Economic Crisis Of 2008
- Almost as bad as the Great Depression, the crisis resulted in the threat of a collapse of major financial institutions, the bailout of banks by governments and downturn of stocks.
- The housing market also suffered and resulted in foreclosures and unemployment.
- Consumer wealth decreased severely and created a global recession.
- There was a collapse in the U.S. sub-prime mortgage market and a reversal of the housing boom.
- This was largely influenced because securitization was used for banks to pool their assets and load off their risky loans to others.
- Banks kept borrowing more money to lend out and create securitization, and sell the bad loans to others, but slowly the banks were running out of people to loan to and they were turning to riskier loans.
- The banks created more risks by trying to manage their current risks.
Ebb & Flow of Liberal Economic
During this time the government of the USA shifted slightly left on the economic spectrum, funding more social programs and putting more regulations on banks in order to ensure this crisis is not repeated.