Today we are remembering recession of 2008 , you may argue why i wake up so late and remembering an event which is almost 7 years old now but believe me when i will post my next article on recession you will get this answer why i am posting about recession today . We will see major reasons of 2008 recession and its impact on world economy today , so here are major reasons which caused a major panic in world economy in 2008
Lehman Brothers
This is major reason to triggered the panic button in market , Lehman brothers a very old financial institution goes bankrupt over night in January and world get a shocker of the decade and whole world stats selling equities like world is coming to an end , many of people predicted this is the end of world banking system and blah blah .
Crude oil Prices
Crude oil was another major reason after Lehman brother for recession , world was in shock after Lehman episode then suddenly crude prices were going to the roof and major economies who relies on oil pretty much started feeling pressure , Arabs were getting richer and western economies were getting poorer with this episode and asia were feeling heat including India and China . Investors shifted their money from equities to gold and markets started collapsing .
US Housing Bubble
In 2007-2008 US were going mad over new housing projects and prices were on the roof , a normal middle class american could only dream to buy a place for his own in america when an average house price were selling 200K USD and after recession same was selling for 50K . There so major glamour attach into housing that builders spent too much amount into housing and american bought home without worrying about their EMI and in 2008 it burst and we knew what happened later on
Lower Confidence
After Lehman Brother’s episode many investors were not ready to believe on banking system and it took a while to gain their confidence back , Banks were lending with greater risk in housing bubble and they were mortgaging to those people who were not able to pay their loan installments and later loans started default and banks lost too much money specially in america , this gave a very bad effect to economy and shake many investor;s confidence
Banks Bankruptcy
If you think only Lehman Brother’s gone bankrupt in recession of 2008 you are wrong , nearly 500 commercial banks gone bankrupt in recession of 2008 . World started panic and there were chaos in market , in america many people were afraid to keep their money in bank after so many banks gone bankrupt and it costed a lot to world economy
These are major reasons which caused recession of 2008 .
Why i posted this article today ?
Will answer in my next article
Just a hint : We may see recession very soon maybe in 2016-17 or a repeat of recession of 2008 ?
Why there will be another recession in 2016 – 17 ?
Will answer in my next article
Enjoy