Effects of Economic Recession 2008-09

An economic recession is the general downturn in an economy which is typically associated by a drop in the stock market. In prior years banks globally had increased freedom that allowed people to take loans for 100 percent or more the value of their homes as collateral and when it came time to sell them the banks were left with subprime mortgage crisis. This led to lack of trust among banks making this the major cause of the economic recession of 2008 since banks had stopped lending each other mortgages at the risk of them being worthless. This resulted in the banks having toxic assets which they could not liquidate. This affected the overall value of the corporate assets, mutual funds and pension funds which further aggravated the economic recession. Here are some of the effects of the economic recession of 2008-09.

High inflation was one of the major effects of the economic recession globally. This created a macro economic problem where the wages fell, wage growth slowed down and there was a significant drop in the people consumption of products. This alternatively led to a drop in the gross domestic product of countries where the economic recession was most felt. (Meschi, Vivarelli, 2009) This created high levels of unequal income distribution and service provision which further deteriorated the situation further.

Unemployment was more than 9 percent since investors had pulled out their investments where possible therefor lowering the capacity for job opportunities in the various firms. This was also affected further when companies almost shut down owing to the major losses experienced by the institutions which had left them with no choice but to retrench some of their employees. (Seguino, 2009)There were also many discouraged workers who had given up looking for work despite their qualifications as many firms were not employing workers.

There was also a significant drop in the value of real estate industry where housing values fell with more than 31 percent over the duration of 2008-09. This further deteriorated the economy further as the mortgages that had been acquired by banks were worth less than their real value which further destabilized the economy further. (Amadeo, 2017)

In conclusion it is clear that banks alone cannot regulate themselves and the governments should come in to regulate the economic situation of banks and other relevant institutions to prevent them from taking very high risks. The government should also regulate banks and other relevant institution sizes so as to reduce the risks in case an institution falls it does not affect vast areas of the economy.


Amadeo, K. (2017).  The 2008 economic crisis. A look at the causes, costs and could it happen again? 23 (2), 14-15.

Meschi, E., Vivarelli, M. (2009). World development. Trade and Income Inequality in Developed Countries, 37, 287-302.

Seguino, S. (2009). The global economic crisis. Its Various Implications and Policy Responses.  Burlington, VT: University of Vermont Press. 1-14

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Live Chat+1(978) 822-0999EmailWhatsApp

Order your essay today and save 20% with the discount code LEMONADE