Abstract
Since the last few years, a frightening phenomenon concerning subprime is being observed in the United States of America. Some people think that the financial crisis that the whole world is living through is related to the subprime crisis, and some think that it was the beginning of a very slow and long global economic failure. Even if we are concerned every day by the financial crisis in European countries, I will try to focus on the subprime crisis, because I think that it is the real demonstration of the bad performance of the banking system in general. In my paper, I will strive to develop my idea in several parts in order to better understand issues concerning loans in our society in general. I will begin by explaining what are subprime loans, enumerating the different characteristics and how does it works, and finish this part by presenting the subprime crisis. Then I will focus on reasons addressing the subject like the law of 1997, the rise of interest rates, the change of political context and the part and the responsibility of the rating agency. Thereafter, I will finish analyzing its economic effects, effects concerning the banking system and loans in particular. I will conclude by trying to imagine several different scenarios. I picked out this subject because in my opinion, it is a very interesting subject in as much as it shows that even the most powerful country in the world in term of economy, and political influence can be touched and damaged by its own system. In addition, I made this choice because it is a global subject which concerns a lot of financial aspects seen during lectures.
