What was the relationship between “financialization” and the Great Recession of 2008-09?

What was the relationship between “financialization” and the Great Recession of 2008-09?

Expert Solution

There was a deep connection between excessive financialization and the Great recession of 2008-09. The Great Recession was brought on due to the collapse of the housing market and this was because there were too many loans, of questionable credit quality, which was given to customers, who did not have the requisite income levels to possibly pay back the loans.

Now these so called 'sub-prime' loans were packaged into derivatives products on the financial markets and because of the manner that these loans were distributed and securitised, the underlying risks were overlooked by most investors. Thus, due to excessive securitization of products such as the housing mortagage, investors and analysts were unable to decipher the true risks and most of the financial world was not able to take any corrective or preventive action. And when most of the mortgages started going bad, the whole securitization structure collapsed resulting in the great recession.

So clearly due to too much financial engineering, the great recession was brought on the world.

jeff jeffy answered 2 years ago

What are the causes of the Recession in 2008-09?

What happened in the 2008-09 recession?

The unconventional monetary policy undertaken during the financial crisis and the great recession in 2008-09 and...

The unconventional monetary policy undertaken during the financial crisis and the great recession in 2008-09 and compare the current Zero bound lower (ZBL) interest rate. What is the so-called “liquidity trap” and what are the remedies?

Explain the unconventional monetary policy undertaken during the financial crisis and the great recession in 2008-09...

Explain the unconventional monetary policy undertaken during the financial crisis and the great recession in 2008-09 and compare it to the current Zero bound lower (ZBL) interest rate. What is the so-called “liquidity trap” and what are the remedies?

Give an Analysis Liquidity Trap of the 2008-09 recession...

The great recession started in 2008 but it did not become a second great depression

What caused the Great Recession to occur in 2008, and as result, what happened to equilibrium...

What caused the Great Recession to occur in 2008, and as result, what happened to equilibrium real GDP, the unemployment rate,and the price level? Using the aggregate demand and aggregate supply model to explain what caused this.

Is an allegory of what happened in the U.S. economy during the great recession of 2008-2009....

Is an allegory of what happened in the U.S. economy during the great recession of 2008-2009. Therfore, starting from a position of equilibrium in AD-AS, explain what happened to U.S. economy during the great recession of 2008-2009. what did the U.S. goverment and/or the Fedreal Reserve do to get the U.S. out of recession? What eventually happened in 2015-2016 to improve the U.S. economy, GDP, and unemployment, while also decreasing prices? (Explain graphically and writing)

1. In your view, what was the cause of the Great Recession of 2008-2009? Did we...

1. In your view, what was the cause of the Great Recession of 2008-2009? Did we follow the proper steps to mitigate its effects? Explain. 2. What impact would federal spending cuts have on the current equilibrium level of economic activity? Would you favor such cuts? Why or why not? 150 words per question, please (:

What was the similarities and difference between the great depression and the great recession 2007-2009?

Question