Diagram

2008 Great Recession: Caused by subprime mortgage crisis, where loans are given with low initial interest rates that later increased significantly. This leads to many homeowners unable to meet mortgage obligations, causing a surge of foreclosures which cause downturn in housing market. Globalization of finance as a result of interbank lending made the failure of the US markets jeopardize the state of global economy as well. To escape this:

• Decreased interest rates, tax cutes
• Quantitative Easing: central bank purchasing financial assets to inject liquidity into financial system. restores confidence.
• Governments intervening with massive bailout packages.