The Great Recession began, as most American economic catastrophes began, with the bursting of a speculative bubble. Throughout the 1990s and into the new millennium, home prices continued to climb, and financial services firms looked to cash in on what seemed to be a safe but lucrative investment. Especially after the dot-com bubble burst, investors searched for a secure investment that was rooted in clear value and not trendy technological speculation. And what could be more secure than real estate? But mortgage companies began writing increasingly risky loans and then bundling them together and selling them over and over again, sometimes so quickly that it became difficult to determine exactly who owned what. Decades of lax regulation had again enabled risky business practices to dominate the world of American finance. When American homeowners began to default on their loans, the whole system tumbled quickly. Seemingly solid financial services firms disappeared almost overnight. In order to prevent the crisis from spreading, the federal government poured billions of dollars into the industry, propping up hobbled banks. Massive giveaways to bankers created shock waves of resentment throughout the rest of the country. On the Right, conservative members of the Tea Party decried the cronyism of an Obama administration filled with former Wall Street executives. The same energies also motivated the Occupy Wall Street movement, as mostly young left-leaning New Yorkers protesting an American economy that seemed overwhelmingly tilted toward “the one percent.”
Candela Citations
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