Home > Business Cycles, Housing Recession, Recession > The 2008 Financial Crisis Revisited

The 2008 Financial Crisis Revisited

A movie (The Big Short) has recently appeared that attempts to portray the events leading to the financial crisis of 2008. While I have not seen the movie but plan to do so, I have seen statements that the movie does not describe the role of the federal government in this fiasco. Whether or not that is true, there is some information easily available which provides an account of the government’s role in this crisis.

Peter Wallison is on the staff of the American Enterprise Institute.  He has written extensively on the financial crisis and he has a recent blog post giving his views on risk-taking by financial firms that was induced by the federal government.

I have also written previously on the crisis (read those posts here and here).  All of the information referred to in this post points to the affordable housing goals adopted by the federal government as providing incentives for financial firms to take on riskier mortgages. This does not mean that the federal government was the only cause of the crisis but it was a big part of the forces causing this latest U.S. recession.

  1. Saseassociates@aol.com
    January 9, 2016 at 12:19 PM

    Bob Well put. I saw the movie last week. It’s great! However, I agree that it focuses on a few insiders while ignoring some of the major Macro elements. My impression of the film/book is that it makes those responsible within the industry appear to be simply dumb while ignoring the actions of superiors who were/are well-connected to the public sector via Wall Street’s revolving door. It’s scarier to think that such a bubble and recession were caused by mere stupidity rather than covert nefarious acts of knowledgeable participants.

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