The Financial Crisis Of 2008 Hit The American Economy

In 2008, the American economy broke down. Known as the Global Financial Crisis, this is widely considered to be the worst financial crisis since the 1930’s when the stock market crashed and the Great Depression hit.

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

Many people today would consider the 2008, United States financial crisis a simple “malfunction” or “mistake”, but it was nothing close to that. Contrary to what many believe, renowned economists and financial advisors regarded the financial crisis of 2007 and 2008 to be the most devastating crisis since the Great Depression of the 1930’s. To make matters worse, the decline in the economy expanded nationwide, resulting in the recession of 2007 to 2009 (Brue). David Einhorn, CEO of GreenHorn Capital, even goes as far as to say "What strikes me the most about the recent credit market crisis is how fast the world is trying to go back to business as usual. In my view, the crisis wasn't an accident. We didn't get unlucky. The crisis came

The Global Financial Crisis or 2008 financial crisis is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world.

The underlying problems that caused the financial crisis of 2008 began building before many economists and policymakers are willing to admit. Since the laissez-faire policies of the Reagan administration in the 1980s, inequality and unemployment heightened. “Between 1976 and 2006 (...) ation-adjusted per capita income increased by 64 percent, for the bottom 90 percent of households it increased only by 10 percent. For the top one percent of households it increased 232 percent,” (Wisman 2013, 932) causing an income gap. Another arsing issue was globalization after World War II. The economy’s structure changed and outdated previous economic policy. Manufacturing jobs were outsourced because labor was cheaper abroad; the US imported more goods than it exported, causing a trade deficit.

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. “ Many American homeowners bought houses they could not afford, signed into mortgage agreements they could not understand or which were misleading and took equity out of homes as if they were cash machines” (Cushman 1).

The 2008 financial crisis was the worst economic disaster the world had seen since the Great Depression of 1929. In spite of efforts made by the Federal Reserve and Treasury department to prevent such a tragic event from occurring, a large portion of the US banking system was fraudulent. The banks ' failure took a toll on more than just the financial system - it hurt people. People experienced layoffs, lost pensions, lost retirement funds,

Since 2003, there are economists warned America  's real estate bubble will burst a year, although this prediction has not fulfilled,however, the occurrence of happen sooner or later. In 2007 August,America sub-prime mortgage crisis broke out suddenly, not only the real estate bubble has finally burst, America also fell into the since twentieth Century 30 the Great Depression of the most serious financial crisis.

The financial crisis was something very few people saw coming. We were in what seemed to be a good economic place before it, the housing market appeared to be healthy and our economy seemed strong. The financial crisis rocked not only the American people and the United States economy to its core, but the rest of the world as well. It was on the borderline of being a true catastrophic event. A myriad of unforeseeable events occurred leaving policy makers around the globe in a plight, reeling to figure out what actions to take to keep the global economy from collapsing.

When America was faced with one of the most economic crisis ever felt since the Great Depression it was no doubt a hard blow for everyone to undertake. Some of the world's largest businesses are to blame for the financial crisis. Even a year after banks collapsed and government bailouts were given for certain automakers the future of America looked dark and bleak. Unemployment rose to an unprecedented high. Consumers realized that they were in a financial crisis and changed their spending behavior by staying in more and going out less. Consumers consumption took a different turn by taking a more conservative approach to life.

The recession greatly affected the housing investments as housing slump was set off. The investors were unable to flip their homes for a quick profit. Also, the adjustable rates of mortgages were increasing making it hard to get a mortgage.

When one of the largest US investment banks collapsed in 2008, it indicated that an economic crisis began. This economic crisis became the largest one since the 1930s. As a result, economic growth rates dropped in most parts of the world. More over, job losses dramatically increased and income amounts took a significant dive. On the other hand, the wealth of the top 1 percent increased dramatically, bringing with it significant social inequality and issues.

When you think of the 2008 financial crisis that affected not just the US economy, but the world as a whole, most average middle-class Americans won’t really know what triggered this economic disaster. Most will probably blame, and rightfully so, those large corporations on Wall Street. These corporations, which deal with insanely large amounts of money, will always be wary of their stocks decreasing. But they also know that 99% of the time, everything will go back to normal in the future. What they are not prepared for is economical collapses like we say in the year 2008. The financial crisis of 2008 can be compared to the stock market crash of 1929, the event responsible for the Great Depression. The financial crisis of 2008 can mainly be attributed to what would be the mortgage market collapse. The exposures for these large Wall Street corporations were too high, and when the bubble finally burst, trillions of dollars were lost. The company that lost the most: Lehman Brothers.

The Global Financial Crisis, also known as The Great Recession, broke out in the United States of America in the middle of 2007 and continued on until 2008. There were many factors that contributed to the cause of The Global Financial Crisis and many effects that emerged, because the impact it had on the financial system. The Global Financial Crisis started because of house market crash in 2007. There were many factors that contributed to the housing market crash in 2007. These factors included: subprime mortgages, the housing bubble, and government policies and regulations. The factors were a result of poor financial investments and high risk gambling, which slumped down interest rates and price of many assets. Government policies and regulations were made in order to attempt to solve the crises that emerged; instead the government policies made backfired and escalated the problem even further.

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).