3-+Economic+Decline


 * Recession and the Mortgage Crisis**

2008 marked the beginning of the United States' longest recession since World War II. There were many factors leading up to this decline. First, many banks allowed mortgages for those with lower credit scores. Ultimately, many of these people failed to pay their mortgages, and housing foreclosures became more and more common. When this happens, the banks get nothing in return; the simple truth is the banks lose money. This fundamental failure in the banking system sent shock waves through the economy, and unemployment rates rose to about 10%. The mortgage crisis climaxed with the federal take over of Fannie Mae and Freddie Mac.


 * Oil and Motor Companies**

Meanwhile, rapidly rising oil prices drove home to the general public the benefits of fuel efficient automobiles. American motor companies like GM, Chrysler, and Ford faltered as the sales of large muscle cars that they mass produced dwindled. It was also apparent, however, that something must be done to rescue these ailing car companies and banks.


 * Market Crash**

On September 29th, when the House failed to pass a bill that would give a $700 billion bailout to the ailing banks, the Dow dropped a whopping 778 point. "The day's loss knocked out approximately $1.2 trillion in market value, the first post-$1 trillion day ever, according to a drop in the Dow Jones Wilshire 5000, the broadest measure of the stock market" (Twin). Come October, the stock market would only drop further. Government spending in response to the economic recession has since skyrocketed, and the national debt has not thanked us for it. Even today, the national debt increases rapidly while our liabilities outweigh our assets. Primary source: []

