Global Financial Crisis 2008
The GFC had its origins in the United States with the advent of the sub-prime mortgage crisis which first appeared in August 2007. Banks experienced bad loans in the sub-prime mortgage market. In 2008, severe financial problems were exposed in some major banks in the United States which led to a freeze of credit markets, resulting in the GFC and a worldwide economic recession.
If you consider the GFC to not be over yet, then reasons are concerns about sovereign debt issues in several European countries, including Greece and Ireland, where Governments have been bailed out financially by Eurozone members. There is some uncertainty about global economic growth, and interest rates remain at record low levels in many countries to try to increase economic growth and avoid another recession. The United States has been using quantitative easing (money printing) to try to boost its economy.
If you consider the GFC to be over, then reasons are the United States economy is now out of recession and economic growth in the United States has returned to pre-GFC levels, the unemployment rate in the United States is decreasing and consumer spending in the United States is increasing. Also, the United States will soon end its program of quantitative easing. Note that there was no recession in Australia due to the GFC although the GFC did reduce economic growth in Australia.
The Board of the Reserve Bank of Australia lowered the cash rate to 3.0% per annum due to the GFC to try to keep Australia’s economy out of recession and to help the economy recover from the effects of the GFC.
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