Financial Crisis

Introduction

A global recession is a period of global economic slowdown. The International Monetary Fund takes many factors into account when defining a global recession, but it states that global economic growth of 3 percent or less is "equivalent to a global recession". By this measure, four periods since 1985 qualify: 1990-1993, 1998, 2001-2002 and 2008-2009. 

Late-2000s, financial crisis (often called the Global Recession, Global Financial Crisis) is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It accounted in the failure of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The housing market had also suffered in many areas, resulting in many evictions, foreclosures and prolonged unemployment. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, and a significant decline in economic activity, leading to a severe global economic recession in 2008.

This crisis is analytically separate from the Late-2000s financial crisis, although the two phenomena are linked in their effects. The sovereign debt crisis refers to budget deficits that have been created by insufficient tax revenue, excessive spending, or both in several Mediterranean states. There are included Greece, Italy, Spain, and Portugal. The financial crisis on the other hand began in the U.S. and in countries that imitated the problematic lending practices of the U.S., such as Iceland and Ireland. The two phenomena have become linked because many European banks held assets in financially troubled American banks, and because the need to bail out troubled banks has worsened the budget deficit for governments. The size of the budget deficits has frightened investors, who have demanded higher interest rates from struggling governments. This in turn makes it difficult for governments to finance further...