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How The 2008 Financial Crisis Affected The Economy

817 words - 4 pages

Some issues that arise from the 2008 financial crisis that directly affected the economy on a national scale as well as on a international scale were all interlinked which could have been attributed to things such as the housing market bubble burst which securities that may have been tied to this sector leveled out in 2006 and had a sharp decline in 2007. In the year of 2006 interest rates took a less aggressive approach and they were lowered from 2000 – 2003 due to the fear of deflation as a result of the dot com bubble and the September 2001 terrorist attacks. Higher than expected United States account deficit would peak around the same time as the housing bubble which burst more so in 2008 which lead to foreclosures on people’s homes and less borrowing going on such items as homes.
Tax rebates fashioned by the law were paid to individual U.S. taxpayers during 2008. Most taxpayers below the income limit received a repayment of at least $300 per person ($600 for married couples filing jointly). Qualified taxpayers received, along with their distinct payment, $300 per dependent child under the age of 17. The sum was equal to the payer's net income tax obligation, but could not exceed $600 (for a single person) or $1200 (married couple filing jointly).
In 2008 groups of programs were shaped and run by the U.S. Treasury to steady the country’s monetary system, reestablish economic growth and prevent foreclosures in the stir of the 2008 financial crisis done by buying worried companies’ assets and equity. The Troubled Asset Relief Program originally gave the Treasury buying power of $700 billion to buy illiquid mortgage-backed securities and other assets from key organizations in an effort to restore liquidity to the money markets. The fund was created on October 3, 2008 with the channel of the Emergency Economic Stabilization Act. The Dodd-Frank Act later condensed the $700 billion authorization to $475 billion.
As a result of people losing their homes and even their jobs in 2008 unemployment took a sharp curve upward which in fact resulted in higher unemployment. Do to the GDP dropping to an annualized 6.1 % after an initial 6.3% decline. In 2009 President Barrack Obama made proposals that would address consumer protection, executive pay, bank financial cushions or capital requirements, expanded regulation of the shadow banking...

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