rough in 2009 and 2010.

6. What has the world's key central banks done to stop the crash?
The world's key banks have stopped lending to each other. For example, Britian was forced to rescue many of its banks, spending $865 billion and Iceland took control of its largest bank.