2008 Global Economic Crisis

Decent Essays

Due to globalizations and open trade unions, economies are more linked to each other.
So, the economic crisis in 2008 became the global economic crisis and influenced international businesses. Economic activities were weakened, people lost their jobs, wages and benefits were reduced and unemployment was rising. As far as the US government wanted to keep US economy going they reduced already low interest-rates and slowed down economic growth. US bank losses were forecast to hit $1 trillion and European bank losses will reach $1.6 trillion. The International Monetary Fund (IMF) estimated that US banks were about 60% through their losses, but British and eurozone banks only 40%. (Lost Spaces, 2009). Financial systems, in this case, created the financial crisis with devastating social and economic effects. Key impacts of the crisis are slow economic growth, losses in real estate wealth and job losses, which directly influenced households and their income. The government response was Troubled Asset Relief Program (TARP), through which the government purchased toxic assets from …show more content…

Further, 500,000 additional foreclosures began during the acute phase of the financial crisis. Since the recession, 8.8 million jobs have been lost according to the Bureau of Labor Statistics. According to the Employment Situation from October 2009, the unemployment rate reached the highest rate since 1983 (Goodman, 2009). The economic crisis reduced spending on social welfare programs and people lost jobs which caused decreased consumption (Robe, Podpiera, 2013). Low incomes, depreciation of houses, the high number of unemployed people and instability caused liquidity trap. So, people were holding on their cash. On the market was not enough of qualified borrowers and investors were not investing cause of really low expected returns. The whole economy was frozen and the government was spending trillions to save US banking

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