The Domino Effect

1. How is the "domino effect" affecting the global economy?

     - The domino effect started in the United States because banks gave a lot of amount of loans to low income people. Those people couldn't pay some of their loans back and didn't know how to return the money. So we were the first domino to fall and it affected a lot of countries because they depend on us.

2. What caused the U.S housing crisis?

    - What caused it was the Banks because they gave out their loans to low income people, who at the end had trouble paying back the loans.

3. Why is the cut consumer spending a serious problem?

    - Cut consumer spending is a big problem because, if people cut down on the things they buy then any goods wont make good money and if the goods aren't making good money then the company goes bankrupt. 

4. How is less spending affecting local and state governments?

    - Less spending is affecting local and state governments because they also had to cut down on their budgets. They cut down on programs, raised their taxes, or used emergency funds to balance any budget.

5. What trend does expert Brian Sack predict for the economy?

    - The trend he's predicting is that he's calling this situation a recession, and that we are going to have a tough time in 2009 and 2010.

6. What have the world's key central banks done to stop the crash?

    - Global banks have stopped helping each other financially. Great Britain has helped many banks and they spend $865 billion. Iceland took control of their own bank.