The global financial crisis 2008, the great recession

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The global financial crisis 2008, the great recession
The global financial crisis started in the year 2007 and worsened in the year 2008. The period was characterized by a sharp decline in the global economy. The crises resulted in devastating effects to individuals and firms. Many people lost jobs, houses and many were rendered bankrupt especially in the United States. The crises were mainly stemmed by the rogue industry who took advantage of the legal situation. Numerous corrupt and unacceptable deals between the financial institutions and investors transpired almost bringing the world economy to a standstill. The crises is said to be greater than the great depression (Foner, Give me liberty)
The crisis can be attributed to the poor government financial policies especially the United states government. The issue of deregulation in the financial sector is to blame for the economic setback that was experienced in the whole world (Ferguson, inside job, 2010). This resulted in the failure of numerous major financial institutions around the globe an example being the Lehman brothers.
In the 1940s until 1980s, the US government regulated the financial industry (Ferguson, Inside Job). After this period deregulation of the industry was embraced. The giant firms took advantage of the situation. Banks began selling collateralized debt obligations (CDOs) to the investors. Numerous CDOs were backed by subprime mortgages. Rating agencies also blundered when they gave many CDOs AAA rating. This resulted in many investors betting their Credit Default Swaps (CDSs) against CDOs they did not own. The collapse of the CDOs market happened and many investment banks were left with hundreds of billions of dollars in loans they could not repay (Ferguson, inside job, 2010). If the US government had introduced strict regulation in the financial industry the situation could not have been the same.
References
Foner, E. Give me liberty: An American history (volume 2). New York: W. W Norton and Amp Company. 2007
Foner, E. (20). Voices of freedom: A documentary history (volume 2, 3rd ED). New York: W. W Norton and Amp Company. 2006.
Ferguson, C. Inside job: the systemic corruption of the United States. New York. 2010.