- The ‘Great Recession’ has been particularly deep. In the USA, the loss of GDP relative to trend growth has been 9 per cent. The recovery from recession has also been much slower than the recovery from the recessions of the early 1980s and early 1990s. After those recessions, the USA achieved economic growth of 4.3 per cent and 3.6 per cent respectively.
- The slump has not been nearly as bad as the US Great Depression, though the fall in stock market values of over 50 per cent was the second-largest in history. This compares with a fall in the stock market of 79 per cent during the Great Depression. Furthermore, house prices have fallen by 37 per cent since the financial crash.
- One of the major causes of the crash was the boom in securitisation whereby inherently risky loans were packaged together and sold as very low-risk securities. This was strongly encouraged by the government; Fannie Mae and Freddie Mac, the government agencies responsible, should be privatised.
- The US government was right to bail out the systemically risky banks. However, other aspects of the fiscal stimulus package were misguided for various reasons.
- In gen