The Never-Ending Financial Crisis of 2008

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.

In the midst of the current economic downturn, dubbed the “Great Recession”, it is natural to look for one, singular entity or person to blame. Managers of large banks, professional investors and federal regulators have all been named as potential creators of the recession, with varying degrees of guilt. No matter who is to blame, the fallout from the mistakes that were made that led to the current crisis is clear. According to the Bureau of Labor Statistics, the current unemployment rate is 9.7%, with 9.3 million Americans out of work (Bureau of Labor Statistics). Compared to a normal economic rate of two or three percent, it is clear that the decisions of one group of people have had a profound affect on the lives of millions of

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 Great Recession that began in 2007 introduced people to a feeling not since felt since the Great Depression of the 30’s and 40’s. It reintroduced a new generation to the realization that we cannot take anything for granted. It sprung up fears in a fearless population, and out of it born a stress like no other. We can harness that stress; we own it as individuals, employees, as employers, as caretakers of the future.

The Great Recession lasted from December of 2007 until June of 2009, making it the longest recession since World War II. During this time, gross domestic product (GDP), inflation, unemployment, and interest rates were all greatly affected. The previously mentioned metrics are used to compare today’s economy to the economy during the Great Recession to see how the United States has rebounded since 2009. Monetary and fiscal policies were also implemented to combat the recession, and their effects determine whether or not the policies have a lasting effect in continuing to help the U.S. economy rebound.

The “Great Recession of 2008" hit The United States and the rest of the world with a force not seen since the Great Depression less than a century ago. December of 2007 saw an unemployment rate of 5.7% as the economy was rolling forward on the back of the high-profiled housing market funded by aggressive loans to consumers with sub-par credit. (National Bureau of Economic Research) This created a proverbial “House of Cards” that fell apart that same month and over the course of two years; the unemployment rate would nearly double as The United States would lose over 8 million jobs according the National Bureau of Economics. The cause of The Great Recession can’t simply be quantified to just one person, agency or company. However, in the broad

Following the crash of the stock market, over 9000 banks failed to stay in business. This caused many fellow Americans to lose their savings they began to refuse to spend their money. In addition, due to businesses not having high value and banks shutting down, companies and industries began to fire their employees.

The U.S. economy experienced a deep recession in years of 2008 through 2009. A huge factor in this was the number of large financial institutions that failed. Also, the stock market declined significantly which can be contributed to the bailout plan that was passed by our government. Third, spreads on many different types of loans over comparable U.S. Treasury securities has expanded significantly (Chari, Christiano, & Kehoe, 2008). The financial crisis is the result of the collapse of the housing bubble in the U.S., which can be seen as the starting point of a crisis in the global economy afterward.

The Great Recession of 2008 hit U.S citizens hard and many still wonder if it could have been prevented and why the country didn’t see it coming. The growth of the new phenomenon of mortgage backed securities and little regulation in the financial industry made it easy for banks, financiers and rating agencies to make money quick and easy leading to a heated market that eventually collapsed.

Ever since World War II the United States has experienced many recessions. There have been many terrible recessions that have hit this great country hard. What is a recession people may wonder? A recession is a significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country 's gross domestic product (GDP). Although, the recession of 2001 wasn’t a dramatic and horrible recession, it was the end of the longest expansion our country had seen since WWII. The expansion following the recession of 1991 was 10 years up until this recession of 2001. Furthermore, this recession was difficult and was hard to deal with and overcome, because during the time of this recession our country experienced 9/11.

The great US recession was a result of foolish decisions made in the past, which then in turn lead to a slow and painful punishment for the US economy. It was caused mainly because banks were loaning out too much money; Banks used money which they didn’t really have on paper to invest heavily into the housing market and the stock market; the debts which the citizens were creating by using large amounts of loans to pay for their daily expenses and to pay for expensive things became impossible to pay.

This financial crisis and bursting of the US housing bubble prompted a wider recession. Due to the credit crunch, there was less available credit for consumers and businesses. There also began to be restrictions on lending- since banks went bankrupt there was a reduction in bank’s lending in the first place and bank lending went down to just over $10 billion.

To really understand this situation it is crucial to realize what a recession really is. In January 2008 economists were not even sure yet if the economy was heading into a recession, yet the National Bureau of Economic Research determined in December 2008 that the U.S. had really been in a recession since December 2007 (Lim, 2008). The economic

The American government has made dramatic changes in its role in the economy in the past. During the great depression unemployment soared to twentyfive percent and the government was forced to take a more hands on approach in directing the economy. Today, America still has an unemployment compensation system, social security, and other services that comprise the american safety net. Since the early 2000’s there has a steady increase in unemployment for recent college graduates and an increase in the number of people who consider themselves underemployed. However, according to Derek Thompson, this may not be such a severe issue as to require government intervention. Thompson acknowledges some discouraging statistics such as the fact that,

The financial crisis has created a strained relationship between common employees and management all across the country. The immediate effects of the crisis were a period of deep job cuts in many economic sectors. Some industries, such as finance, shed hundreds of thousands of jobs as firms like Bear Stearns and Lehman Brothers completely shut down. (Stjern, 2008) Other sectors suffered in the immediate aftermath, like public sector services as well as construction. The unemployment rate across the country rose to 10%, and in some states that number reached 12 or even 15%.