The Great Recession

In: Business and Management

Submitted By laguy1010
Words 1552
Pages 7


MARCH 24, 2013


Most economists consider the Great Recession of 2008 to be the worst financial crisis since the Great Depression. The sequence of economic events affected the entire global economy, with certain countries being hit harder than others. In the end, the collapse resulted in the total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of US dollars, and a downturn in economic activity leading to a global recession and contributing to the European sovereign-debt crisis.

Most experts agree that one of the most important contributors to the recession was the collapse of the housing bubble. This led to an extremely high rate of loan defaults for people who probably should not have been given those loans in the first place. Due to the practice of predatory lending, many unsuspecting people were offered mortgages that they could not afford; however these people were convinced by lenders and realtors that they would be able to refinance those properties in a year or two and make tons of money. Since, the housing market was strong at the time, many people jumped on this opportunity, knowing that the property they were signing for was more than their budget could handle. Another part of the problem was the relationship between mortgages, the housing crisis and Wall Street. When Wall Street giants such as Bear Stearns, Lehman Brothers and Merrill Lynch jumped into the void left open by the collapse of the Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac;…...

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