World Business News

Late-2000s recession

Late 2000s recession

Late 2000s recession in Africa Late 2000s recession in the Americas Late 2000s recession in Asia Late 2000s recession in Australasia Late 2000s recession in Europe

Countries in official recession (two consecutive quarters) Countries in unofficial recession (one quarter) Countries with economic slowdown of more than 1.0% Countries with economic slowdown of more than 0.5% Countries with economic slowdown of more than 0.1% Countries with economic acceleration N/A (Between 2007 and 2008, as estimates of December 2008 by the International Monetary Fund)

The great asset bubble:^[1]

1. Central banks' gold reserves - $0.845 tn.
2. M0 (paper money) - - $3.9 tn.
3. traditional (fractional reserve) banking assets - $39 tn.
4. shadow banking assets - $62 tn.
5. other assets - $290 tn.
6. Bail-out money (early 2009) - $1.9 tn.

Since 2008, much of the industrialized world entered into a recession, the late-2000s recession, sparked by a financial crisis which was caused in part by the combination of a real estate bubble in the United States and the securitization of real estate mortgages in a way which made the riskiness of mortgage-backed securities difficult to assess.^[2].^[3][4] Sub-prime loan losses in 2007 exposed other risky loans and over-inflated asset prices. With the losses mounting, a panic developed in inter-bank lending. The precarious financial situation was made more difficult by a sharp increase in oil and food prices. The exorbitant rise in asset prices and associated boom in economic demand is considered a result of the extended period of easily available credit,^[5] inadequate regulation and oversight,^[6] or increasing inequality.^[7] As share and housing prices declined many large and well established investment and commercial banks in the United States and Europe suffered huge losses and even faced bankruptcy, resulting in massive public financial assistance. A global recession has resulted in a sharp drop in international trade, rising unemployment and slumping commodity prices.

In December 2008, the NBER declared that the United States had been in recession since December 2007, and several economists expressed their concern that there is no end in sight for the downturn and that recovery may not appear until as late as 2011.^[8] The recession is considered the worst since the Great Depression of the 1930s.^[9][10]