Term Paper: Great Recession in America

Pages: 3 (889 words)  ·  Bibliography Sources: 3  ·  Level: Master's  ·  Topic: Economics  ·  Buy This Paper

¶ … great recession in America

The Current Recession in America

The global community is now more than ever concerned with an economic crisis which commenced within the United States real estate sector, and soon afterwards expanded to the entire American and global economy. While there are several topics of interest related to the crisis, the most stringent ones refer to the causes of the crisis, the position and role played by the United States Congress, the manifestation of the crisis with particular emphasis on the lack of liquidities and the effects of the economic recession.

At a most basic and simplistic level the economic crisis was formed on the bases of the real estate crisis, which was in turn formed as the result of dubious transactions and the issuing of sub-prime mortgages. The Congress played a pivotal part in the meaning that it inadequately regulated the operations and it as such allowed for the situation to enhance. At a more specific level, the causes are presented as follows:

The uncontrolled "housing boom and bust" (Sowel, 2010)

The instability of the labor force due to the aging of the population and the high rate of joblessness

The financial losses of economic monoliths

The population's destructive habit of living on debt (massive purchases on credit cards)

The inability of the population to reimburse its home loans (defaults on mortgages)

The increase in the retail prices of essential commodities

The decision of economic agents to halt the hiring process

The decision (or necessity) of populations and economic agents to spend their savings on day-to-day expenses, rather than have them invested

The decrease in the national output, materialized in a decrease of the gross domestic product

Generalized panic (More Business, 2008)

The United States Congress has played an important part in both the generation as well as the manifestation of the economic crisis. At the first level, they allowed financial institutions to easily grant sub-prime mortgages. At a secondary level, they forced banking organizational to implement more prudential decision making strategies and to no longer expose themselves and the economy to such great risks. Third, the Congress stimulated the financial institutions to pick up lending operations in order to increase the population's access to funds and as such stimulate economic revival. The specific actions taken by the United States Congress include the following:

The interdiction of foreclosures and the obligation of financial institutions to offer refinancing options for the customers

The grating of a $168 billion economic stimulus which included tax deductions for business owners and tax rebates for home owners. The impact of the decision was however short lived.

The efforts in the issuing of a… [END OF PREVIEW]

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Great Recession in America.  (2010, July 3).  Retrieved July 23, 2019, from https://www.essaytown.com/subjects/paper/great-recession-america-current/421273

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"Great Recession in America."  Essaytown.com.  July 3, 2010.  Accessed July 23, 2019.
https://www.essaytown.com/subjects/paper/great-recession-america-current/421273.