The Great Recession of 2008 was the worst economic downturn since the Great Depression. It originated in the United States due to a housing bubble and lax lending practices that led to many subprime mortgages being issued. As the housing market declined, it caused a financial crisis that spread globally. Major financial institutions collapsed and unemployment rose sharply in the US and Europe. The recession had significant impacts including job losses, declines in GDP, real estate prices and stock markets falling worldwide.

1. Great
Recession
The
2008
Group Members:
Lê Đức Mạnh
Phạm Quỳnh Anh
Lê Anh Vũ
Nguyễn Ngọc Chiến
Nguyễn Việt Long

2. Introduction
Definition
Basic Information
Events
Main Events
US, Eurpoe, Asia
Analyze
US Real Easte
Bank Policy
Government Policy
Impact
How?
Numbers and
statistics

3. I Introduction
A significant decline in activity across the economy,
lasting longer than a few months
The Technical Indicator of a recession is GDP – Gross
Domestic Product (or Economic Growth)
Interest rates usually fall in during these periods
Normally Recession is one part of the Business Cycle

4. I Introduction
The worst since the Great Depression of the
1930s—originated in the United States:
The stock market crash of 1929 – “Black Friday”.
By 1933, the height of the Depression:
- The typical working-age household saw an income
decline of $2,700 from 2007 to 2009.
1929 2008
- Unemployment had risen from 3% to 25% of
the nation’s workforce.
- GDP was cut in half, from $103 to $55 billion
- Wages fell 42 % for those who still remained jobs
- Through multiple channels to other industrialized
countries.
- The U.S. labor market lost 8.4 million jobs, or
6.1% of all payroll employment

5. I Introduction
The worst since the Great Depression of the
1930s—originated in the United States:
The stock market crash of 1929 – “Black Friday”.
By 1933, the height of the Depression:
- The typical working-age household saw an income
decline of $2,700 from 2007 to 2009.
1929 2008
- Unemployment had risen from 3% to 25% of
the nation’s workforce.
- GDP was cut in half, from $103 to $55 billion
- Wages fell 42 % for those who still remained jobs
- Through multiple channels to other industrialized
countries.
- The U.S. labor market lost 8.4 million jobs, or
6.1% of all payroll employment

6. II Events
United statesof america 11/7/2008: American federal government obtained
control of IndyMac Bancorp bank,
7/9/2008: Freddie Mac and Fannie Mae were forced
to transfer their ownership to America
The 4th quarters of 2008: Many big banks
declared bankrupt (Lehman Brothers, Washington
Mutual,…)
In 3 months, to the beginning of 4th quarter of 2008,
there were more than 30000 American businesses
went to bankrupt.
9 and 10/2008: Dow Jones Index decreased
25% value after 1 month from 15/9/2008

7. II Events
15 to 21/9/2008 stock market of London, Paris,
Frankfurt, Amsterdam were shock
29/4 and 31/7/2008 Deutsche Bank provided
provision of 4.2 and 3.6 billions usd for bad debt
and stock
11/2008 inflation decreased to 2.1%
17/2/2008 Northen Rock Bank was officially
nationalized
28/2/2008 DZ Bank of Germany lost asset total of
1.36 billions euro
Europe

8. II Events
15 to 21/9/2008 Tokyo, Shanghai, Seoul and
Hongkong stock market saw their indexes falled
18/11/2008 Japan officially announced that they
entered a state of economic recession
Economics crisis reached BRICS countries: China,
Russia, India, Brazil, South Africa
Russian government spent 58 bil USD to maintain
currency rate
ASIA

9. III analyze
House price rose steadily from
1990 to 2006
The appreciaton in house prices
exceeded 10% per year from
early 2004 to early 2006
The home ownership rate rose to
a record level of 68.6% of
households by 2007
House Price

10. III analyze Bank andFinancialPolicy
HOUSING BUBBLE:
Many countries experienced a rapid growth in house prices. House price rose faster than
inflation and faster than incomes. This boom in housing was encouraged by a growth in bank
lending and high confidence.
1
2 BAD LOANS:
In the period leading up to the credit crunch, banks became more aggressive and willing to take
risks in lending. Bad loans repacked and resold. These ‘bad’ mortgage loans were sold onto
other financial institutions around the world
The scale of bank losses started to increase and it became more difficult for banks to
borrow money on money markets.
3

11. III analyze GOVERNMENTPOLICies
1. BUSH INCOME TAX CUT
This policy turned a $127.3 billion budget surplus into a $157.8
billion budget deficit in fiscal 2002, and the U.S. government has
had trouble balancing its budget ever since.
2. HEALTH CARE COST
The cost of Medicine and Equipment increased significantly from 2001 to 2008.
President George W. Bush's decision to pass a senior citizen prescription
program without a tax increase sim
3. WARS AND NATIONAL SERCURITY:
Cost for war and for national security (Iraq war and The terrorist attack
September 11th 2001) all added to national debt and all borrowed
from other countries.

12. III analyze GOVERNMENTPOLICies
1. BUSH INCOME TAX CUT
This policy turned a $127.3 billion budget surplus into a $157.8
billion budget deficit in fiscal 2002, and the U.S. government has
had trouble balancing its budget ever since.
2. HEALTH CARE COST
The cost of Medicine and Equipment increased significantly from 2001 to 2008.
President George W. Bush's decision to pass a senior citizen prescription
program without a tax increase sim
3. WARS AND NATIONAL SERCURITY:
Cost for war and for national security (Iraq war and The terrorist attack
September 11th 2001) all added to national debt and all borrowed
from other countries.

13. III analyze GOVERNMENTPOLICies
1. BUSH INCOME TAX CUT
This policy turned a $127.3 billion budget surplus into a $157.8
billion budget deficit in fiscal 2002, and the U.S. government has
had trouble balancing its budget ever since.
2. HEALTH CARE COST
The cost of Medicine and Equipment increased significantly from 2001 to 2008.
President George W. Bush's decision to pass a senior citizen prescription
program without a tax increase sim
3. WARS AND NATIONAL SERCURITY:
Cost for war and for national security (Iraq war and The terrorist attack
September 11th 2001) all added to national debt and all borrowed
from other countries.

14. III analyze
A business cycle consists of a downturn
and contraction followed by an upturn
and expansion in aggregate economic
activity.
This change is recurrent but not periodic.
Duration from more than one year to ten
or twelve years.
Business Cycle

15. We knew all those number… But they got it wrong. They thought it was going to
cause a dollar crash. It didn’t do that. It caused a different kind of crisis. Just another
example of how difficult it is to predict
III analyze Prediction
Ben Bernanke
The professor cites his early 2008 paper, The Rising Risk of a Systemic Financial
Meltdown: The 12 Steps to Financial Disaster, as proof that he got it right. It includes a
lack of market discipline, internal mismanagement and conflicts of interest within
financial institutions caused Financial Crisis.
Nouriel Roubini

16. IV impact
USA
EUrope
Asia
INCOME
The financial crisis
cost the U.S. an
estimated $648
billion due to slower
economic growth
GOVERNMENT
Federal government
spending to mitigate
the financial crisis
through the Troubled
Asset Relief Program
(TARP)
The U.S lost $3.4
trillion in real estate
wealth from July
2008 to March 2009
according to the
Federal Reserve
REAL ESTATE

17. IV impact
USA
EUrope
Asia
JOB
5.5 million more American
jobs were lost due to
slower economic growth
during the financial crisis
than what was predicted by
the September 2008 CBO
forecast
STOCK MARKET
The U.S. lost $7.4
trillion in stock
wealth from July
2008 to March 2009,
according to the
Federal Reserve

18. IV impact
USA
EUrope
Asia
Many financial institutions acquired or bankcrupted and lead
to the financial crisis in some countries like Iceland, England,
Switzeland ,Spain,…
The first quarter of 2009, the annualized rate of decline in GDP
was 14.4% in Germany, 7.4% in the UK, 18% in Latvia, 9.8% in
the Euro area
Official euro area fell into the first recession since the date
of establishment.

19. IV impact
USA
EUrope
Asia
Exports of many
countries affected,
especially the export-
oriented countries in
East Asia.
Some economies as Japan,
Taiwan, Singapore and Hong
Kong were into recession. The
growth of other economies
are slowing down.
Korea plunged into crisis when the national currency devalued
since the beginning of 2008.