2008 Financial Crisis

The worst global financial crisis since the Great Depression began in late 2007, reaching a crescendo in 2008 and inaugurating the Great Recession of 2008-2012. The 2008 financial crisis threatened the very stability of the global economy, collapsing several major financial institutions. In the United States, total collapse was largely avoided by a massive bailout of several industries, actions mirrored in other nations, but the pain of the crisis lingered for years.

There is no single cause of the 2008 financial crisis, but one examination concluded that it was largely the result of high-risk, complex financial dealings, much of which centered on the housing market. Some combination of excessive borrowing, risky investing, and a lack of oversight of large financial institutions allowed these investment banks to essentially run amuck. When the housing bubble of the early 2000s broke in the United States, a domino effect took over.

The stock market, for example, peaked in October 2007, before collapsing in the wake of the 2008 financial crisis, bottoming out in March 2009. It is believed that the subsequent recovery of the Dow Jones Industrial Average has largely been the result of several rounds of quantitative easing undertaken by the Fed in wake of the collapse. Additionally, several large bail-outs by the US government, including TARP the Troubled Asset Relief Program, which declared some of these large banks, those that had precipitated the 2008 financial crisis, were too big to fail.