The Pros And Cons Of The Bailout During The Great Recession

I will be discussing the bailout that occurred during the Great Recession of 2008. I will also examine the advantages and disadvantages of the bail out. Lastly, I will be analyzing and hypothesizing the bailout of 2008 and how it will and has affected my generation, and those to come after. In December of 2007 the great recession started, and it lasted until June of 2009; this had been the largest recession since World War II (WWII) (Adams, 2016). During the Great Recession, the resulting loss of wealth led to sharp cutbacks in consumer spending. In 2008, the cost of housing decreased twenty-eight percent, the last time housing and the labor forced decreased so low was during the great depression of 1929. To help fix the issue, the government passed the bill for the bail out. Due to the failing of the bailout, America was provided information about good and bad investments. . The bailout took taxpayers money to fix the issue of the recession, instead of putting the money towards the essentials; such as school, housing, road work, or even debt. Even though the bailout was successful. Many are facing foreclosure, millions more underwater, and generally stripping Americans of years' …show more content…
Months after Henry Paulson announced the bailout, stock prices rapidly dropped, housing cost continued to decline, and the real economy contracted markedly (Miron, 2009) . An issue with the bank bailouts was the moral hazards; Moral hazard states that if the government bailouts a bank, then it may influence their behavior in the future (Pettinger, 2009). Another disadvantage of the bailout was for the taxpayers. The bailout took taxpayers money to fix the issue of the recession, instead of putting the money towards the essentials; such as schools, housing, road work, or even debt. Taxpayers were forced to pay for the bailout even though they were not the cause of the economic crisis happening from 2007 to