Effects Of The Great Recession On The United Kingdom Essay

The recession of 2008 is also called the ‘Great Recession’, said to have begun in December 2007, and took a turn for the worse in September 2008, and it was a severe economic problem expanded globally. This recession affected the world economy, and is said to have been the worst financial disaster since the Great Depression. The decline in the Dow Jones this time was -53.8%. Since the official start of the recession in December 2007, and through June 2010 there have been about 2.3 million homes foreclosed in the United States. In 2012, the state with the most foreclosures in January alone was California, with 51,584 houses being repossessed. Unemployment during this collapse was 8.5%, and continued to increase to about 10% as of 2010. People’s reaction to this recession was a huge decrease in spending and borrowing from banks, but an increase in saving.

The Great Recession of the 2000’s is something many of us have been affected by in some way or form. From the real estate bubble to the acts of major firms on Wall Street-there were numerous factors that lead to this recession. The United States Government is to blame in large for what happened to the economy in the early part of the 2000’s. Major firms such as Merrill Lynch, Goldman Sachs, and AIG tried to used the failing economy as a huge paycheck to their CEO’s, payouts made partially by the US Government’s bailouts. The government should have allocated money to the people who were struggling, not continue to feed the “hand that bit them.”

Similarly, the Great Recession was due to consumer spending cutbacks and a drop in demand for the establishment of new housing. In the two decades previous to 2008, the American growth rate was very high. Their household needs also became very high, which made demand increase. Spending was at a high. However personal income was decreased. The consumers then had to borrow money from the banks. This gave the consumers debt. So, when the house prices rose, banks stopped loaning money to people and the people decreased their spending. This happened because the people were not able to pay the banks back. People also cut back on buying or making new houses, so household demand dropped. Many say that this decrease caused the Great Recession. Housing was one of the main subjects that many believe, caused the Great Recession. “Subprime” mortgage availability and low interest

Everybody in the United Stated was affected by the recession that began in December of 2007 and spanned all the way to June 2009. Even though the recession is over, many people are still being affected by it and have still not been able to recover from the great recession. “The recent recession features the largest decline in output, consumption, and investment, and the largest increase in unemployment, of any post-war recession”. Many people lost their jobs due to the recession and some of them are still having a hard time finding jobs and getting back on their feet. Businesses

“Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

There is no doubt that subprime lending was a major cause of the Recession. It was a tactic used by investment banks in order to get more money from unsuspecting homeowners. However, lenders found out that most of the people who were qualified to have a mortgage already had one. In turn, the lenders had to lower their credit criteria for people to take out a loan on a house. This is how the term subprime lending came to be in the financial world. As a result of subprime lending, the investors were able to make millions off of these mortgages. People who qualified for a subprime mortgage usually had a credit score below that of 620. To make the subprime mortgage deal more customer friendly, the lending banks decided to have the people who qualified for these mortgages didn’t have to have a down payment. Normally, the down payment would be as much as 20%, but this made it easier for people to get mortgages without having to worry about how much money they needed at the beginning of their purchase. “ Many American homeowners bought houses they could not afford,

The housing market crash, which broke out in the United States in 2007, was caused by high risk subprime mortgages. The subprime mortgage crisis resulted in a sudden reduction in money and credit availability from banks and other lending institutions, which was referred to as a “credit crunch.” The “credit crunch” and its effect spread across the United States and further on to other countries across the world. The “credit crunch” caused a collapse in the housing markets, stock markets and major financial institutions across the globe.

In 2008, the US experienced the traumatic chaos of a financial downturn, whose effects rippled throughout Europe and Asia. Many economists consider it the worst crisis since the Great Depression, and its alarming results are still seen today, a long six years later. Truly, the recession’s daunting size and formidable wake have left no one untouched and can only beg the question: could it have been prevented? The causes are manifold, but can be found substantially rooted in illogical investments and greedy schemes.

The 2008 financial crisis can be traced back to two factor, sub-prime mortgages and debt. Traditionally, it was considered difficult to get a mortgage if you had bad credit or did not have a steady form of income. Lenders did not want to take the risk that you might default on the loan. In the 2000s, investors in the U.S. and abroad looking for a low risk, high return investment started putting their money at the U.S. housing market. The thinking behind this was they could get a better return from the interest rates home owners paid on mortgages, than they could by investing in things like treasury bonds, which were paying extremely low interest. The global investors did not want to buy just individual mortgages. Instead, they bought

Since the global financial crisis of 2008, the UK government has been implementing various policies to combat the recession and stimulate economic growth. This essay will look at how effective the fiscal and monetary policies used since the crisis are in achieving the four-macro economic objectives. In addition, I will provide my input on the best way the UK government can carry out these policies.

January 23, 2009 was the official day that the United Kingdoms entered into what would be one of the longest and deepest recession ever in their history. It was the deepest due to a lot of loss of output that couldn’t be recuperated. The United Kingdom had not been in a recession since 1991. A recession for an economy means high unemployment rates, slowing GDP, and high inflation. According to BBC News, Gross Domestic Product (GDP) fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter meaning that the widely accepted definition of a recession - two consecutive quarters of negative economic growth - had been met. It was the biggest on quarter to quarter decline since the 1980. Not only that their currency, the pound, also drop significantly counter the U.S dollar, one pound equaling $1.35.

The financial crisis of 2007-08 also commonly referred to as the global financial crisis caused a rippling effect on the world economy, leading to the dissolution of some of the largest corporations. There are many factors that led to the crisis such as deregulation, gained popularity, easy access to subprime mortgage loans, low interest rates, securitization and the bursting of a housing bubble and illiquidity. The combination of a real estate burst and their underlying mortgages that were securitized is the most rampant speculation of the cause of

The financial crisis of 2007-08 was also known as subprime crisis or credit crisis. Since the bubbles of real estate market in America came into surface on August 9, 2007 investors were losing their confidence on subprime mortgage assets and the liquidity risk followed behind. Even though the central banks of many countries tried to turn around the situation by injecting huge amount of capital to the financial market, the financial crisis still broke out and spread to Europe and other parts all over the world especially on the backing sector.

In September 2008, thousands of financial sectors all over the world went bankrupt like dominoes after the failure of Lehman Brothers Bank, which is also known as the Financial Crisis of 2008, caused the severe recession of the economies around the world. In order to help the country out of crisis, the central banks in different countries had to take measures to stimulate the growth of economy. The goal of this essay is to introduce the measures that Bank of England have taken in 2008 of financial crisis and will discuss the macroeconomics consequences and effects. Three measures taken by Bank of England will be presented in first section and how macroeconomics outcomes influenced by policies and objectives will be discussed in the second section.

An economic event intertwined with the credit crunch of 2007 is the U.S. subprime mortgage crisis. In 2007, the subprime mortgage crisis dealt a huge economic blow to America and then had a great impact on the world economy. Although several actions were taken, the crisis still had severe, long-lasting consequences, which makes the world economy still in a slow recovery so far. The credit crunch of 2007 was triggered by several factors. Analyzing the cause of credit crunch can help us reduce the probability of it and then prevent financial crisis in the future.