Cause Of The Great Recession Of 2008

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The Great Recession of 2008 was the most devastating recession since the Great Depression itself. To further investigate what caused this, we interviewed our mother Marianne Massinger. She has worked in the finance industry for many years now, and she was able to witness and experience the effects of the recession personally. Overall, the information found through our research on the Recession of 2008 closely lined up with the accounts given by our mother. Firstly, we learned that the most significant cause of the Great Recession was the collapse of an unstable housing market. “The Great Recession began with the bursting of an 8 trillion dollar housing bubble. The resulting loss of wealth led to sharp cutbacks in consumer spending. This……show more content…
“The Great Recession of 2008 didn't just happen in one month. It took years to correct the easy-money policies and lax standards of Wall Street”. Corruption in Wall Street ran rampant in the months leading up to the recession. Many brokers on Wall Street poorly informed customers, and tied them into mortgages they simply could not sustain. Corporations could get away with corrupt actions due to a lack of regulation on business practices, specifically instituting regulations on big financial corporations. At the same time, the government bailed out multiple large-scale businesses, as an attempt to preserve struggling American industry. This ultimately proved not to be beneficial. As our mother remarked, “I did have an idea that we were going to be heading for at least a contraction in the market. But, I had absolutely no clue of the magnitude of it, and blindsided me a bit. I feel like it was protracted because of all of the bailouts that were offered… It might have had a more natural outcome if some institutions were allowed to fail…”. Ultimately, government efforts to prevent an impending recession were concentrated in areas that would only magnify its…show more content…
“The pace of monthly job losses slowed dramatically soon after President Obama and Congress enacted the Recovery Act in February 2009”. From a statistical standpoint, the Obama Administration was highly successful at pulling the country out of the recession, despite its initial severity. “The United States, like many other nations, enacted fiscal stimulus programs that used different combinations of government spending and tax cuts”. These types of measures are essentially universally successful. As explained by our mother, “Bringing the country out of recession, there are only two levers that you can pull: you can reduce taxes, and you can increase jobs. If people are working, then they have free money to spend… that helps everybody. That helps a variety of industries. So, a lower interest rate environment, tax breaks, those are some things that can improve the situation.” When facing the task of economic recovery, the solutions are actually fairly simple. As long as we stick to those measures which are consistently effective, the country should never remain in an extended period of devastating recession. In conclusion, the consistent corroboration between sources on the Great Recession and personal accounts confirm that the facts of the recession are
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