2008 financial meltdown
The 2008 financial meltdown either began late in 2007 or in January 2008, depending on which metrics you look at. It led to a long-lasting worldwide recession whose effects are still being felt.
Major contributors include several actions of the US government whose consequences should have been foreseen by those who made them (and which probably would have caused public outrage for that reason, had current mechanisms of online activism existed at the time they were enacted). These include:
- (1999) the repeal of the 1933 Glass-Steagall Act, leading to the housing bubble and its inevitable bursting
- (2001, 2003) the Bush tax cuts for the rich (Wikipedia)
- (2001-) two major wars (Iraq and Afghanistan), neither of which were paid for by any increase in revenues
The proximate cause for the meltdown – "the straw that broke the camel's back" – was the bursting of the housing bubble in late 2007, causing extensive damage to the financial industry. Had the investment firms which had become too involved with the new financial instruments permitted by the Glass-Steagall repeal simply been allowed to fail (with any government money being used to compensate individual investors instead of the failed investment firms), the economy might have recovered much more quickly – since the "damage" was entirely a paper construct having to do with allocation of funds; there was no damage to actual essential services or infrastructure.
Unfortunately, first Bush and then Obama approved a series of government bailouts which were given directly to many of the institutions which had behaved irresponsibly – essentially "socializing" the risk those institutions had taken while allowing them to keep their private profits. (Articles needed: socialized risk, privatized profit, corporate welfare)
This in turn deepened the already-severe US budget deficit and heightened the public perception of a disaster in need of drastic measures.
- /Clinton: Bill Clinton's alleged culpability for the meltdown
- 2008 mortgage crisis
- Black-Scholes model [W]
dKosopedia: no equivalent page as of 2009-05-24
- SourceWatch: see Financial Crisis 2008 Timeline, Summary of Origins of Financial Crisis 2008