The recent recession was a product of the problem in the financial landscape that began in the housing sector. The appealing mortgages offered by banks and financial institutions to loaners attracted many people who opted to loan, but the interests ballooned over time and the individuals found out soon that they cannot handle the payments anymore. During the Depression, specialists believe that what happened was a case of mismanaged wealth and money.
During the recent global financial crunch that affected the United States as well as the rest of the world, it appears that the same problem was at hand (Mc Kay, 2009, p. 398). The result was that there were so many prime houses and lot properties that no one wanted to buy. This was followed by other financial problems, especially since other industries are connected with the banking and financial institutions. The bad debts originated from the housing and mortgage sector spreading all around the country and all around the world, eventually.
The drop was serious, and for some analysts there were parts of the housing crisis/current recession that are “worse even during the Great Depression (Mc Kay, 2009, p. 398). ” Months later, what was once originally a problem between banks, the mortgage and the house owners, who cannot cope with the payment, infected other aspects of the financial and economic landscape. Soon the impact of this financial problem was also felt in the commodity market sector (Mc Kay, 2009, p. 398). The government tried to answer the problem of the global financial crisis in different ways.
The efforts were mostly centered on the cooperation of government entities, as well as private groups, including banks and those willing to invest money to help struggling companies recover, or even opt for buy out. In the US, the Emergency Economic Stabilization Act of 2008 was created as an answer to the problem in the hope that this would be the remedy that the country and the private institutions needed. This was focused on addressing the financial problems of big business entities, primarily banks and loan and mortgage entities (Abrahams and Zhang, 2009, p. 1).