The Great recession is a global economic decline that began in December 2007 and took a particularly sharp downward turn in September 2008.
The outbreak phase of the crisis, manifested as a liquidity crisis.
The bursting of the U.S. housing bubble caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.
The global recession has affected the entire world economy , with greater difference to some countries than others.
The proximate cause of the crisis in 2008 was the failure or risk of failure at major financial institutions globally. The European housing bubbles began to deflate during the 2007-2009 period, depending on the country.
The origin of these housing bubbles involves two major factors:
-Low interest rates in the U.S. and Europe following the 2000-2001 U.S. recession;
– Significant growth in savings available from developing nations due to ongoing trade imbalances.
These factors caused a large increase in demand for high-yield investments. Large investment banks fueling housing bubbles in the U.S. and Europe
The crisis in Europe generally progressed from banking system crises to sovereign debt crises, as many countries elected to bailout their banking systems using taxpayer money.
Several countries received bailout packages from the European Commission, and European Central Bank, which also implemented a series of emergency measures, but five years after this great recession the world economy is still struggling to recover.
During 2012 a growing number of developed economies have fallen into a double-dip recession:
– firms and households is holding back normal credit flows and consumer and
-unemployment remains high;
-fiscal austerity responses to deal with rising public debts are further deterring economic growth, which in turn is making a return to debt sustainability all the more difficult;
-bank exposure to sovereign debts and the weak economy are perpetuating financial sector fragility, which in turn is spurring continued deleveraging.
This are the causes and the current situations.
Authors: Antonella Cassarà, Tedi Marković, Isabel Tina Braun, Ivana Mišura