There are several factors that have contributed to the global recession of 2008. Some of the key factors include:1. Subprime Mortgage Crisis: The subprime mortgage crisis, particularly in the United States, was one of the major triggers of the recession. It involved the collapse of the housing market due to the high number of mortgage defaults by borrowers with poor credit histories. This resulted in a significant decline in housing prices and a wave of foreclosures.2. Financial Deregulation: Deregulation of the financial industry allowed for increased risk-taking and lax lending standards, which further exacerbated the subprime mortgage crisis. Financial institutions were able to create complex financial products that were difficult to understand and value accurately, leading to a buildup of systemic risks.3. Globalization: The interconnectedness of the global economy meant that the effects of the subprime mortgage crisis quickly spread beyond the United States. Many international financial institutions and investors were exposed to toxic assets tied to the US housing market, causing a global financial contagion.4. Failure of Financial Institutions: Several major financial institutions, including Lehman Brothers, Bear Stearns, and AIG, faced severe financial distress or outright collapse during the recession. The failure of these institutions and the subsequent credit freeze had a cascading effect on other companies and led to a loss of confidence in the entire financial system.5. Tightening of Credit: As financial institutions faced mounting losses and a lack of liquidity, they became reluctant to lend to each other and to businesses and individuals. This resulted in a contraction of credit availability, making it difficult for businesses to invest, consumers to borrow, and economies to grow.6. Decline in Consumer and Business Spending: The subprime mortgage crisis and the resulting economic uncertainty led to a significant decline in consumer and business spending. People cut back on discretionary purchases and businesses reduced their investments and hiring, contributing to a slowdown in economic activity.7. Government Response: Governments around the world intervened to stabilize the financial system and stimulate economic growth. Central banks lowered interest rates, injected liquidity into the markets, and provided financial support to troubled institutions. Fiscal stimulus measures, such as increased government spending and tax cuts, were also implemented to boost demand.These factors collectively created a perfect storm that led to a severe and prolonged global recession. The effects of the 2008 recession were felt worldwide, causing job losses, bankruptcies, and long-lasting economic and social consequences.
Qzone
Weibo
Wechat