Resurrection of the American Dream Essay

Download this Essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Essay:

Resurrection of the American Dream

The American Dream is a concept that has been a part of American culture for many decades. The American Dream is a deeply held conviction that an individual can reach his or her fullest potential if they apply themselves appropriately. This concept is built on the idea that there are no limiting conditions that can keep someone from fulfilling their potential such as age, race, sex, disabilities, or other factors that are beyond an individual's control. The idea is centered on the concept that there exists the opportunity for social mobility that can be achieved through the application of one's efforts.

Through hard work and determination an American has the potential to improve their circumstances at all times. However, the vitality of the American Dream has been compromised in recent decades with many macroeconomic developments that have negatively impacted the economic opportunities for Americans. Furthermore, there are other threats to the American Dream as well. For example, the health of the population is declining with the instances of cancer and obesity reaching epidemic levels. However, homeownership stands as one of the cornerstones of the concept of the American Dream as well. This analysis will consider some of the factors that are detracting from the achievement of the American Dream as well as offer suggestions to how this dream can be resurrected.

American Dream Background

James Truslow Adams was among the first to explicitly refer to the American Dream in his book The Epic of America, which was written in 1931. The author stated that the American dream is:

"that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position. (Adams)"

The original ideas relating to the American Dream were not born in a merely materialistic pursuit. Rather, the American Dream was defined in terms of potential and the achievement of that potential regardless of the "circumstances of birth."

Despite the origins of the concept of the American Dream, it has steadily evolved over the years and has different meanings to different groups. The American Dream has been associated with home ownership since the post-World War II period. It has also been associated with different ideas regarding consumerism and the ability to purchase material items. However, in the modern globalized environment that constitutes that background for our current way of life there are many various material items and services that are necessary for individuals to have the opportunity to reach their full potential. For example, without access to health care an individual may not have the opportunity to live full and rewarding lives. The same arguments can be made about other services; especially education. Without access to education, an individual will not have a significantly diminished ability to better themselves in a modern world. Therefore, regardless of the material ambitions of various individuals, factors such as health, education, and access to the basic humanly needs are vital to maintaining the concept of the American Dream. However, since homeownership has manifested within the last couple of decades in regards to its association with the American Dream, this factor will be examined to determine the current state the concept.

Housing Crisis

The broadest first cause of the housing crisis in the United States is usually attributed to deregulation of the financial markets. The deregulation trend began in 1990s, which was led by many people who upheld a strong "free market" ideology. By deregulating financial institutions it gave them more freedom to design their own operations and internal policies by reducing the compliance and oversight limitations. Furthermore, investment banks and deposit institutions were allowed to merge their services whereas once they were separated by law. The deregulation of the banking gained the most traction under President Clinton who enacted regulations that virtually revolutionized the way banks do business (Lal).

The deregulated environment set the stage for what is known as the sub-prime real estate market. Banks were eager to carve out new market segments in which they could craft financial products for because the industry was fueled by competition. The industry forced banks to become more innovative so that they could simply remain competitive (Asensio and Lang). The sub-prime mortgage was developed and was designed that more Americans could experience the American Dream and banks could provide services to a broader customer base. A sub-prime mortgage was targeted towards customers whose could not qualify for a traditional mortgage for a variety of reasons. However, the most common type of sub-prime borrower often had a limited ability to repay their home loans and therefore this class of lending was coined as "sub-prime."

Because the market had become so deregulated, banks now had the ability to reinvent the mortgage process. It was formerly a requirement that borrowers would have to put down a down payment in order to qualify for a mortgage. However, this requirement was lifted for the sub-prime borrowers primarily because this group did not have the resources to make a significant down payment as traditionally required. Therefore banks created a new set creative loan terms in which potential homeowners could borrow with no money down. This opened the possibility of home ownership and the American Dream to a wide variety of consumers who had never been in the position before. Millions of first time borrowers took advantage of the new mortgage terms and purchased their first house; many times with only their mediocre credit score and their signature.

Since there was a lot of risk in this category of borrowers, banks needed a way to effectively manage their risky sub-prime loans. As a consequence of managing these risks, banks created a complex set of financial instruments known as financial derivatives. With the creation of derivatives and the derivative markets, lenders could package loans a group of loans for resale to various real estate funds. These packages work to effectively securitize the mortgage. So when a loan officer sold a new mortgage, they may have only been responsible for the mortgage for a second before sending it off to an investor or an investment fund. On one hand these were a reasonable approach to dealing with the risk in the sub-prime market. Historically, there had been a natural default rate that generally remains fairly consistent. Therefore, by diversifying the risks in these packages this worked to leverage the amount of risk exposure that any individual would face on their own (Focardi and Fabozzi).

As a result of deregulation and the innovative new loans that emerged, the real estate market exploded. Millions of Americans were eager to participate in the American Dream that they had been familiar with for most of their lives. This drove up demand for properties and as a consequence real estate prices catapulted because of the sub-prime eager to make purchases. The pursuit of the American Dream led to what was later called the "housing bubble" which was defined by the fact that real estate prices had grown to a level in which the actual asset price exceeded that would have been otherwise deemed as normal due to inflated demand. The demand was also fueled by the fact that buyers could purchase a mortgage with no initial investment on their behalf (Zhang, 2008).

However, the bubble ultimately burst and millions of new homeowners found that their housing values were now worth less than their sub-prime mortgages that they borrowed. Since many of the homeowners did not actually put down any of their own money to purchase these houses, this made it easy for this group to simply "walk away" from the properties. Others found themselves unable to make payments that grew larger under the terms of their adjustable rate mortgages and eventually fell into foreclosure. In total, it is estimated that roughly four million families have lost their homes and their piece of the American dream between 2007 and early 2012 (Wilson).


Although the intentions may have been pure to bring the American Dream to more and more families, this experiment ended horribly for many Americans and eventually sparked a global financial crisis. Yet it is difficult to believe that the intentions were actually pure given the numerous fraud and abuse charges that plagued all the major banks. In 2012 for example, the largest five banks agreed to a billions in settlements to avoid further legal actions which stemmed from misconduct. Various government efforts were proposed, however they were never enacted and as a result millions…[continue]

Cite This Essay:

"Resurrection Of The American Dream" (2013, March 02) Retrieved December 10, 2016, from

"Resurrection Of The American Dream" 02 March 2013. Web.10 December. 2016. <>

"Resurrection Of The American Dream", 02 March 2013, Accessed.10 December. 2016,

Other Documents Pertaining To This Topic

  • American Investment Recovery Act Throughout American History

    American Investment Recovery Act Throughout American history there has been an emphasis on maintaining a balance of power between different branches of government. This is from the belief that concentrating too much authority in one area will lead to inevitable abuses in others. To prevent this, the federal government and states have always practiced these basic principles. As a result, there are varying interpretations as to the overall scope of power

  • Native Americans Dakota and Lakota People the

    Native Americans Dakota and Lakota people The word 'Dakota' is derived from the seven council fires (Oceti Sakowin) - or in other words, the main political units for the people of Dakota. The word means "ally" also referred to as "Sioux" at times. Historically, the Sisseton, Wahpekute, Wahpeton, and Mdewakanton constituted of western Yankton and Yanktonai who were together referred to as Nakota and the Teton and Eastern Dakota. The Santee Dakota

  • Magical Realism in Ana Castillo s Novel so Far From God

    Magical Realism in Ana Castillo's 'So Far From God' When looking for the magical realism in Ana Castillo's So Far From God, and for those readers who know her work and her cultural background, one of the ways in which the author employs magical realism is as a skilled fiction writer. Castillo is writing about Latinos, a family of women. Her first step in employing magical realism is to set aside

  • Melville s Bartleby the Scrivener

    Bartleby The Finite and Infinite: An Analysis of Melville's "Bartleby" Herman Melville's Bartleby is a representational figure of modern malaise. A soul adrift in the universal modern ethos of self-assertion, Bartleby epitomizes the utter emptiness at the heart of it all: for him the American Dream is one he would "prefer not to" chase. Bartleby's dream, rather, is an unspoken nightmare that ultimately paralyzes him. Whether his paralysis is due to a

  • Autobiography All About Me Because

    That experience was different for my mother, who incorporated her religion into every aspect of her life. Fasting is a large part of the Orthodox Church, and it seemed to me that my mother was always engaged in some type of fast. As an adult, I realize that this was not merely the perception of a child; Orthodox Christians really do fast about half of the year, though the

  • Mortgage Fraud

    Mortgage Fraud If a rash of armed bank robberies swept across America next year, and if in these robberies criminals absconded with $30 billion dollars, one may be certain that a public panic would ensue. The banking system would likely be changed forever. If thousands of armed thugs went rampaging across the nation forcing people out of their homes, into the streets, and then destroying the properties, leaving the occupants homeless

  • Jefferson Views Towards State Rights and Secession

    Jefferson Davis Views on State Rights and Secession Jefferson Finis Davis or more popularly known as "Jeff" Davis was born on June 3rd 1808 to the Kentucky couple Samuel and Jane Cook Davis. He passed away on December 6th, 1889 but not before he served as an American statesman and leader from the Confederacy throughout the American Civil War entire duration of the Civil War as well as the history that

Read Full Essay
Copyright 2016 . All Rights Reserved