2008 The Great Recession flashcards

Recession

decrease in GDP, lasts for at least 2 quarters, and a slow down in economic activity.

Depression

Extreme recession,  lasts for 3 or more years, or leads to a decline in GDP.

The Great Recession

• Dec 2007 - June 2009

• Worldwide; America’s/Mexico felt it, China/India/Indonesia prospered

• Banks unable to pay back businesses and homeowners with paying debt more than getting it.

• George W Bush & Obama

George W Bush

• US President 2001 - 2009

• Widespread anger at banking bailouts and stimulus measures begun by him.

Subprime Mortgage Crisis 

• a multinational financial crisis that occurred between 2007 and 2010

• Caused The Great Recession

• banks gave risky loans to people with poor credit

• Housing prices fell, can’t sell their houses, losses for banks, financial collapse.

Troubled Asset Relief Program (TARP)

• Signed by Bush

• created in 2008 to stop the financial crisis.

• Helped banks, save the auto industry, support homeowners

Recovery and Reinvestment Act (ARRA)

• Signed by Obama

• A 2009 stimulus plan to fix the economy after the Great Recession.

The 2000s United States housing bubble

• was a sharp run-up and subsequent collapse of house asset prices affecting over half of the U.S. states. 

• The credit crisis resulting from the bursting of the housing bubble is an important cause of the Great Recession in the United States.

the Bush tax cuts

• legislation to reform healthcare

Barack Obama

• 2009 - 2017 length term

• continued and expanded banking bail-outs and stimulus measures, started by bush

• Created Recovery and Reinvestment Act of 2009  

The Shadow Banking System

• legally provide services similar to traditional commercial banks but outside normal banking regulations.

• Third party banking

Reaction to The Great Recession

• General public’s response

  • Widespread anger at bank bailouts and stimulas measures

• Gov reaction

  • The Gov passed The Emergency Economic Stabilization Act of 2008 (EESA) 

    • Funds banks and other acts that fund banks and bailouts

Bail-out

• Funding businesses seen as essential from bankruptcy

• Gov profits from bailouts?

  • Yes, US Government

  • No, auto industry and housing industry

“Too big to fail”

• concept that certain corporations or financial institutions are so large and interconnected that their failure would be disastrous to the greater economic system,