Effects Of The 2008 Financial Crisis

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The effects of the 2008 Financial crisis were felt globally, it being the worst financial crisis since the Great Depression of the 1930s. Suggested in the documentary Inside Job shown in class, there were many factors which led to the 2008 Financial crisis. To better understand how it happened, we have to look back to the Great Depression of the 1930s. The Great Depression was the deepest and longest worldwide economic downturn in the 20th century. For fear of another economic collapse, strict regulations were put in place upon the financial industry. This heavy regulation persisted up until the Reagan Era in the 1980s. Hoping to spur economic growth the financial institutions on Wall Street and politicians in Washington wanted to deregulate the financial industry, which had been steadily growing for little over 50 years since the depression. President Reagan ushered in his economic policies starting the unregulated era that eventually led to the 2008 financial crisis. In the early 2000s, investors were seeking good investments. Traditionally investors would purchase treasury bills from the Federal Reserve Bank, considered to be the safest investment. However, in the wake of the dot-com bust and September 11th, Allen Greenspan, the Chairman of the Federal Reserve, lowered interest rates on loans to 1% to keep the economy strong. For Investors, 1% is a very low return on their investments, so they sought out new ways to invest. For years prices in the US Housing Market had
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