Great Recession Effects

world felt the effects, with some of them being felt to this day. I will

be focusing more on the effects of the recession, more than the causes. But, the general recession

in America started due to combination of many things; the housing bubble bursting, and the

banks giving out bad loans and causing a credit bubble. (Financial Crisis Inquiry Commission, p2) There were other

factors as well, but these were the key ones to creating the great recession.

During this great recession, a lot happened in a very short period of time. The stock

market dropped significantly, the unemployment rate went up significantly as well as millions of

people losing their jobs, and the availability of loans went down (Bernanke p87) ; all of these happened

While the stock market isn’t the

perfect way to see how an economy is doing in every way, you can see the general health of the

it just by looking in some ways. In the span of two years, the Dow Jones Industrial Average

dropped from a high of 14,165 in 2007 to a low of 6,547 in 2009. (Grusky p4) . This lead to

significantly less liquidity in businesses, banks, and also lead to a lot of businesses closing their

doors and laying people off. It is hard to get %100 accurate numbers of the unemployment rate,

but in 2009 the United States had about %17 unemployment rate. (McNally p23) This caused a lot of

these unemployed people to not have the money for food, healthcare, and other social assistance

programs, but sadly a lot of these programs were also being cut at the time . (McNally p23) In the housing

market, some houses which had been bought a few years before hand fell by more than 50% (Grusky

p4) . All of these problems tended to hit the non-white Americans harder than the white ones as

well.

While this was going on the United States government was doing what they could to try

to help the situation. When it came to employment, those who had lost their jobs could file

Across Europe a few of the largest financial businesses failed and others

needed a bailout (Shah, Global Financial Crisis) In Iceland, the entire economy changed from mainly

specializing in fishing and aluminum smelting, to specializing in global finance. In this time,

they were offering their business overseas where they could get larger interest rates, causing the

3 largest banks to balloon into a size 10 times greater than their economy. (O’Brien) Unlike in

America, because those banks grew so large the Iceland government couldn’t afford a bail out.

However, the banks only had protections on their own people’s money, so letting them fail just

meant people internationally losing money. While the government did bail out the banks that it

could for the people of its country, that left the government with so little money that it had no

clue but to get a bailout from the International Monetary Fund. When the IMF did help them, it

also helped put in capital controls to stop the Icelandic economy from falling any further. (O’Brien)

There were also many other parts of Europe which went through financial burden, like