The Great Recession Essay

833 words - 4 pages

Many economists have come to consider the 2008 financial crisis as the worst recession since the 1930’s Great Depression. The recession led to the total collapse of financial institutions, the withdrawal of banks by the national governments and the total collapse of stock markets across the world. The housing market also suffered in many areas, which resulted in prolonged unemployment, evictions and foreclosures. The crisis played a key role in the failure of significant businesses, the decline in the wealth of consumers, estimated in trillions of American dollars, a downturn in economic activities and the debt crisis of the European countries. On 9 August 2007, the Banque National de Paris ...view middle of the document...

S. passed an act, the American Recovery and Reinvestment Act of 2009 as a recovery measure.
Experts have suggested many causes of the financial crisis, and assigned varying weight to each. Levin-Coburn Report compiled by the U.S. Senate concluded that the financial crisis was because of “undisclosed conflict of interests; complex, high risk products; the failure of credit rating agencies, regulators, and the reigning of the excesses of Wall Street by the market itself” (Akif, 2011, p. 84). The Financial Crisis Inquiry Commission, on the other hand, concluded that the crisis resulted from the following factors: systematic collapse in ethics and accountability, the breakdown of mortgage securitization pipeline and mortgage-lending standards, the failure of correct risk pricing by credit rating agencies and the inconsistent action, and ill preparation by the government (Akif, 2011). Critics argued that investors and crediting rating agencies failed to price the risks related to mortgage financing products correctly and the government’s failure to adjust regulatory practices that would address the financial markets of the 21st century led to the recession.
Ethics is a concept that incorporates the judgment about fair and right behavior or conduct; these judgments involve moral decisions in relation to something, whether it is right or wrong. Repeatedly, greed was said to be the cause of the financial crisis. However, there should be a distinction between this vice and legit economic rationality that takes advantages of certain opportunities such as making purchases when the prices are low and selling when prices are high. Other discarded virtues include temperance...

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