AD 2007- The Great Recession begins

 recession photo

Despite the War on Terror, the late 1990’s and early 2000’s marked a period of economic growth for the United States. During this time, investor confidence was high, and lending institutions, falsely believing that the economic growth would continue unchecked, began a series of highly risky lending practices, including giving out mortgage loans that far exceeded the recipient’s ability to repay. Beyond that, many investors began taking on assets that were toxic (i.e. they no longer held value due to changes in the market). As a result of these actions, the United States saw a huge drop in the housing market in mid-2007, coupled with a huge drop in the financial market. Overnight, many investors lost between 30 and 90 percent of their investments. Not since the Great Depression had the American economy taken such a drastic loss, which is why that time is referred to as the “Great Recession”. Because of lessons learned during the Great Depression, the American government began buying up bad loans, mortgages, and investments, spending 800 billion dollars to prevent the entire American economy from collapsing. Although not quite as severe as the Great Depression, the Great Recession saw the highest level of unemployment since the 1940’s. As many as ten percent of the American workforce went unemployed, and the stock market tumbled. If not for the recovery efforts of the American government with programs such as TARP, it is likely that the United States economy would have fully collapsed. Even with these vast efforts by the government, the United States is still feeling the effects of the Great Recession, and unemployment continues to be a serious problem.