Causes of the Great Recession - Free Essay Example by.
Week Two Essay Great Recession If I had to choose on even that will have significance in my life it would have to be “The Great Recession”. The economic turmoil that started in early 2008 by the fall of Bearn Stern the 4th largest Investment Banking firm in the U. S. followed by the collapse of Leman Brothers in September of 2008 has led to the worst recession since the World War II and.
September 2008 marked the first recession of the 21st century which resulted in stock markets all over the world in red for almost a year. The reason behind the recent recession was due to the lax monetary policy adopted by the privatised banks (Carmassi et al. 2009, p.977).
The period known as the Great Moderation came to an end when the decade-long expansion in US housing market activity peaked in 2006 and residential construction began declining. In 2007, losses on mortgage-related financial assets began to cause strains in global financial markets, and in December 2007 the US economy entered a recession.
The recession was caused by many downfalls but the majority was caused by the collapse of the housing market. In the years before the crisis, the behavior of lenders changed dramatically. Lenders offered more and more loans to higher-risk borrowers, including undocumented immigrants. Lending standards particularly deteriorated in 2004 to 2007.
The Great Recession was particularly severe and has endured far longer than most recessions. Economists now believe it was caused by a perfect storm of declining home prices, a financial system heavily invested in house-related assets and a shadow banking system highly vulnerable to bank runs or rollover risk. It has lasted longer than most.
For the United States, it’s been one of the worst economic recessions since the Great Depression during the 1930’s. The recession was caused by many downfalls but the majority was caused by the collapse of the housing market.
Sample Essay: Great Recession of 2008 Today, economists stick to the opinion that the period of the Great Recession of 2008 is the hardest economic crisis since the Great Depression times. It had hard effects on the wellbeing of the U.S. population, including the rise of unemployment, increase of poverty, and homelessness.