Within a few months in 2008, household finances were crushed as asset values fell, millions of jobs were lost, countless credit cards were canceled, and thousands of homes were foreclosed on.
Sentiment: NEGATIVE
Millions of Americans were duped by the federal government and the Federal Reserve into buying homes they could not afford and failed to count the cost. When the financial crisis of 2008 hit, they could not keep up the monthly mortgage payments and defaulted.
In October 2008, when the credit crunch hit, small businesses were really crushed by the lack of capital.
The 2008 economic crisis and Great Recession forced widespread restructuring throughout the U.S. economy - not unlike a company gritting its teeth through a lifesaving bankruptcy.
Housing was ground zero for the Great Recession. Between early 2006 and Obama's inauguration in 2009, average house prices fell by a third across the country. In certain areas, including cities as diverse as Akron, Orlando and Las Vegas, house prices fell by more than half.
I'm very interested in the more grass-roots consequences of the economic meltdown: issues related to mortgage foreclosures, debt collection, and the practices of credit card companies and others who hold a lot of consumer debt.
It took us years to get into the mess that we got ourselves in at the end of 2008, and it's going to take a while to get us out. We lost eight million jobs, we saw a financial system near collapse, we have a continuing housing crisis that we're making progress on dealing with.
For too long, tricks and traps in mortgages, credit cards, and other financial transactions have stripped wealth from working families.
Viewed from a distance, or through the eye of the All-Knowing CEO of the Universe, the crash of 2008 followed the usual pattern. A long-lived boom driven by cheap credit, going back as far as 1982 (though subject to interruptions in the mid-1980s and 1990s, and in 2001), came to grief because of a rise in the cost of borrowing money.
It is hard to be enthusiastic about the economy's prospects when house prices are falling: Households spend less, small business owners can't use homes as collateral for loans and local governments are forced to cut jobs and programs as property-tax revenue disappears.
The financial crisis of 2008 was not caused by investment banks betting against the housing market in 2007. It was caused by the fact that too few investors - including all of the big investment banks - bet too heavily on the housing market in the years before 2007.