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Since lately, we have seen a lot of companies collapse due to economic downturn faced by America. The biggest issue is on the 'sub-prime mortgage', which has caused investor to miss billion of dollars. For those who really understand about the concept of 'sub-prime mortgage', the condition in America is getting worst when all the sub-prime loans have been converted (securitized) to become 'Mortgage -backed security'.



Lehman Brothers and Merrill Lynch are the biggest founder for this kind of what so called 'debt trading'. Even AIG, among the giant insurance company also dying and require help from American government. It begin when the properties in America become 'bubble'. Means that the value of the properties have reached to unsustainable level in which the price could not be affordable by most of American resident and this would cause higher 'defaulter' or Non Performance Loan (NPL). Since the NPL in America is getting worst, the above term also highly affected as they have a very strong economical symbiosis. Capital injection done by US government amount USD 700 Billion to 1 trillion to buy all the NPL assets might cause situation to become even worst.

American economist suggest that those investors who took risks to earn profits must also bear the losses.The government can ensure a well-functioning financial industry without bailing out particular investors and institutions whose choices proved unwise.