A financial crisis has happened with regular intervals during the last century, it still happens during the year 2008 and probably will happen in the future in much the same way. There are fundamental differences between such crises in our time and former crises, except perhaps that they occur faster, occur more frequently, but fortunately also heal faster.

THE TYPICAL SITUATION BEFORE THE CRISIS
The crisis often occurs after a long period of economic growth, high employment and high activity. The situation for companies and individuals are typically as follows:

* Economic activity in the whole society is very high after a long period of development, but it is the beginning of fall.
* Stocks are sold with quotes historically high after a long period of increase of 300% or more, have reached all time high level, but are beginning to decline further.
* Prizes of real estate property are also high after a long period of development, 300% or more, but are also beginning to decline after all the time at high level.
* The above companies are set-often after aggressive investments for money borrowed. The investments have not yet shown advantageous, but the companies evaluate the big profits from investments because they think that the general development continues uninterrupted.
* Also medii individuals have high debt after investing massively in their homes and luxury items. Have some problems starting with the payment on their debts, but they think that these problems go away soon with further increases expected of personal income.

THE BEGINNINGS OF THE CRISIS
The crisis often faces a slow initial development. During this front, the situation can be reversed and the economy recovers without major damage. In this initial period one can observe the following process:
* Most companies realize that their investments consistently large do not pay back to the income anticipated and have problems paying their loans. Sharply reduce further investment and begin to liquidate assets.
* Most people also realize that constantly have a debt too large to deal with their income confidential. Reduce their consumption and liquidate the properties and objects of luxury. * Companies are constantly getting fewer orders, are selling less and have less to do because the reducing consumption and investment.
* The earnings of companies and individuals are falling and many are loosing real money.
* The stock market values are falling sharply, often 20-30%.
* Prizes are falling sharply the ownership, often 20-30%.

ADDITIONAL STEPS THAT LEAD TO A CRISIS IN FULL
At one time there may be a critical turning point that leads the development of a comprehensive crisis that it's impossible to be recovered in a simple manner. This turn occurs when a certain percentage, say 10% of individuals and companies realize that not having enough income to handle their debt and that the sell-off of properties and stocks do not cancel the debt. The crisis has completed these properties:
* The activity and corporate earnings are falling sharply.
* Many companies feel the massive losses.
* The number of companies and individuals with debt problems is rising sharply.
* The number of bankruptcies is increasing sharply.
* The level of unemployment rises sharply.
* Banks entering the compression due to serious customers unable to pay their debts and due to the decline in the value of properties that serves as security loans.
* The troubled bank has to increase interest rates of several percent to neutralize the loss. But this act only increases the problems for other banks, individuals and companies and accelerates the crisis.
* A high percentage of the bank and get unfunctional bankrupt
* Now there will be large sell-offs of property and stocks. The sell-offs are used by people trying to get rid of some of their debts and the bank trying to stop the losses on loans.
* The stock market cracks down by a new 50% or more driven by the large sell-offs.
* The housing market also cracks down another 50% or more due to the large sell-offs, but usually slower than the stock market.

CHARACTERISTICS OF THE LATEST CRISIS
The last phase of the crisis is seldom reached, because governments want to at some point take control of financial systems and ensure a minimal functionality. The last crisis, the production of goods and services in society has fallen 30% or more and continues to fall. Investment or construction activities completely stopped. There are total unemployed, 30% or more. The financial system almost collapsed and can only support the daily payment for food, energy and other necessities. Production facilities and organizations of society have fallen apart 30% or more due to lack of maintenance, which means that the company can not recover quickly.

THE CONCLUSION OF THE CRISIS
Before the crisis can be completed, all sell-offs to be paid back on loans to be made. Then each actor in society should accept their losses. The debts that actors can not pay back must somehow be canceled. Then all the remaining parts of the former companies must be repaired together again in new functional units. Then the company can slowly rebuild its strength.

THE CAUSES OF THE CRISIS
A major cause of the crisis is over-optimistic businesses and individuals during the preceding period of economic development. They tend to believe that the overall development will continue forever without periods of interruption of economic decline. Also tend to overestimate and think will be a winner in the competition against other companies or individuals, not a looser, not an average performer, but the winner. This optimism, which is a general human property, urges all actors to borrow huge amounts of capital and investing in homes, luxury items and expanding their business. This behavior tends to accelerate expansion for quite a long time until in meets the wall. Another case is in paintings of banking companies try to pay off as much money as possible to borrowers without regard to consequences for banks and borrowers, because this behavior gives the picture a huge short-term personal gain.

HOW TO AVOID THE FINANCIAL CRISIS
Future crises can be avoided only obstacles out of the financial institution lending more money to anyone that borrower can pay back in a comfortable way. This can be done only by governmental regulations which establish the criteria that must be made free when a certain sum of money is paid out. In addition, the bank should be prohibited to establish contracts of employment for their paintings that reward them directly for the amount of mortgages down.