The Great Recession Essay

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What caused the Great Recession that lasted from December 2007 to June 2009 in the United States? The United States a country with abundance of resources from jobs, education, money and power went from one day of economic balance to the next suffering major dimensions crisis. According to the Economic Policy Institute, it all began in 2007 from the credit crisis, which resulted in an 8 trillion dollar housing bubble (n.d.). This said by Economist analysts to attributed to the collapse in the United States. Even today, strong debates continue over major issues caused by the Great Recession in part over the accommodative federal monetary and fiscal policy (Economic Policy Institute, 2013). The Great Recession of 2007 – 2009 enlarges the longest financial crisis since the Great Depression of 1929 – 1932 that damaged the economy.
The causes of the Great Recession all started as hundreds of billions of dollars was given to the United States abroad and financiers conceiving were to make a profit and what better way but the real estate market. Since the Community Reinvestment Act of 1977 and an expansion made in 1995 the than President Bush endorsed the program that created Option adjustable rate mortgages (nick-named “Pick-A-Pay”) to allow for bank to sell these options even though they were high risk (Conservapedia, 2013). The Community Reinvestment Act of 1977/95 is defined as to framework financial institutions, state and local governments, and community organizations to jointly promote banking services in the community” (Office of the Comptroller of the Currency, n.d.). That being said, there were three individuals, and firms that contributed the most to the recession including Senator Charles Schumer D-NY, Fannie Mae, American Ins...

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...ttinger, could leave people liable to lose funds (2013). The definition of moral hazard is “any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go wrong” (Pettinger, 2013). Moral hazards used in the recession in the form of bailouts only gave firms, banks and other organizations more reason to take risk knowing they have nothing to lose. If anything comes from moral hazards using fiscal and monetary policies would be higher debts, which in one day create more jobs lost, more homelessness, poor education and more healthcare expenses. The Great Recession of 2008 in North America was an enormous economic downturn causing the real GDP to fall at a nearly six percent annual rate (Pettinger, 2013). In the end, the recession recovered because policymakers enacted the monetary and fiscal policies.
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