Quick Notes Recession Encyclopedia
What You Should Know About Work
Reconstructing the Great Recession
II Was The Great Recession a Balance
II Was The Great Recession a Balance
Presidential Politics Party Politics and Presidential Elections 1788 to 2012 edited by W. Antoniotti
Thomas Jefferson The Art of Power, 2012 J. Meacham
Top 10 Recent Financial Crises often lead to local recessions which sometimes roll around the world.
9. The Mexican Peso Crisis 1994
8. Argentine economic crisis 1999 Printing didn't help
7. German hyperinflation 1918-24 Printing devalued WW1 debt
6. Souk Al-Manakh - 1982 Try not to use post dated to buy stocks
5. Black Monday - 1987 23% drop in a single day black swan
4. Russian financial crisis 1998 Devaluation of the ruble and
cancellation of debt is never good for a local stock market
3. East Asian financial crisis - 1997 aka the Asian Contagion
2. Black Tuesday 1929
1. 1973 Oil Crisis — Big energy increases cause recessions
Source Top 10 Financial Crises | The Big Picture
Source What We Know About Financial Bubbles WSJ 9/22/17
Don't Know Much About History Everything You Need To Know About American History But Never Learned by K. C. Davis
Education and Income Inequality ch 21 The Age of Turbulence, Adventures in a New World, by A. Greenspan
Hoodwinked An Economic Hit Man Reveals Why the World Financial Markets Imploded--and What We Need to Do to Remake Them, J. Perkins
IV. The Great Recession from Quick Notes
A. The Great Moderation of the mid 1980's to mid 2000's preceded the Great Recession
1. It enhanced the psychology effect of the steep slowdown..
2. 9/11 got the century off to a terrible start.
3. It fostered Structured Investments Vehicles which remove perceived risk and created an unstable
financial/credits system with extreme optimism and panic in bad times.
Think derivatives, securitization, credit default swaps managed by banks and
hedge funds with no skin in the game. U.S. Economic Normality 1945 -2015
B. A change in philosophy
1. In 1980's, U.S. and England return to conservative government business deregulation
which was in response to the liberal induced safety-net expansion of the 60's and 70's,
which had upset many voters. This change was the most recent of many such
US political cycle changes which began with the 1800 presidential election. It signified a
change from a strong federal government advocated by Federalists Washington, Adams
and Hamilton lost out to the limited central government state's right politics of Hamiltonian
Republicans. Think Great Society and lax regulation.
2. In 1980's, major investments banks went public creating the need to balance client funds
with investor's funds.
3 .1980's, accounting standard began to decline as accountancy firms struggled to balance
their commitment to high audit standards against the desire to grow their burgeoning
consultancy practices. Think off balance items allowed and Arthur Anderson scandal.
4. Home Equity Loans replaced many home improvement loans as many used their home equity
to enhance current consumer spending rather than as retirement savings. Think fewer
prepared for retirement.
5. Reverse mortgages lowers savings of the elderly. Think less inheritance for their children,
6. Failed Regulation
a. In 1998 ,Greenspan. Rubin and Levii stop US Congress from regulation the OTC_derivatives_market.
b. In 1999, the Gramm, Leach, Bliley_Act more than repealed Glass-Steagall Great Depression Act, which
had limited systemic financial risk, was repealed by a majority of Republicans and signed by President Clinton.
See Five Bad Bush/Clinton Policies enhanced the Great Recession.
7. In 2006, FASB required housing assets be mark-to-market by financial institution.
This action resulted from a 1991 Government Accounting Office (GAO) caused by a recent
Savings and Loan Crisis.
C. From Financial Crisis to Recession to Great Recession
1. Financial crisis of 2007-9 was tamed by the Federal Reserve.
2. The 2008-9 recession was tamed by monetary and fiscal policy.
3. European financial and economic instability plus austerity measures
slowed not only her own recovery but also the world recovery and
added to a developing long-term secular slow down in wage growth
for all but the very, very, very wealthy.
4. The Great Recession Recovery Has Varied Around The World
D. Seven Stages of Great Recession from The Shifts and the Shocks by Martin Wolf
1. More complex unstable credits system evolved. It creates extreme optimism in good
times and panic in bad times. Think derivatives, securitization, credit default swaps,
and managed hedge funds.
2. Emerging countries began saving export generated Dollars, Yens, Pounds, and Euros
because the 1990's Asian Crisis had depleted their foreign currency reserves.
Foreign credit from high income countries financed economic growth.
3. Savings Glut led to secular stagnation.
a. Emerging countries like China built up a large trade surplus .
b. Private sector of high income countries like Germany and Japan's saved much more.
Rebuilding East Germany and the Asian 1990's credit crisis were Minsky moments.
c. Commodity exporters, especially oil exporter, saved more as indicated by their increased trade surplus.
d. U.S. nonfinancial sectored saved high globalization profits because of
1 expected weak demand
2 fewer domestic investment opportunity.
e. With propensity to save up and propensities to invest down, low long-term real interest rates indicated a savings glut.
f. As expected, long-lived asset prices increased, especially real-estate.
g. The savings glut also leads to secular stagnation and negative long term real interest rates.
4. Current Accounts Deficits in wealthy countries took up the excesses as central banks fulfilled
their mandate to maximize employment within reasonable inflation targets. This meant easy money,
low interest rates and debt, carloads of debt. This task was made more difficult as the a dreary
investment existed when more corporate savings were needed to solidify employee pension funds.
Investment in housing plus increased consumer spending in the US, UK and Southern Europe
soaked up the trade surplus and balanced world monetary flows.
5. Bank deregulation provided an easy conduit to soak up the easy credit provided by
central banks. Households borrowed the funds, investors ate-up the securities created and
insured by creative financial instruments which few understood. Fraud, near fraud and data
manipulation exploded. Leverage rose dramatically as modern economic and financial theory
created regulators and politicians who were complacent and often captured by those they
6. Poor pre-crisis management resulted as politicians and their economic advisors lacked
understanding, especially as to the extent of possible contagion. Political, intellectual
and bureaucratic resistance limited quick action, especially in areas requiring cooperation.
While a depression was avoided in all but southern Europe, economic growth slowed for years.
7. Post crisis management relied to heavily on monetary policy as fiscal austerity to control
government debt flourished everywhere though less in the US than in Southern Europe.
E. Major Causes of the Great Recession
1. A global savings glut and associated global imbalances.
2. Expansionary monetary policy that ignored asset prices and extensive credit.
3. Unstable financial system
4. Inadequate government regulation
5. Using homes as ATM machines not home buying fervor more to blame housing crisis
F. Causes of the Financial Crisis
1. Market Fundamentalism and laissez-faire/free market lowered regulation policies
beginning in 1980 and continuing cause serious problems.
2. Financial Product Innovation made asset purchases easier and fostered the belief that
risk avoidance was possible. Examples: Collateralized Debt Obligations, Asset Backed Securities,
Commercial Mortgaged Securities, Residential Mortgaged Backed Securities
G. Congressional Findings
1. Majority report (signed by 6 members) which found that the primary cause of the crisis was poor
financial corporation governance with insufficient (and ineffective) government regulation and supervision
2. Minority report focused on a list of 10 symptoms of the crisis* and identifying "shock and panic" as the root cause
3. Majority Report 2 concludes government housing policies were the primary cause
H. Other Causes
1. Innovation Cycle begins excessive growth that crashes (RR, computers, bio-technology?)
1. Causes of the Great Recession
2. An Historical Perspective on the Crisis of 07-08
3. Fiderer When Hank Paulson Launched The Big Lie- 9/15/08
4. After the Financial Crisis: How to Tell the Forest from the Trees
V. Financial Bailouts and Recovery
A. Banking Oligarchs Did OK
|Economic Policy||Policy Result|
|Bank Stress Test||Unemployment % 2009 - 14||
|US||Yes, Quickly||Expansionary||Little||Some Creditable||10||5.7||10.7 m||8%+|
|England||Yes Quickly||Expansionary||Some||Late||10||6.2||2.0 m||3%+|
|Europe Zone||Very Late (2015)||Concretionary||Much||Little Creditable||7||11.42||-3.5 m||-1.5%|
US now has about $10,000/head more than Germany.
1Cost of Great Recession were much higher.
US FED Profit of 100 billion
in 2014 were up from 47 in 2009 with and 420 billion 2010-14.
|from the St Louis Fed 3/14/17|
Some ECB Members Want More Easing, ECB Needed More Easing
Editor's Note: Using total GDP US leads and Germany plus England are a little behind.
Eurozone Catching Years
Foreigners Still Buying Treasuries
Recent Recession Recoveries
Impact of Great Recession
from SF FED
Impact of Great Recession from SF FED
D. Financial Credit Cycle Worsens vs. Business Cycle
10/20/15 much has been done to prevent future financial crisis but these
efforts will fail because greed and politics change very slowly.
Thankfully for many, Western civilization has progressed to the point
where even during poor times well-being is maintained at a reasonable
E. Recovery Was Historically Slow Though Not For a Balance Sheet Recession
1.Chart-book of the Great Recession 7/10/18 see 10 YEARS AFTER THE CRISIS for more data
2. Chart Book: Tracking the Recovery From the Pandemic
3. Econ Talk Podcast Recession, Stagnation, and Monetary Policy EconTalk Podcast 1/9/17
4. Mark Blyth: After the Financial Crisis: How to Tell the Forest from the Trees 57 min. video
5. Have Big Banks Gotten Safer? Brookings' Report Fall 2016
F. Some Worry Because
1. Debt Continues to Grow because of low Interest Rates
4. A Little More Leverage
Financial Crisis Still Empowering Far-Right
C. Risk-taking behavior increased encouraging
C. Risk-taking behavior increased encouraging
1. Financial product innovation
2. Inaccurate credit ratings
3. Lack of transparency and
4. Off-balance-sheet financing
5. Regulatory avoidance
6. Financial sector concentration
1. Interest rates
2. Globalization and Trade deficits
3. Chinese mercantilism
4. End of a long wave
5. Paradoxes of thrift and
1. Commodity price volatility
2. Inaccurate economic forecasting
3. Monetary expansion, uncertainty
4. Over-leveraged financial products
5. Credit creation as a cause
6. Oil prices
9. Declining Births Lowered Demand
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VIII. Wiki List of U.S. Recessions Note: I-phone display is poor.
|Name||Dates [nb 2]||Characteristics|
|Panic of 1785||1785–1788||The panic of 1785, which lasted until 1788, ended the business boom that
followed the American Revolution. The causes of the crisis lay in the
overexpansion and debts incurred after the victory at Yorktown, a postwar
deflation, competition in the manufacturing sector from Britain, and lack of
adequate credit and a sound currency. The downturn was exacerbated by the
absence of any significant interstate trade. Other factors were the British
refusal to conclude a commercial treaty, and actual and pending defaults
among debtor groups. The panic among business and propertied groups led to
the demand for a stronger federal government.
|Copper Panic of 1789||17961789–1793||Loss of confidence in copper coins due to debasement and counterfeiting
led to commercial freeze up that halted the economy of several northern
States and was not alleviated until the introduction of new paper money to
|Panic of 1797||17961796–1799||Just as a land speculation bubble was bursting, deflation from the
Bank of England (which was facing insolvency because of the cost of
Great Britain's involvement in the
French Revolutionary Wars) crossed to North America and disrupted
estate markets in the United States and the
and caused a
major financial panic.
Prosperity continued in the south, but economic activity was stagnant in the
north for three years. The young United States engaged in the
|1802–1804 recession||18021802–1804||A boom of war-time activity led to a decline after the
Peace of Amiens ended the
war between the United Kingdom and France. Commodity prices fell
dramatically. Trade was disrupted by pirates, leading to the
First Barbary War.
|Depression of 1807||18071807–1810||The
Embargo Act of 1807 was passed by the
United States Congress under President
Thomas Jefferson as tensions increased with the United Kingdom. Along
with trade restrictions imposed by the British, shipping-related industries
were hard hit. The
Federalists fought the embargo and allowed smuggling to take place in
England. Trade volumes, commodity prices and securities prices all began
Macon's Bill Number 2 ended the embargoes in May 1810, and a recovery
|1812 recession||18121812||The United States entered a brief recession at the beginning of 1812.
The decline was brief primarily because the United States soon increased
production to fight the
of 1812, which began June 18, 1812.
|1815–21 depression||18151815–1821||Shortly after the war ended on March 23, 1815, the United States entered
a period of financial panic as bank notes rapidly depreciated because of
inflation following the war. The 1815 panic was followed by several years of
mild depression, and then a major financial crisis – the
Panic of 1819, which featured widespread
foreclosures, bank failures,
unemployment, a collapse in real estate prices, and a slump in
|1822–1823 recession||18221822–1823||After only a mild recovery following the lengthy 1815–21 depression,
commodity prices hit a peak in March 1822 and began to fall. Many businesses
failed, unemployment rose and an increase in imports worsened the trade
Panic of 1825, a stock crash following a bubble of speculative
investments in Latin America led to a decline in business activity in the
United States and England. The recession coincided with a major panic, the
date of which may be more easily determined than general cycle changes
associated with other recessions.
|1828–1829 recession||18281828–1829||In 1826, England forbade the United States to trade with English
colonies, and in 1827, the United States adopted a counter-prohibition.
Trade declined, just as credit became tight for manufacturers in New
|1833–34 recession||18331833–1834||The United States' economy declined moderately in 1833–34. News accounts
of the time confirm the slowdown. The subsequent expansion was driven by
|Name||Business activity||Trade & industrial activity [nb 3]||Characteristics|
|1836–1838 recession||-32.8%||—||A sharp downturn in the American economy was caused by bank failures and lack of confidence in the paper currency. Speculation markets were greatly affected when American banks stopped payment in specie (gold and silver coinage). Over 600 banks failed in this period. In the South, the cotton market completely collapsed. See: Panic of 1837|
|late 1839–late 1843 recession||-34.3%||—||This was one of the longest and deepest depressions. It was a period of pronounced deflation and massive default on debt. The Cleveland Trust Company Index showed the economy spent 68 months below its trend and only 9 months above it. The Index declined 34.3% during this depression.|
|1845–late 1846 recession||−5.9%||—||This recession was mild enough that it may have only been a slowdown in the growth cycle. One theory holds that this would have been a recession, except the United States began to gear up for the Mexican–American War, which began April 25, 1846.|
|1847–48 recession||−19.7%||—||The Cleveland Trust Company Index declined 19.7% during 1847 and 1848. It is associated with a financial crisis in Great Britain.|
|1853–54 recession||−18.4%||—||Interest rates rose in this period, contributing to a decrease in railroad investment. Security prices fell during this period. With the exception of falling business investment there is little evidence of contraction in this period.|
|Panic of 1857||−23.1%||—||Failure of the Ohio Life Insurance and Trust Company burst a European speculative bubble in United States' railroads and caused a loss of confidence in American banks. Over 5,000 businesses failed within the first year of the Panic, and unemployment was accompanied by protest meetings in urban areas. This is the earliest recession to which the NBER assigns specific months (rather than years) for the peak and trough.|
|1860–61 recession||−14.5%||—||There was a recession before the American Civil War, which began April 12, 1861. Zarnowitz says the data generally show a contraction occurred in this period, but it was quite mild. A financial panic was narrowly averted in 1860 by the first use of clearing house certificates between banks.|
|1865–67 recession||−23.8%||—||The American Civil War ended in April 1865, and the country entered a lengthy period of general deflation that lasted until 1896. The United States occasionally experienced periods of recession during the Reconstruction era. Production increased in the years following the Civil War, but the country still had financial difficulties. The post-war period coincided with a period of some international financial instability.|
|1869–70 recession||−9.7%||—||A few years after the Civil War, a short recession occurred. It was unusual since it came amid a period when railroad investment was greatly accelerating, even producing the First Transcontinental Railroad. The railroads built in this period opened up the interior of the country, giving birth to the Farmers' movement. The recession may be explained partly by ongoing financial difficulties following the war, which discouraged businesses from building up inventories. Several months into the recession, there was a major financial panic.|
|Panic of 1873 and the Long Depression||−33.6% (−27.3%) [nb 3]||—||Economic problems in Europe prompted the failure of Jay Cooke & Company, the largest bank in the United States, which burst the post-Civil War speculative bubble. The Coinage Act of 1873 also contributed by immediately depressing the price of silver, which hurt North American mining interests. The deflation and wage cuts of the era led to labor turmoil, such as the Great Railroad Strike of 1877. In 1879, the United States returned to the gold standard with the Specie Payment Resumption Act. This is the longest period of economic contraction recognized by the NBER. The Long Depression is sometimes held to be the entire period from 1873–96.|
|1882–85 recession||−32.8%||−24.6%||Like the Long Depression that preceded it, the recession of 1882–85 was more of a price depression than a production depression. From 1879 to 1882, there had been a boom in railroad construction which came to an end, resulting in a decline in both railroad construction and in related industries, particularly iron and steel. A major economic event during the recession was the Panic of 1884.|
|1887–88 recession||−14.6%||−8.2%||Investments in railroads and buildings weakened during this period. This slowdown was so mild that it is not always considered a recession. Contemporary accounts apparently indicate it was considered a slight recession.|
|1890–91 recession||−22.1%||−11.7%||Although shorter than the recession in 1887–88 and still modest, a slowdown in 1890–91 was somewhat more pronounced than the preceding recession. International monetary disturbances are blamed for this recession, such as the Panic of 1890 in the United Kingdom.|
|Panic of 1893||−37.3%||−29.7%||Failure of the United States Reading Railroad and withdrawal of European investment led to a stock market and banking collapse. This Panic was also precipitated in part by a run on the gold supply. The Treasury had to issue bonds to purchase enough gold. Profits, investment and income all fell, leading to political instability, the height of the U.S. populist movement and the Free Silver movement.|
|Panic of 1896||−25.2%||−20.8%||The period of 1893–97 is seen as a generally depressed cycle that had a short spurt of growth in the middle, following the Panic of 1893. Production shrank and deflation reigned.|
|1899–1900 recession||−15.5%||−8.8%||This was a mild recession in the period of general growth beginning after 1897. Evidence for a recession in this period does not show up in some annual data series.|
|1902–04 recession||−16.2%||−17.1%||Though not severe, this downturn lasted for nearly two years and saw a distinct decline in the national product. Industrial and commercial production both declined, albeit fairly modestly. The recession came about a year after a 1901 stock crash.|
|Panic of 1907||−29.2%||−31.0%||A run on Knickerbocker Trust Company deposits on October 22, 1907, set events in motion that would lead to a severe monetary contraction. The fallout from the panic led to Congress creating the Federal Reserve System.|
|Panic of 1910–1911||−14.7%||−10.6%||This was a mild but lengthy recession. The national product grew by less than 1%, and commercial activity and industrial activity declined. The period was also marked by deflation.|
|Recession of 1913–1914||−25.9%||−19.8%||Productions and real income declined during this period and were not offset until the start of World War I increased demand. Incidentally, the Federal Reserve Act was signed during this recession, creating the Federal Reserve System, the culmination of a sequence of events following the Panic of 1907.|
|Post-World War I recession||−24.5%||−14.1%||Severe hyperinflation in Europe took place over production in North America. This was a brief but very sharp recession and was caused by the end of wartime production, along with an influx of labor from returning troops. This, in turn, caused high unemployment.|
|Depression of 1920–21||−38.1%||−32.7%||The 1921 recession began a mere 10 months after the post-World War I recession, as the economy continued working through the shift to a peacetime economy. The recession was short, but extremely painful. The year 1920 was the single most deflationary year in American history; production, however, did not fall as much as might be expected from the deflation. GNP may have declined between 2.5 and 7 percent, even as wholesale prices declined by 36.8%. The economy had a strong recovery following the recession.|
|1923–24 recession||−25.4%||−22.7%||From the depression of 1920–21 until the Great Depression, an era dubbed the Roaring Twenties, the economy was generally expanding. Industrial production declined in 1923–24, but on the whole this was a mild recession.|
|1926–27 recession||−12.2%||−10.0%||This was an unusual and mild recession, thought to be caused largely because Henry Ford closed production in his factories for six months to switch from production of the Model T to the Model A. Charles P. Kindleberger says the period from 1925 to the start of the Great Depression is best thought of as a boom, and this minor recession just proof that the boom "was not general, uninterrupted or extensive".|
|Dates||Peak unemployment||GDP decline (peak to trough)||Characteristics|
Stock markets crashed worldwide. A banking collapse took place in the
Extensive new tariffs and
other factors contributed to an extremely deep depression. The United
States did remain in a depression until World War II. In 1936, unemployment
fell to 16.9%, but later returned to 19% in 1938 (near 1933 levels).
|Recession of 1937–1938||1937May
Recession of 1937 is only considered minor when compared to the Great
Depression, but is otherwise among the worst recessions of the 20th century.
Three explanations are offered for the recession: that tight fiscal policy
from an attempt to balance the budget after the expansion of the
caused recession, that tight monetary policy from the Federal Reserve caused
the recession, or that declining profits for businesses led to a reduction
|Recession of 1945||1945Feb–Oct 1945||05.25.2%
|12.7−12.7%||The decline in government spending at the end of World War II led to an
enormous drop in gross domestic product, making this technically a
recession. This was the result of demobilization and the shift from a
wartime to peacetime economy. The post-war years were unusual in a number of
ways (unemployment was never high) and this era may be considered a "sui
generis end-of-the-war recession".
|Recession of 1949||1948Nov
|01.7−1.7%||The 1948 recession was a brief economic downturn; forecasters of the
time expected much worse, perhaps influenced by the poor economy in their
The recession also followed a period of monetary tightening.
|Recession of 1953||1953July
|02.6−2.6%||After a post-Korean
War inflationary period, more funds were transferred to
national security. In 1951, the Federal Reserve
reasserted its independence from the U.S. Treasury and in 1952, the
Federal Reserve changed monetary policy to be more restrictive because of
fears of further inflation or of a
|Recession of 1958||1957Aug
|03.1−3.7%||Monetary policy was tightened during the two years preceding 1957,
followed by an easing of policy at the end of 1957. The budget balance
resulted in a change in
budget surplus of 0.8% of GDP in 1957 to a
budget deficit of 0.6% of GDP in 1958, and then to 2.6% of GDP in 1959.
|Recession of 1960–61||1960Apr
|01.6−1.6%||Another primarily monetary recession occurred after the Federal Reserve
began raising interest rates in 1959. The government switched from deficit
(or 2.6% in 1959) to surplus (of 0.1% in 1960). When the economy emerged
from this short recession, it began the second-longest period of growth in
The Dow Jones Industrial Average (Dow) finally reached its lowest point on
Feb. 20, 1961, about 4 weeks after President Kennedy was inaugurated.
|Recession of 1969–70||1969Dec
|00.6−0.6%||The relatively mild 1969 recession followed a lengthy expansion. At the
end of the expansion, inflation was rising, possibly a result of increased
deficits. This relatively mild recession coincided with an attempt to start
closing the budget deficits of the
Vietnam War (fiscal tightening) and the Federal Reserve raising interest
rates (monetary tightening).
|03.2−3.2%||A quadrupling of oil prices by
with high government spending because of the Vietnam War led to
stagflation in the United States.
The period was also marked by the
1973 oil crisis and the
1973–1974 stock market crash. The period is remarkable for rising
unemployment coinciding with rising inflation.
|1980 recession||1980Jan–July 1980||7.8%
|02.2−2.2%||The NBER considers a very short recession to have occurred in 1980,
followed by a short period of growth and then a deep recession. Unemployment
remained relatively elevated in between recessions. The recession began as
the Federal Reserve, under
Paul Volcker, raised interest rates dramatically to fight the
inflation of the 1970s. The early '80s are sometimes referred to as a "double-dip"
|Early 1980s recession||1981July
Iranian Revolution sharply increased the price of oil around the world
in 1979, causing the
1979 energy crisis. This was caused by the new regime in power in
exported oil at inconsistent intervals and at a lower volume, forcing prices
monetary policy in the United States to control inflation led to another
recession. The changes were made largely because of inflation carried over
from the previous decade because of the
1973 oil crisis and the 1979 energy crisis.
|Early 1990s recession||1990July
|01.4−1.4%||After the lengthy peacetime expansion of the 1980s, inflation began to
increase and the Federal Reserve responded by raising interest rates from
1986 to 1989. This weakened but did not stop growth, but some combination of
1990 oil price shock, the debt accumulation of the 1980s, and growing
consumer pessimism combined with the weakened economy to produce a brief
|Early 2000s recession||2001March 2001–Nov 2001||6.3%
|00.3−0.3%||The 1990s were the longest period of growth in American history. The collapse of the speculative dot-com bubble, a fall in business outlays and investments, and the September 11th attacks, brought the decade of growth to an end. Despite these major shocks, the recession was brief and shallow. Without the September 11th attacks, the economy might have avoided recession altogether.[47|
|Great Recession||2007Dec 2007 – June 2009||10.0%
|03.9−4.3%||The subprime mortgage crisis led to the collapse of the United States housing bubble. Falling housing-related assets contributed to a global financial crisis, even as oil and food prices soared. The crisis led to the failure or collapse of many of the United States' largest financial institutions: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, City Bank and AIG, as well as a crisis in the automobile industry. The government responded with an unprecedented $700 billion bank bailout and $787 billion fiscal stimulus package. The National Bureau of Economic Research declared the end of this recession over a year after the end date. The Dow Jones Industrial Average (Dow) finally reached its lowest point on March 9, 2009.[|
X. Subprime Mortgage Bundling