The Economic Crisis Was The Worst Monetary Disaster Since The Great Recession

The banking crisis of the late 2000s, often called the Great Recession, is labelled by many economists as the worst financial crisis since the Great Depression. Its effect on the markets around the world can still be felt. Many countries suffered a drop in GDP, small or even negative growth, bankrupting businesses and rise in unemployment. The welfare cost that society had to paid lead to an obvious question: ‘Who’s to blame?’ The fingers are pointed to the United States of America, as it is obvious that this is where the crisis began, but who exactly is responsible? Many people believe that the banks are the only ones that are guilty, but this is just not true. The crisis was really a systematic failure, in which many problems in the

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Obama on July 21, 2010 as a response to the financial crisis of 2007-08. From an economic standpoint the overall consensus leading to the financial crisis can be linked to not only greed, but to ‘excessive deregulation’ and the “finanicialization of everything” (Knight 2015). Supposedly, the failures were due to the financial sector being funded by debt, which already sounds unethical and a poorly planned system. Prior to Dodd-Frank legislation was the Banking Act of 1933, which had similar intentions of providing stability. However, the Act was eaten away over time and companies weren’t as strictly regulated (Acharya 2013).

In this essay, I will briefly explain what happened during the financial crisis of 2007-09, and also discuss the contribution of the government to the financial crisis.

The 1930s, the period of the Great Depression is perhaps the most unstable financial time in United States history. The decade where more than 40 percent of nation’s banks disappeared crippled the economy for years and caused the Senate to pass the Glass-Steagall Act (part of the U.S. Banking Act of 1933). The main purpose of the legislation was to separate commercial and investment banking, limiting commercial banks’ securities and activities within commercial banks and securities firms and to restore confidence in the U.S. banking system. For the next 30 or so years, there was a substantial government safety net and government played a huge role regulating the economy and maintaining the aggregate demand through fiscal and monetary policies. (Arthur MacEwan. “Inequality, Power, and Ideology: Understanding the Causes of the Current Economic Crisis.” Real World Macro, Economic Affairs Bureau, Inc. November 2012.)

As we go into our research on the financial crisis of 2007, we will try to answer some questions about what actually cause of the failure of our financial system, which almost collapse the dollar. While there are plenty of faults to go around on what cause this crisis, there was never a clear path on how to reverse the demand that was cause by repealing the Glass-Steagall Act of 1933. Although there has been other regulations and acts pass since the repeal of the Act of 1933, the ability to restore and strength our dollar has been an uphill battle to take control of it. What was known within our economic system to readjust and rebuilt

The Great Depression was the single worst economic crisis ever experienced by the United States. In President Franklin Delano Roosevelt 's own words, by 1933 fully one-third of the nation 's citizens were ill-housed, ill-clad, and ill-nourished. Roosevelt 's was a presidency sired in crisis and sustained in war, and the very fabric of American society could not but be fundamentally altered as these extraordinary years progressed (Heale 2001, 16). One such fundamental change pertained to the American family. The Great Depression would forever reform the ways in which women in America were perceived, utilized, and ultimately, needed. Eliciting deep wellsprings of resourcefulness and ingenuity, the Great Depression demanded that women assume

The Great Depression was the worst economic crisis in U.S. history. From 1931 to 1940, unemployment was always in double digits. In April 1939, almost ten years after the crisis began, more than one in five Americans were still facing unemployment. A common misbelief is that the World War II ended the great depression in the U.S.

The Great Depression was a time when the economy in the U.S. plummeted. It occurred between the late 1920s and early 1940s. Many became homeless, jobless and hungry. Therefore, it leads many to wonder how it happened. A number of factors that led to the The Great Depression, the worst economic crisis in the United States, include the collapse of banking systems, reduction in foreign and domestic purchasing, and a major drought known as the Dust Bowl.

The Reagan Administration of the United States began a thirty-year-period of deregulation by the legislators in the financial system. Deregulation allowed the financial sector more freedom and less discipline, which provided more opportunity for profit and risk. Reflecting the profit growth resulting from deregulation, investment banks went from small, private firms to public companies. To illustrate the growth of the financial sector beginning in the 1970s and continuing into the early 2000s, consider this - from 1978-2008 the average salary in the United States in every profession other than investment banking rose by 25% and the average salary in investment banking rose by 150%.

The collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. Considered by many economists to have been the worst financial crisis since the Great depression of the 1930s. Economist Peter Morici coined the term the “The Great Recession” to describe the period. While the causes are still being debated, many ramifications are clear and include the failure of major corporations, large declines in asset values (some estimates put the drop in the trillions of dollars range), substantial government intervention across the globe, and a significant decline in economic activity. Both regulatory and market based solutions have been proposed or executed to attempt to combat the causes and effects of the crisis.

The stock market crashes, banks are closed for “holiday”, unemployment rates rise, work is hard to find and families are seen in swarms in the streets and sections of the city. The time is 1929 after the stock exchange crash. With little to no faith in the financial system the government had a challenge on its hands. How to recover the United States economy? Their first proposal was drafted, by Senator Carter Glass, a Democrat from Virginia, that held the position of Treasury Secretary. He proposed a bill that in essence was created “to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes” basically put, banks could either be commercial banks that were able to hold onto deposits and earn profit by utilizing government bonds or securities (a more secured form of investing), or they had to choose to be investment banks which specifically specialized in high risks lending and utilize investors as a source of capital, however, they could not secure deposits. The bill was cleared through the Senate in 1932, nonetheless, The House of Representatives did not have time to vote on the Act before their recess. During this time Representative Henry B. Steagall a Democrat from Alabama added an amendment to the Banking Act, he insisted per guidance of Franklin D. Roosevelt that there be some type of Insurance Company associated within the

 ”Inside Job” provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse. Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia.

An important regulation document was the Glass-Steagall Act, which seperated the commerical banking business from the investment banking. Due to speculation in investment banking parts, people with savings also lost their money, since the whole bank went bankrupt. The new regulation framework was supposed to avoid such scenarios in the future. In 1999, the act was repealed (Piereson, 2008, May 15th).

The documentary “Inside Job” offers its viewers with a thorough and thoughtful analysis of the 2008 financial crisis, which eventually led to the Great Recession that later cost the world ten trillion dollars and thirty million jobs. Almost all major economist as well as the International Monetary Fund (IMF) agree that the recession is the worst global recession that has ever happened since the Great Depression of the 1930s.

Iceland is a small island country located in the North Atlantic Ocean with only 300,000 populations in a country. They had almost no contact and relationship with other countries within 1000 years. However, throughout the 1990s and early 2000s, Great changes had taken place in Iceland. The average Icelander became 300% wealthier from 2003 to 2006, and all three of Iceland’s major banks which are Kaupthing, Landsbanki and Glitnir had developed from tiny saving banks in the 1990s to become the world’s top 300 banks a decade later (Gunnlaugsson, 2012). Iceland became the best places for living in this period of time. However, the 2008 world economic crisis sudden started in Iceland and became a national issue, and these three major banks crushed within a few days in October of 2008 (Boyes, 2009; Vaiman, 2011). After this happened, the public had an outcry that the cause of recession should be blame to local politicians and bankers, the government and supervisory agencies (Gunnlaugsson, 2012). However, others argue that they should not only blame to their bankers and politicians. This essay will argue that this financial crisis in Iceland in 2008 was not only caused by these individuals, but also by the society, banking system and world economy. Firstly, this essay will talk about the nepotism and naive belief of neoliberalism from politicians and bankers, then it will move to the reason that why Icelanders only blame to those individuals and show society’s