Question

Write an essay: What caused the recession 2007- 2009

Answer 1

Recession 2007- 2009- It was one of the biggest recessions in the world, it started in the USA but later hit whole world including many big countries. This recession is also called economic slowdown.

Reason- The primary reason of recession 2007- 2009 was "Subprime mortgage crisis". Before 2007, US financial companies provided mortgage loan to the people to buy properties in USA. These loan were given without proper documentation and authentication. People took the loan and built the properties. In early 2007, properties got unsold due to demand and supply, people could not sell them because they did not get buyers, property prices came down, they could not recover money from properties so could not repay the mortgage loan to banks and non banking financial institutions. Banks and NBFIs could not get their loan repayment back due to default. It hit banks' liquidity and banks remained cashless. Many banks got bankrupt in which Lehman bother's and Merrill Lynch were main. The increasing number of defaulters hit the US economy, people remained jobless, there was depression all over the country. Slowdown in US economy spread and it affected many countries.