RS: 5 Inside the Meltdown - for real this time

“The financial system will melt down in a matter of days. If we don’t do this today, we won’t have an economy tomorrow.” Talk about a snowball affect. “The Meltdown” of 2008 was definitely the most impactful economic crisis and biggest spiral effect in the economy that I have lived through. The video provided detailed information about the 2008 meltdown from the housing burst to Obama getting into office and everything in between.

            In September 2008, there was an emergency meeting at the capitol, where congress watched the credit markets freeze after housing market crashed. Many people didn’t see this coming, due to the housing market roaring for months but when it crashed terror crept in quickly. When Bear Stearns could barely open horror struck Wall Street, Washington and almost every American. It was a difficult decision for many people in the Government to decide if they should bail Bear Stearns out or let them file bankruptcy. Paulson made a moral hazard point saying, “If you bail someone out of something they caused themselves, what incentive will they have to not make the same mistake”.

           After Bear Stearns, two huge mortgage companies were the next failure, Fannie Mae and Freddie Mac. The government stepped in to fire management and take over. Following that collapse Lehman brothers took a turn for the worse. At this point, it was officially the largest crisis since the Great Depression. This time the government didn’t want to step in and wanted Wall Street to find ways to resolve it. The only resolution was for another bank to buy out Lehman Brothers, but Bank of America and Barclays wanted nothing to do with it unless the Government intervened. From individuals, to companies and the government no one wanted to loan anything and credit markets froze. 

           The disease was spiraling and at now AIG, the largest insurance company, was at risk. After Lehman Brother’s declared bankruptcy, the economy had an even more drastic meltdown. The goevernment was limited and the financial system was quickly declining. Bills were created and rejects, ideas were proposed but nothing was getting through congress and it looked like nothing was going to work. Finally a revised bill was cleared and some people saw hope. Obama came into office in a major financial crisis, 350 billion dollars was given to save the financial system, and trillions were on the way.

            The meltdown was a frightening time for many Americans whether they were involved in business, government or individual practices. It didn’t take long for the panic to reach over seas when Lehman brothers collapsed. Suddenly, Ice land went bankrupt and China became a non growth company immediately. This economics crisis affected everyone and is still drastically affecting people. In no means is the crisis over, but there is hope on wall street and for many people that were affected.