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The Great Recession and The Policy Response - Research Paper Example

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The Great Recession and Policy Response Explain the cause of the crisis: America has always had one of the most stable, if not the most stable economy in the world. After the Great Depression that beset the country during World War II, it seemed like lessons were learned about the causes of the financial crunch and how to avoid a repeat of that decade's debacle…
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The Great Recession and The Policy Response
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The Great Recession and The Policy Response

Download file to see previous pages... This paper serves to look into the causes of the Great Recession of 2007 as the history books call it and the policy response of President Barack Obama's administration to the crisis. More importantly, I will try to answer the question “Where does America go from here?” Evaluate the Obama administration's policies to respond to the crisis America is a country whose economy has always been based upon the trust factor. The trust that the other nations place upon the credibility of the name of the country and our ability to pay off our country's debt on time allowed the country function like a family that was living beyond its means. We were a country living off “massive foreign borrowing, excessively loose monetary policy, reckless lending practices, lax regulation, and other factors”. As a country, we were borrowing trillions of dollars from other nations every year. Such money inflow triggers rapid and uncontrollable economic growth due to the artificial spending boom that the country was experiencing. This resulted in a real estate boom that would eventually cause the economy to falter as mortgages began to go unpaid. The United States was suffering from a macroeconomic imbalance that had the rest of the world worrying about America, but the Americans were oblivious to what was happening right under their very noses. Economic experts knew that the needle that would burst the economic bubble was sure to come. It was just that nobody could predict when it would actually hit. When it did hit the economy in 2007, there was no place for anyone to hide financially. The U.S economy was officially in shambles and in bad need of rebuilding. What more should the administration do to continue to mend the economy, create jobs, ease credit, etc.? While the U.S was still fighting a war on 2 fronts and struggling to keep up with its debt payments, a new government took over the White House. Pres. Barack Obama rode the wings of change into the White House with the promise that he would end the Great Recession as soon as possible. Everyone applauded and chose to believe that he could do it. But now, 6 years later, the question still remains about what his government policy really was to end the problem and whether it was effective or not. The response of the new Obama administration was swift and clear. He encouraged the adoption of an “accomodative federal fiscal policy”. It is a policy that, even with the great recession having ended in 2010, has failed to help reinvigorate the U.S. economy to the point where economic growth can be said to have spurred to a steady basis. In fact, the growth of the U.S. economy at this point remains suspect because of the lack of effective economic and tax programs on the part of the Obama administration. (Bivens, Josh, Fieldhouse, Andrew , Shierholz Heidi “From Free Fall to Stagnation”). Rather, the Obama government seems to be locked in a battle of political wills with the Republican party as they hold the U.S. economy hostage, a pawn in their political game of survival, without any clear winner. The loser however, thanks to the Obama administration's less than well thought out plans, is definitely the American public. Let's face it, Washington is going to be in a constant state of political gridlock for a long time to come. But our economy ...Download file to see next pagesRead More
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