The Housing Bubble During the Great Recession Essay

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In December 2007, caused by the housing bubble, what is known as the Great Recession began (“The Great Recession”). Prior to this, people kept buying houses with high risk loans, because their mortgage-backed securities were technically making profits when the house values increased; however, when the house values started to decrease, those securities became worthless, thus people were not able to pay for the house—many people had their house confiscated. As a result of this wealth loss, consumer spending decreased sharply and many banks collapsed. The U.S. government tried to combat this issue, but many of the fiscal policies they had created were controversial because of their interference in the economy. One debate sparked on whether…show more content…
One of the biggest problems that contributed, is that the amount of the money spent was “too small” and that it was providing money for everything—money was spent “from ailing infrastructure like bridges and rails to invasive species like Asian carp and Russian olive trees” (“How the $800B”). Stimulus package create programs that are unnecessary and wasteful, for its primary goal is to put American people to work. Republicans criticize that such economic measures run the country into large deficit, having severe effects on the economy in the long term such as substantial increase in inflation (“Deficit Spending”). Overall, Republicans believe that the program was too small in scale, and its timid plan only created massive deficits of the country. Despite the should-have and could-have afterthought arguments from Republicans, ARRA’s accomplishment cannot be discredited; it kept the real gross domestic product, or real GDP, from falling significantly, and it also increased employment. The Council of Economic Advisers, or CEA, reports that the real GDP began to grow steadily starting in the third quarter of 2009, and the ARRA has raised the level of GDP as of the second quarter of 2011, relative to what it otherwise would have been, by between 2.0 and 2.9 percent (“President Obama’s Stimulus”). ARRA struggle to win recognition of its
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