Causes of the Great Recession

THE GREAT RECESSION

The Great Recession is an ongoing marked global economic

decline that began in December 2007 and took a particularly turn in

September 2008. The initial phase of the economic crisis started with a

financial liquidity crisis, started on August 9 2007, at the interbank

lending market when central banks had to step in with liquidity lending

to the banking market. This was a response to a situation where BNP

Paribas (Banque Nationale de Paris Paribas) temporarily had to block

money withdrawals from three hedge funds - citing a "complete

evaporation of liquidity". The bursting of the U.S. housing bubble, which peaked in 2006, caused the

values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally

and creating an interbank credit crisis.

It began as a national recession in the United States in December 2007, but only met

the International Monetary Fund (IMF) criteria for being a global recession in the year 2009. The IMF

global recession definition does not evaluate quarterly data, despite the fact that quarterly data are

being utilized as recession definition criteria by all G20 members, representing 80% of the World

Gross Domestic Products (GDP).

The recession affected the entire world economy, with greater detriment to some countries

than others, but overall to a degree which made it the worst global recession since World War II.

It was a major global recession characterized by various systemic imbalances, and was sparked by

the outbreak of the U.S. subprime mortgage crisis and financial crisis of 2007–08. The economic side

effects of the European sovereign debt crisis, austerity, high levels of household debt, trade

imbalances, high unemployment, and limited prospects for global growth in 2013 and 2014, continue

to provide obstacles for many countries to achieve a full recovery from the recession.

According to the U.S. National Bureau of Economic

Research (the official arbiter of U.S. recessions) the US

recession

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