2008 Recession

In 2008, the US went into a recession – Recession: a period of economic decline, usually characterized by a drop in GDP – The recession was largely caused by the bursting of the housing bubble Housing prices had been rising steadily for years but, starting in 2006, they began slowly dropping As housing prices dropped, people could not sell their houses for enough to pay off their mortgages and many defaulted (did not pay) As people defaulted, the banks foreclosed on them but were left with properties that were worth less than the money they had leant out, causing many banks to collapse Large corporations that had invested in banks and mortgages lost money and some collapsed – The collapse of the housing bubble had effects that rippled out to the rest of the economy Collapsing banks and a shrinking stock market meant that there was less money being leant out to keep businesses going Lack of money, lack of loans, and lack of confidence in the housing market meant fewer people bought houses, further lowering housing prices

Evaluating Evaluate how each of the following programs performed using the reading and the graphs: 2009 Fiscal Stimulus Bill Troubled Assets Relief Program (TARP) Federal Reserve Policies

Planning If you had been in charge during and after the 2008 recession, what would you have done? Your answer should include detailed plans and explanations.