The global financial meltdown in 2008 and the Great Recession that followed
It are some of the most important events of our lifetime
Ten years later our memories have gotten a little bit fuzzy so in the next minute or so I'm gonna really try and summarize
Why these events happen so we can really recognize some concerns in the future to prevent them from happening again
I want to see how quickly I could do this all right
In the early 2000s then President George W Bush believed that all Americans should own their own homes
He said the more ownership
There is in America the more people have a vital stake in the future of this country
Bush promoted policies that encourage lots of low-income Americans to try on my houses they wouldn't have normally been able to afford
banks, and other financial
institutions took this idea and ran with it issuing lots and lots of
subprime mortgages for every one dollar worth of these risky mortgage loan products Wall Street layered on top of that
$50 worth of side bets that everything would turn out just fine. They did this through new types of
investment vehicles
Called credit default swaps
collateralized debt obligations and mortgage-backed securities
private companies like Moody's and S&P and Fitch
Were issuing
triple-a credit ratings to these new types of investments that no one had much of any experience with
Which were layered on top of really really risky mortgage loans?
Unfortunately nobody in government was really paying attention
President Bush's conservative Republican policies of
Deregulations meant that the people who were supposed to be policing all this the Securities Exchange Commission
Had their budget cut and they were staffed with people who said that they wanted to be quote kinder and gentler
to Wall Street
like a game of musical chairs
Music just stopped people who couldn't afford to keep up on the monthly payments for their mortgages
eventually defaulted on those mortgages
And there was a wave of foreclosures the financial companies that had basically built their business model on all this
They crash - as a result banks had less money to land which led to a credit crunch that made matters worse
Because the world is so interconnected the effects shot out across the globe to clean it up some governments pursued policies of austerity
Basically huge budget cuts, but these may have backfired
Austerity was a little bit like trying to clean up a huge mess
With a single tissue other countries like the United States responded to the crisis with stimulus spending
Packages to help kick-start the economy again
This worked a little bit better, but today many experts say that these efforts may not have been large enough
Which may have prolonged the recovery?
Huge events like the Great Recession are incredibly complex and I left out a lot of things for the purpose of time
But if we've learned anything from this crisis
One lesson is that we can't completely do you regulate Wall Street and let it do whatever it wants
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