What are the causes and effects of recession 2008?

Answer 1

.- Stagnating oil prices (easily surpassing the $ 100 a barrel), driven by geopolitical uncertainties, the collapse of stock markets and subsequent diversion of speculative investment market and the expected oil production cuts by the OPEC.

2.-Continued escalation of prices of staple foods (around 15%), due to the effect called "second round" (translation by companies from increased costs of crude oil and raw materials along with wage increases the prices of manufactured products; abusive margins of companies and brokers and a totally inefficient administration and lack of mechanisms to control the ceaseless desboque with consequent rises in inflation and subsequent contraction of consumption.

3.-runaway inflation rates close to 6% and unbridled growth of foreign debt (d 2.5 billion U.S. dollars) and current account deficit (15% of GDP) for 2008 as a result of the above two points, with a consequent drop in state revenues Autonomies and loss of purchasing power of workers in a near future due to salary increases below the inflation rate or the freezing or reducing them.

4 .- Rise in interest rates by the European Central Bank to reach 4.5% in the last quarter of 2008 with the aim of trying to curb rampant inflation in the euro zone (close to 5%) the immediate impact on mortgages and bank loans due to increases chilling Euribor (up almost 6%); economic strangulation consequent extensive social and dramatic increase in delinquencies and embargoes banking collapse of securities (around the IBEX 10,000 points at the end of the year) and diversion of investment to fixed income and real estate.

5 .- An increase in the rate of unemployment up to 12.5% at the end of 2008, due to the outbreak of the housing bubble and subsequent domino effect in the sectors linked to the construction of a united euro artificially appreciated that the cause of the bottleneck exports and the stagnation of the tourism sector (into recession in the second half of 2008 and ending the year with a meager increase of 1.5% of GDP), with the proverbial drop in state revenues and the consequent contraction of investments basic infrastructure and social service

Answer 2

The big problem is credit and how people don't know how to use it. When you borrow money you can't pay back it is a problem, if most of a country does it, it is a huge problem which affects the whole globe. The first great depression happened when people borrowed money to play the stock marketand the prices of stocks ballooned until bell telephone stocks were close to 800$ a piece ( in the 20s!!!) Then people realized that this was ludicrous and the stock prices readjusted downwards (losing a lot of people a lot of money.) people couldn't pay their debts, so the banks couldn't get their money back so they went out of business losing the savings of people and companies. This time around it was because people borrowed more money they could ever pay back, now it's caught up to them, there was a bunch of bank foreclosers and no one could pay their debts, the banks have no money for savings and the people have no money to buy things, causing stocks to crash, etc.

Answer 3

Mortgage Crisis