Great Recession

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A lot of economists consider the global economic crises of 2007 to be the worst financial crisis since the Great Depression of the 1930s. The global crisis affected the entire world economy, with higher detriment in some countries than others. It resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market also suffered, resulting in evictions, foreclosures and prolonged unemployment. The crisis played a significant role in the failure of key businesses, declines in consumer wealth estimated in trillions of US dollars, and a downturn in economic activity leading to the 2008–2012 global recession and contributing to the European sovereign-debt crisis.

Causes for the crisis.

The immediate cause of the crisis was the bursting of the United States housing bubble, which peaked in 2006, caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally. The financial crisis was triggered by a complex interplay of government policies that encouraged home ownership, providing easier access to loans for subprime borrowers.

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The U.S. mortgage crisis triggered a liquidity crisis of world banks. Financial institutions refused to lend to each other or to finance non-financial firms who needed to refinance their debt, or to pay their suppliers, or receive payments from their customers. Battling the crisis demanded a large-scale nationalization of banks.

As a result recession which started in 2008 and continue to the present day, persistent high unemployment remains, along with low consumer confidence, the continuing decline in home values and increase in foreclosures and personal bankruptcies, an escalating federal debt crisis, inflation, and rising petroleum and food prices.

Great Recession spread widely as it covered all economic sectors. The crisis started in the financial sector exclusively associated with banks and financial exchanges. Today, it hits on all branches of the economy, not distinguishing between the banking sector or industry.

Crisis in Russia.

It is no doubts that the crisis was brought to Russia from out. However, it should be noted a number of factors that determined purely Russian threats and have amplified the impact of the global crisis on our economy.

- Russia has not developed funded pension system, no modern insurance system, rather late created mutual funds, which do not accumulate sufficient financial resources. The predominance of the "short" money in the economy gives rise to high volatility, lack of liquidity, the general instability of the financial system and the real economy.

- The high share of foreign capital in the Russian stock market.

- The dependence of the Russian economy on oil and gas exports.

- High, compared with developed countries, inflation. In Russia, inflation, before the crisis, reached 13%, compared to 1-3% in developed countries

- The growth of budget expenditures in the country.

Global economic crisis ruined plans of Russian government to take the country in the five world leaders in 2020.

The development of the crisis in Russia was much more serious and painful than in the West. Deep devaluation of the ruble - more than 50%, the collapse of stock markets by more than 75%, the budget deficit of 20% in December 2008, the collapse of rail traffic in early 2009, decline in production by more than half in the steel industry, more than a million of unemployed, the sharp decline in real wages, growing poverty and the destruction of the middle class.

Global economic crisis ruined plans of Russian government to take the country in the five world leaders in 2020.

A lot of experts consider that crisis will have a second wave.

In my opinion the main cause of the crisis and following recession was human’s greed.

In general, except for the negative effects any crisis has certain positive aspects. In the industrial market is the so-called "natural selection." Remain afloat only the most viable enterprises conducting effective policy for resource management. Uncompetitive companies leave the market. But the struggle for the survival of businesses in a competitive environment can also occur and reduce the prices of some goods and services, which, of course, is also a positive development. Example - gasoline, land and real estate. Crisis leads to a natural market pricing. In addition to a general improvement of the economy and brought to the forefront of domestic producers.