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Financial Crisis 2008 Explanation needed

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LandJ posted on Mon, Dec 24 2012 1:58 PM


Hello. I am trying to undestand the Financial Crisis 2008 and how it began. I watched the Overdose documentary, but I am still a little confused. 
Could you give me a simple explanation of how the crisis started, please?
I would appreciate it if in your explanation, you would include answers in the following questions derived from:
- what was dot com bubble and how did it burst?
- On 7:00 of the mentioned documentary, it is noted that Greenspan rescued bankers speculators. Why?
- Why interestes rates can't be low for a long time? What makes them rise again?
- On 9:00, why Bush did propagandize house buying?
- On 9:20,  how low interestes rates did cause housing bubble?
- Why goverment wanted to guarantee mortgages?
- Why government by low interestes rates did wante to keep housing prices high?
- What were the risks that investment banks did take?
- Why government did backe up those risks?
- Why government wanted to restore investors confidence by reducing rates?

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- On 9:20,  how low interestes rates did cause housing bubble?

"The housing bubble could not have arisen without the Federal Reserve. Had people started buying houses at unusually high rates, banks’ loanable funds would have begun to deplete, interest rates would have shot up, and that would have been the end of it. That would have discouraged any additional speculation in real estate. But Alan Greenspan and the Fed could create money out of thin air, thus giving the banks more to lend and driving interest rates down, thereby perpetuating the destructive bubble in housing." -Tom Woods
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