2008 Financial Crisis in a Macroeconomic Lens

Discussion: 2008 Financial Crisis
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Discussion: 2008 Financial Crisis
The 2007-2008 financial crisis was caused by imprudent financial decisions made by both private and public financial institutions. This led to the meltdown of the credit market, particularly after the housing bubble had burst. This led to the collapse of some of the largest financial institutions in the U.S. such as the Lehman Brothers prop, government support of AIG, and over $700 billion bailouts to other companies. From a personal perspective, most investors had heavily gambled on risky home mortgages, and this implies that when the housing bubble occurred, people not only lost their homes but also their entire savings. From a macroeconomic perspective, the onset of the crisis implies that financial org...