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In your opinion what was the primary cause of the financial crisis/recession of 2008-2009?

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  1. Introduction
  2. Financial crisis/recession of 2008-2009?
  3. Imbalance in the financial system
  4. The huge influxes of finances
  5. Over liquidity
  6. The mortgage agents
  7. Conclusion

I believe that the main reason for the economic depression that happened to United States in 2008-2009 was as a result of failure by the insurance companies and banks. The cri8sis was mainly as a result of a combination of global macroeconomic imbalances and weaknesses that were so sever in the financial system and Western system of the U.S. Ever since mid 1990s, the world economic growth involved many macroeconomic imbalances between two different group's of countries and the main ones involved the US and the Great Britain. Other countries included the Asian countries (Velde 22). The problem rose when the US did not invest a lot as a share of its GDP while consuming more than it had saved. The countries with trade surpluses also increased their production and their exports and in the process, they end up accumulating big holdings of foreign exchange denominated in currencies of their major export markets and most specifically the United States.

I feel that the main reason of this decline was mainly because of the housing bubble that happened in 2006. The effects of this bubble were seen at around October the year 2007. It was the crisis that happened as a result of subprime mortgages (Velde 17).

The results of the crisis in the housing mortgage began getting apparent and more serious at the beginning of 2008. The crisis was first felt in the monetary system of the US and proceeded to become a global crisis. This crisis resulted in grave problems of liquidity and as a result, it resulted to other monetary problems for instance, there was an international food crisis, diverse stocks crumpled, for instance the collapse of the stock market that was experienced in January 2008 and also in October 2008 was as a result of the financial problems that occurred.

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