What Is The Great Recession

2014 Words9 Pages
When people think of huge Economic crisis that has plagued America the first thing that they think of is the Great Depression. Why is that because the Great Depression absolutely destroyed our economy with the crash of the stock market, the closing of our banks, and the huge loss of jobs and it took years to recover from it. But, there is another crisis that has plagued our nation and it is formally known as The Great Recession. Recession? What is that you may ask, well I got an answer for you. A Recession is a period of general economic decline, defined usually as a contraction in the Great Depression for six months (two consecutive quarters) or longer. Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally…show more content…
Mortgage debt of America’s households rose from 61 percent of gross domestic product in 1998 to 97 percent in 2006. A number of factors appear to have contributed to the growth in home mortgage debt. In the period after the 2001 recession, the Federal Open Market Committee (FOMC) maintained a low federal funds rate, and some observers have suggested that by keeping interest rates low for a “prolonged period” and by only increasing them at a “measured pace” after 2004, the Federal Reserve contributed to the expansion in housing market activity (Taylor 2007). However, other analysts have suggested that such factors can only account for a small portion of the increase in housing activity (Bernanke 2010). Moreover, the historically low level of interest rates may have been due, in part, to large accumulations of savings in some emerging market economies, which acted to depress interest rates globally (Bernanke 2005). Others point to the growth of the market for mortgage-backed securities as contributing to the increase in borrowing. Historically, it was difficult for borrowers to obtain mortgages if they were perceived as a poor credit risk, perhaps because of a below-average credit history or the inability to provide a large down payment. But during the early and mid-2000s high-risk mortgages were offered by lenders who repackaged these loans into…show more content…
They also introduced a number of new lending programs that provided liquidity to support a range of financial institutions and markets. These included a credit facility for “primary dealers,” the broker-dealers that serve as counterparties for the their open market operations, as well as lending programs designed to provide liquidity to money market mutual funds and the commercial paper market. Also introduced, in cooperation with the US Department of the Treasury, was the Term Asset-Backed Securities Loan Facility (TALF), which was designed to ease credit conditions for households and businesses by extending credit to US holders of high-quality asset-backed
Open Document