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The contagion quickly spread to other economies around the world, most notably in Europe.As a result of the Great Recession, the United States alone shed more than 8.7 million jobs, according to the U. Bureau of Labor Statistics, causing the unemployment rate to double.
RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.
The Great Recession is a term that represents the sharp decline in economic activity during the late 2000s. recession, officially lasting from December 2007 to June 2009, and the ensuing global recession in 2009. The term The Great Recession is a play on the term The Great Depression.
The result was the bursting of what was later widely recognized to be a housing bubble.
During the American housing boom of the mid-2000s, financial institutions had begun marketing mortgage-backed securities and sophisticated derivative products at unprecedented levels.
The solvency of over-leveraged banks and financial institutions came to a breaking point beginning with the collapse of Bear Stearns in March 2008.
Things came to a head later that year with the bankruptcy of Lehman Brothers, the country’s fourth-largest investment bank, in September 2008.Will the current global economic recession have long-term geopolitical implications?That is, will the recession lead to lasting structural changes in the international system?Next, there were too many financial firms taking on too much risk.The shadow banking system, which included investment firms, grew to rival the depository banking system but was not under the same scrutiny or regulation.Financial innovations such as new types of subprime and adjustable mortgages allowed borrowers, who otherwise might not have qualified otherwise, to obtain generous home loans based on expectations that interest rates would remain low and home prices would continue to rise indefinitely.However, from 2004 through 2006, the Federal Reserve steadily increased interest rates in an attempt to maintain stable rates of inflation in the economy.The research descibed in this report results from the RAND Corporation's continuing program of self-initiated independent research.This report is part of the RAND Corporation occasional paper series.Assuming that economic recovery begins in the first half of 2010, lasting geopolitical changes are unlikely.There is little empirical evidence, for example, that the United States will not remain the dominant global power for decades to come, that U.