The Causes Of The 2008 Financial Crisis

For most economists, the financial crisis of 2008 was the most severe financial crisis since the Great Depression hit the United States and the world in 1929 and the early 1930s. This paper will analyze the causes that lead to the 2008 financial crisis. The paper will also explore the effects of the crisis, not only in the financial world and the economy, but also in the legislation governing financial institutions. The ethical implications that were involved in the crisis will also be studied. The effects of the crisis are still felt today and the crisis reshaped the financial world, leading to a constant comparison with the Great Depression. However, a key difference between both crises was the media coverage and the general public awareness …show more content…
Ferguson. These two films had a great impact as they allowed the general public to have a better understanding and knowledge of the causes and effects of the 2008 financial crisis. The accuracy of both films, as well as their portrayal of different events of the crisis will be studied. Finally, the causes and effects of the crisis will be related to the profession of Industrial Engineering. The effects of the crisis on the profession will be analyzed, as well as the relation between the ethical implications surrounding the crisis and the Code of Ethics for Industrial Engineers.
One of the main causes of the 2008 financial crisis were the never before seen levels of debt. R.A from The Economist defines an economic bubble as a fast increase in the price of an asset to levels above the asset’s value (R.A, 2013). The analogy does not only follow the “blowing up” phase of a bubble, but also the “bursting” of the bubble. Following a very fast surge of prices for the asset, a severe drop of prices occur as a widespread selling of the asset takes place. The end result is a recession, or the contraction of the market. The 2008 financial crisis experienced such phenomenon, with real estate