TIMELINE OF THE US ECONOMIC CRISIS

Timeline of the US Economic Crisis

Timeline of the US Economic Crisis

Introduction

The economic recession of 2008-2012, or sometimes even referred to as the late-2000s recession, Great Recession or the Lesser Depression, is a marked global economic decline that initiated in the early December 2007 and then took a somewhat sharp down turn by the September of 2008. This period of recession not only affected the United States of America but also left a lasting imprint on the economy of the entire world as well. This major global recession can be characterized by a series of systemic imbalances and is said to be sparked by as a result of the outbreak of the 2007-2012 global financial crisis (Astley, Giese, Hume and Kubelec, 2009).

Starting somewhat around in mid-2007, this global economic crisis swiftly metamorphosed itself from the bursting of the housing bubble in the United States of America to one of the worst periods of recession that the world has ever witnessed since over six decades. (Fallon, P.R. and R.E.B. Lucas. 2002) According to a poll in 2011, almost more than half of all the American citizens thought that the United States of America was still in recession or even depression, despite the fact that the official data showed a historically modest recovery. (Bezemer, 2009)

Discussion

In late 2005 the US housing market peaks and the hottest real estate markets begin their descent. By January 2006 homebuilders' stocks peak and begin a steep decline. Subprime loans' delinquency rates begin to rise as extended borrowers have trouble making payments as housing values decline and adjustable-rate mortgage payments increase with interest rate resets. By August 2007, credit crunch" manifests as investors become aware of the broad exposure of banks and hedge funds globally to subprime mortgage-backed securities. The Federal Reserve injects about $100 billion into the money supply for banks to borrow at a low interest rate. Central banks coordinate efforts to increase liquidity for the first time since the aftermath of the September 11 terrorist attacks.

The debate regarding how this economic crisis originated has been mostly focused on the individual parts played by the United States public monetary policy along with the practices of the private financial institutions. In the United States of America, the mortgage funding in particular was habitually decentralized, and somewhat competitive (Bezemer, 2009). On October 15th of 2008 Faiola, Nakashima, and Drew Jill wrote a lengthy article in one of America's most widely read newspaper; The Washington Post which was titled "What Went Wrong". The authors during their investigation seemed to have claimed that the former Federal Reserve Board Chairman Alan Greenspan along with the Treasury Secretary Robert Rubin, and SEC Chairman Arthur Levitt fervently opposed any regulation of financial instruments or more commonly known as derivatives (Baily, Litan and Johnson, 2008). Many economists such as Steve Keen also tend to claim that the economic crisis of 2008 and 2009 had its origin in the financial crisis of 2007 to 2010 and are thus traced back to the overtly indebted economy of the United States of ...