The Great Recession of 2008 – Causes and Consequences

Prior to the Great Recession, there was a real estate boom where the price of property was grossly overvalued. Financial institutions operated under a severe financial risk through their marketing of mortgage-backed securities. Towards the end of 2007, the housing bubble, approximated to be worth US$8 trillion burst. The value of the securities declined quickly exposing millions of Americans to the worst economic crisis in many decades. Banks and other financial institutions which were overleveraged also experienced the drastic decline.

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