The 2008 Financial Crisis: The Great Recession

The 2008 Financial Crisis received the name "The Great Recession" because it devastated all aspects of not only the American but also the Global economy. The shadow banking tactics employed by Wall Street 's "too big to fail" investment firms, left many American households confused as to why their assets plummeted in value. As with any situation, however, with a large amount of losers comes a large amount of winners. Just as those who bought into an index-fund at the bottom of the Great Depression are now seeing their investments return five times their initial value, families that took out mortgages after the busting of the housing bubble have realized substantial capital gains on their home investment. A personal example of buying into the

One was able to capitalize on the recession and prosper in the six-year bull market to follow. The other lost their homes and felt more financially helpless than before. So, what are the takeaways? To start, it 's a no-brainer that the financial crisis made the rich richer and the poor poorer. Families that had enough financial independence to purchase a house at the bottom of the housing collapse boosted their overall net-worth as their homes appreciated in value. Others were forced to default on payments attained largely through ill-advised credit, and now find themselves even worse off than before. Someone had to see it coming though, right? Surely one of the largest financial collapses in the modern era, and certainly in the modern financial period, must have been caused by someone, or something. It turns out it was

The collapse happened too quickly for any regulators to have seen it coming, let alone stop it. But are they to blame, or are the stereotypical money whores of Wall Street at fault? That answer is still up for debate, but many will agree it is a combination of both. The regulators allowed what would later be described as "shadow banking" to continue for far too long. The biggest takeaway is that anyone who cares about the wellbeing of our economy cannot let this happen again. The financial crisis was an economist’s worst nightmare. Their holy idea of equilibrium and Adam Smith 's Invisible Hand had failed them. Wall Street was left relatively unregulated and shot itself in the foot. Looking back, it is apparent the SEC must ratchet up regulations and restrictions, which they have. The implementation of the Dodd-Frank Act has begun a long and tricky road to allowing Wall Street to flourish while being financially safe. To ensure our own banks do not create another economic recession, the large investment banks and the rating agencies must be heavily monitored, or in the coming years another potato may come out of the oven ready to burn someone