Great Recession (1 gen 2007 anni – 1 gen 2009 anni)

Descrizione:

One principal difference between the new era of globalization and previous patterns has been the opening of national financial and currency markets to investment from around the world. The United States and Britain led the way in the 1980s, with powerful political forces pushing for total deregulation of banks, brokerage houses, investment firms, and financial markets. In essentially letting the free market replace government oversight, the two countries led a quiet economic revolution. Financial deregulation led to spectacular profits for investors — and a more fragile, crash-prone global economy. Financial-industry profits in the United States rose from less than 10 percent of total business profits in the 1950s to more than 40 percent beginning in the 1990s. But the risks of deregulation were equally unmistakable: the bankruptcy of the American savings and loan industry in the 1980s; the near-bankruptcies of Russia in the late 1990s and of Argentina in 2001; the 1997 Asian financial crisis, centered in Thailand and Indonesia; and the Great Recession, which shook the entire global economy from 2007 to 2009. Together, the growing global power of MNCs and financial deregulation made ordinary American workers and families economically vulnerable. The American economy continued to generate wealth, but unevenly — wages stagnated and families struggled, even as corporate profits soared



This chart tells a complex and not altogether happy story. The median hourly wages of American workers (adjusted for inflation) stagnated between 1970 and 1995. The rise in median family income reflected the increasing proportion of two-earner families, as more married women entered the workforce. The dramatic increases in productivity did not lead to higher wages for workers. Rather, businesses used those gains either to cut prices to compete in the global marketplace or to reward owners, shareholders, and, particularly, corporate executives.


Katrina was only the first of a series of crises. Increasing violence and a rising insurgency in Iraq made the war even more unpopular at home, despite some successes under a new military strategy. As the unpopular war dragged into a sixth year, Bush’s woes were compounded by economic trouble. As his final full year in the presidency unfolded, a recession turned into a full-blown economic crash — the result of highly overleveraged financial and real estate sectors collapsing under a mountain of unpayable debt. Between late 2007 and early 2009, a span of about sixteen months, the Dow Jones Industrial Average lost half its total value, and major banks, insurance companies, and financial institutions were on the verge of collapse. The entire automobile industry was near bankruptcy. Millions of Americans lost their jobs, and the unemployment rate surged to 10 percent. Housing prices dropped by as much as 40 percent in some parts of the country, and millions of Americans defaulted on their mortgages. The United States was in economic freefall. What soon became known as the Great Recession had technically begun in 2007, but its major effects were not felt until the fall of 2008.

In September, less than two months before the end of Bush’s term of office, Secretary of the Treasury Henry Paulson urged Congress to pass the Emergency Economic Stabilization Act, commonly referred to as the bailout of the financial sector. Passed in early October, the act dedicated $700 billion to rescuing many of the nation’s largest banks and brokerage houses. Between Congress’s actions and the independent efforts of the Treasury Department and the Federal Reserve, the U.S. government invested close to $1 trillion in saving the financial system.

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