Question

Analyzing the 2008 Financial Crisis , a.k.a. The Great Recession

Reflect within the context of the class (i.e. macroeconomics). In other words, using your "macroeconomic lens" describe what you observe about the 2008 Financial Crisis and its impact on the economy.

Expected Word Count:

• 250 initial post

Answer 1

The financial crisis of 2008 has been the worst economic disaster since the 1929 Great Depression. This happened to stop this despite efforts by the Federal Reserve and the Treasury Department. This brought about the Great Recession. That's when housing prices fell 31.8 percent, more than the Depression price collapse. Two years after the end of the recession, unemployment remained above 9%. That's not counting discouraged workers who quit the search for work.

The financial crisis first signs emerged in 2007. Once banks learned they had to bear the losses, they panicked. They kept each other from borrowing. They didn't want other banks to give them as collateral worthless mortgages. No one wanted to keep the bag trapped. As a result, the cost of lending interbanks, called Libor, has risen. The primary cause of the financial crisis of 2008 was this mistrust within the banking community.

Five fields are strengthened by the TARP funds. As a way of giving them money, Treasury used $245.1 billion to buy bank preferred stocks. Auto companies were bailed out by another $80.7 billion. This contributed $67.8 billion to insurance company AIG's $182 billion bailout. About $19.1 billion went for credit markets to be expanded. The bank paid back $23.6 billion, making a profit of $4.5 billion. The Affordability and Stability Program for homeowners disbursed $27.9 billion in mortgage modifications.

To monitor, the government has to step in. To order to prevent banks from taking too much risk, Congress passed the Dodd-Frank Wall Street Reform Act. This helps the Fed to reduce the size of the bank for those who are too big to fail. But it left federal regulators with many of the steps to sort out the details. In the meantime, banks are getting bigger and forcing even this legislation to get rid of it. 2008's financial crisis showed banks were unable to control themselves. We could trigger another financial crisis without government oversight such as Dodd-Frank.

Home Values–According to the Federal Reserve, the U.S. lost $3.4 trillion in real estate assets from July 2008 to March 2009. This is about $30,300 per household in the United States. In addition, 500,000 new foreclosures occurred during the acute phase of the financial crisis as predicted from Stock Values–from July 2008 to March 2009, according to the Federal Reserve, the US lost $7.4 trillion in stock assets. This is an average of about $66,200 per U.S. household