Bonus Paper The Great Recession of 2007-2009 was very harmful to the economy of the United states. Many people lost their jobs and were forced to work at lower wages, so the demand for consumer goods dropped. Homeowners were also hurt because the value of housing and real estate crashed. This decrease in wealth pushed back the retirement age for many people. The financial situation was especially worrisome for my personal household during the Great Recession.
This is how we let the credit crunch happen, Ma'am ... [Online] Available at World Wide Web: [Accessed: 27 October 2013] Thomas, E. 2011. Definition of Credit Crisis. [Online] Available at World Wide Web: [Accessed: 4 November 2013] Udell, G. F. 2009. Wall Street, Main Street, and a credit crunch: Thoughts on the current financial crisis. Business Horizons.
The credit crisis occurred when large financial institutions were on the verge of collapsing due to the risky loans issued to United States residents. In order to stabilize the economy, the United States government developed a two-pronged strategy. They would “bailout distressed financial institutions and industries and pump government money into the economy” (“The Great Recession of 2008-09”). Despite the astronomical costs and the overwhelming republican opposition to the bailout, it was necessary to bailout GM and Chrysler because the US economy would have declined profoundly with the loss of millions of jobs and a decreasing GDP if the companies weren’t bailed out. A grand total of nearly 80 billion dollars was invested in the auto-bailout.
The downfall of the American economy could be accredited to many crises facing our country, such as the subprime mortgage crisis. A few years ago, we experienced an energy crisis in which oil prices soared, and this directly led to the current automotive industry crisis. One could argue that the automotive crisis and the downfall of the Big Three automakers has been solely responsible for bringing our... ... middle of paper ... ... mistakes that were made before. Works Cited Boyer, Peter. "The Road Ahead."
In the latter part of 2008, the United States’ economy was rapidly plummeting - the stock market crashed, the housing bubble burst and gas prices skyrocketed. The majority of U.S. based firms faced the reality that they would not be able to survive during such desperate economic times. The U.S. automobile industry, in particular, began to buckle under the depressed economy. The government stepped in proposing a multi-billion dollar bailout to stimulate the economy and restore economic balance. The possibility of this unprecedented government intervention was condemned by many economists.
The Economist (2008) ‘Confession of a risk manager’, [Online], Available: http://www.economist.com/node/11897037.htm. [30 Oct 2013]. Wilfield, W. E. (2013) Ethical reflections on the financial crisis 2007/2008: making use of Smith, Musgrave and Rajan, New York and Heidelberg: Springer, pp. 1-4.
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.
In 2008 America entered a recession and its consequences were severe enough for some people, such as President Barack Obama, to compare the recent crisis to the world’s darkest economic depression in history, the Great Depression. Although the Great Depression and the Great Recession of 2008 hold similarities and differences between the stock market and government spending, political issues, lifestyle changes, and wealth distribution, the Great Depression proved far more detrimental consequences than the Recession. After World War I America became the world’s center for trade. The economic center of the world moved from London, England to New York City, New York, United States of America, and more specifically Wall Street (Buhle, Mari J, Czitzrom, Armitage 848). Due to women, the 1920’s marked economic and social change in America.
We can still feel the wound of financial crisis up to today. It’s useful for everyone to learn something about economics. IV. Thesis Statement/Preview of Main Points: Investment banks, Rating agencies and Insurance companies are key components of the financial market. In this presentation, I’m going to explain how these three key roles worked together to create the 2008 financial crisis.
Retrieved November 2, 2008, from http://online.wsj.com/article/SB122191819568460053.html?mod=googlenews_wsj Stewart, Heather. IMF Says US Crisis is Largest Financial Shock Since Great Depression (2008). Guardian News. Retrieved November 2, 2008, from http://www.guardian.co.uk/business/2008/apr/09/useconomy.subprimecrisis Wallace, Michael. Wall Street Talks: What the Bailout Means (2008).