Essay On Economic Crisis In America
Economic Crisis in America: Fall of 2008
Lillian Ruiz
ECO 405
Professor: Augustine Boakye
December 10, 2012
Abstract For the past several years, a declining economy has enslaved thousands of people in a life of hardship. The state of the economy has spurred mass furloughs, financial losses and homelessness. With no end in sight, people are becoming desperate in their attempts to support their families and maintain civility. While the government attempts to combat the depreciating economy, personal securities are increasingly declining. A recession is a significant decline in economic activity, measured by the job market, inflation-adjusted income, the total amount of goods and services produced by a country and other indicators. It begins when a country reaches a peak of economic activity and ends when the country reaches its trough. The period on the way up from the trough to the peak is known as an expansion. …show more content…
Before December 2007, the American economy had been expanding since November 2001. In other words, the expansion had lasted for 73 months. The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The speed at which some of the supposedly strongest and most respected financial institutions have melted down is stunning. Lehman Brothers disappeared almost overnight. Shareholders in Freddie Mac and Fannie Mae were virtually wiped out. Lehman, Fannie and Freddie, had too much leverage. Think of a homeowner with a 96% mortgage and credit card bills. If the value of the house declines only 5%, the homeowner is wiped out. The total leverage of companies like Lehman is difficult to calculate, but it is not unlike that of a highly overleveraged homeowner. Small declines in the value of its assets jeopardize their financial
Lillian Ruiz
ECO 405
Professor: Augustine Boakye
December 10, 2012
Abstract For the past several years, a declining economy has enslaved thousands of people in a life of hardship. The state of the economy has spurred mass furloughs, financial losses and homelessness. With no end in sight, people are becoming desperate in their attempts to support their families and maintain civility. While the government attempts to combat the depreciating economy, personal securities are increasingly declining. A recession is a significant decline in economic activity, measured by the job market, inflation-adjusted income, the total amount of goods and services produced by a country and other indicators. It begins when a country reaches a peak of economic activity and ends when the country reaches its trough. The period on the way up from the trough to the peak is known as an expansion. …show more content…
Before December 2007, the American economy had been expanding since November 2001. In other words, the expansion had lasted for 73 months. The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. The speed at which some of the supposedly strongest and most respected financial institutions have melted down is stunning. Lehman Brothers disappeared almost overnight. Shareholders in Freddie Mac and Fannie Mae were virtually wiped out. Lehman, Fannie and Freddie, had too much leverage. Think of a homeowner with a 96% mortgage and credit card bills. If the value of the house declines only 5%, the homeowner is wiped out. The total leverage of companies like Lehman is difficult to calculate, but it is not unlike that of a highly overleveraged homeowner. Small declines in the value of its assets jeopardize their financial