Dissertation Proposal

THE IMPACT OF THE 2008 CREDIT CRUNCH ON THE

HOUSING SECTOR.

Title of the research

The title of the research is THE IMPACT OF THE 2008 CREDIT CRUNCH ON THE
HOUSING SECTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Description of the project

This research is mainly related with the aspect of financial instabilities that were flowing in the
economy few years ago. The mishaps that were initiated by different organisations and the
decision makers lead to the financial crisis and that is the reason why credit crunch actually
initiated. This research will be related with the aspect of how the credit crunch initiated and what
was the core factors associated with it. In the similar manner the aftermaths of credit crunch are
also discussed in this research paper.

Objectives of the research

The entire research mainly focuses upon the scenario of credit oriented mishaps that were
incorporated by different decision makers and policy initiators in the United States. The entire
research although focuses on credit crunch but it maintains a bottom up approach. This research
will first focus on how the credit crunch initiated and what were the affects of credit crunch. In
the similar manner once the credit crunch is discussed then the research will focus on the housing
sector that how credit crunch has enormously affected the housing sector in both the short and
the long run? Besides that certain other phenomenon’s will be discussed in the research that how
the entire crisis initiated and what happened in the year 2008 that badly affected the housing
sector. Discussion on the housing sector with reference to credit crunch can be considered as the
core objectives of this research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Background

Modern world is being run under the influences of a few financial institutions; there is certainly
no doubt that the monetary conditions of the present economy are being administered by the
policy makers of these financial institutions. The increasing trend of capitalism all around the
globe and the defeat faced by the socialist system has predominantly strengthened the ‘laissez
faire’ concept. The decisions and the policies are created and triggered by keeping in mind that
these individuals or organizational can benefit to their heart’s content rather than the national
interests of the economies. This fairly selfish behaviour of such institutions which are running
the economies has affected the health of the macroeconomic structure of not a few regions but of
the entire world. As mentioned earlier, the decisions are made for the attainment of the
individual and organizational targets, therefore long term planning is something which is
completely missing in the strategies; as an effect of this the governments around the world have
become helpless; and some governments even provide shelter and aid to such institutions for
their own political interests and gain, and most importantly at the end of the day the losses are
born by the masses. This situation certainly provokes the need for a parallel or a substitute
system for this impotent capitalism. The need for the socio capitalist system is being felt even by
the western torch bearers of the capitalist schools; this depicts how severe the whole situation has
become.

Since the defeat of the Marxist concept of socialism, the world is being entirely dominated by the
capitalist thought initiated by Adam Smith (Drezner 2007). Why this system is on the verge of
deteriorating? Why the system of the west is has failed largely to solve the economic issues faced
by the entire globe? Is this the right time to think for an alternative system as a reciprocal of this
rapidly obsolescing capitalist thought? Was Karl Marx right in pointing out the forced labour
issues? Can we call him the Nostradamus of the 19th century? At present if the economic
situation is seen under a broad spectrum one has to agree with the thoughts of Karl Marx (Sowell
2002). The proletariats are being utilized to fullest by the bourgeois for satisfaction of their own
greed, lust and the contentment of their overly selfish desires. As a result of this behaviour the
gap between two hemispheres of the world has become increasingly widened and bridging it, at
present, unfortunately seems impossible. This never ending greed and hunger of the modern day
capitalists has taken the world to such a point where all of us are facing the financial crisis, both
at the individual and collective level; as a result of this mentioned situation, the gap between the
economies of classes has grown due to the concentration of wealth in the hands of a small minor
section of the society (Allen and Gale 2009). Even in today’s technologically advanced era of
mankind, people are still dying of thirst and hunger whilst a few are enjoying the inexplicable
luxuries of life; a person living in Darfur cannot even fetch water for his family whilst in Las
Vegas, people gamble billions of dollars every month.

The worst gift that capitalism gave to the humanity was in the form of establishment of an
interest based monetary system. This system vowed to resolve the issues of the general public
(lower and middle classes) by giving them the opportunity to take loans on supposedly “low
interest rates” for the sake of their welfare. The simple people around the world, misguided by
the promises made, fell in this hatch and got trapped in the hands of this fierce monster; and if by
some chance they acquire the knowledge of the realm of this sand trap, it became too late for
them to escape and the more they tried to get rid of it the more they got tangled in its web. The
trap was not only setup for the individuals; even governments around the world became the
victim of this interest bearing system. The administrations of the third world countries were
amongst the widely affected victims. The international financial institutions supposedly lend
them money on “easy terms” and “low interest rates” for the well being of their citizens and for
the development and the rehabilitation of their people (Sowell 2002).

Financial crisis played an enormous role in this regard and it is considered as a term used to
define broadly the losses of the assets of the big financial institutions. When this issue is faced on
a global basis then, such a situation is termed as global financial crisis. As mentioned in the
previous part of the paper that the concentration of wealth to some financial institutions is due to
the virtue of the current system of capitalism and so whenever these mammoth monetary
institutions face problems on a large scale, the economies around the world start to feel the heat
(Krugman 2009). The consequences of such situations are not limited to the governments and
administrations of the world; in fact the common men are also amongst the victims of these
changing situations. The affect of these financial crisis is so fierce that the GDP and the
production levels of all the countries of the world face decline, while on the other hand the
unemployment and the poverty indicators face an upward trend; as a result of this situation
inflation goes up and the prices of the commodities which are of daily usage increase. This
depicts how tightly these financial institutions grip the economy of the world. There have been
many types of financial crises faced by the world in the recent years. These include banking
panics, recessions, bursting of financial bubbles, currency crises, sovereign defaults, stock
market crashes etc (Foster and Magdoff 2009). All these crises have had strongly negative
impact on the economy of the world as a whole; the affects of such financial meltdowns are still
felt by the financial systems of the world. At present, we are living in recessive times due to the
incompetency of the financial systems which are presently set in across the world. Before
comprehending the present situation regarding this issue, it is necessary to get some know-how
about the history of these crises and the various types which have been mentioned above.

All these elements resulted in the scenario of credit crunch which is also termed as credit
squeeze or in broader aspect can be considered as the crisis that are directly associated with the
aspect of credit and there is a general unavailability of loans in this scenario. The official interest
rates rose up and that is the reason why reduction of credit fosters in the economy.
. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Research Methodology

Research methodology pertains to estimating historical data from the preceding

researches, articles, books and other sources as well as carrying on a personal research in order
provide views that can increase human knowledge regarding a specific topic. The main objective
behind the research is to enhance the knowledge of the readers within a specific area and present
convincing facts in any discipline. Research methodology can be considered as one of the most
important aspects when a research is conducted (Creswell 2008). The research methodology
actually defines that how the research will follow and what core elements of research would be
incorporated. Research methodology depends upon deducing from the researches that had taken
place previously and justification of the details of those studies. It also takes into account the
analysis and examination of a specific part of a discipline to provide a new and fresh viewpoint.
It is not possible to have an effective research by only interpreting and collecting the data. The
data should always be backed by conclusion from other available researches. The means through
which the data is composed, evaluated and the form in which the results are presented should be
such that the research is termed effective. Processes through which people try to determine
unknown and discover new ideas is termed to as research (Kumar 2005).

The entire research would be focused on deductive and approach and it would be related
with the factors that how exactly the credit crunch initiated and how it entered the housing
sector. In the similar manner the research strategy that would be used in this dissertation would
be qualitative and it would only focus on secondary sources. This strategy would lead to other
chapters of the research and finally results in a viable conclusion of the topic.

Research Questions

There are certain research questions that are closely related with the topic on which the
research will be conducted. These research questions are states below:

1. What is credit crunch and how it actually started?

2. What is the linkage of credit crunch with the financial crisis?

3. How the credit crunch is directly and indirectly affected the economy of United States
and United Kingdom? . . . . . . . . . .. . . . . . . . . .. . . . . . . . . . . . .. . . . . . . . .

4. How the credit crunch tarnished the housing sector?

Resources

As far as the resources are concerned than it can be said that no special sources will be
required for the completion of this dissertation.
 References

Allen, F. and Gale, D. (2009). Understanding Financial Crises . Oxford University Press.

Creswell, J. (2008). Research Design: Qualitative, Quantitative, and Mixed Methods

Approaches. Sage Publications.

Drezner, D. W. ( 2007). All politics is global: explaining international regulatory regimes

(illustrated ed.). Princeton University Press.

Foster, J. and Magdoff, F. (2009). The Great Financial Crisis: Causes and Consequences .

Monthly Review Press .

Krugman, P. (2009). The Return of Depression Economics and the Crisis of 2008 . W. W.

Norton & Company.

Kumar, D. (2005). Research Methodology: A Step-by-Step Guide for Beginners . Sage

Publications Ltd.

Sowell, T. (2002). A conflict of visions: ideological origins of political struggles. Basic Books.