Essay Example on the Great Recession: Causes & Effects

Part 1

The great recession is one of the most historical financial failures in the US. The following factors caused it:

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a) Inflation. Inflation had caused the wages of many Americans low despite the economic growth experienced in the 1990s. Therefore, most of them depended on credit to purchase commodities. Low-interest rates and easy handing of credits hence caused the credit card debt to rise to over $1 trillion by 2008 (976).

b) Banks wanted to make profits. Due to the hope by banks to make profits from the interest, they made subprime mortgages which were high-interest and high-risk mortgage loans to consumers. These customers either misunderstood the complex terms of these mortgages or lacked the ability to pay (976). This hence led to bad debts.

c) Changes in credit laws. The 1990s and early 2000 experienced changes in credit laws that enabled banks and lending institutions to securitize their mortgage loans and sell them as bonds. This made high-risk loans more attractive as it separated the financial interest of the lender from the borrower's ability to pay.

d) Credit default swaps. These were financial instruments created by financial institutions as insurance. If an investment lost money, the investors were to be paid.

Part 2

Immigration had posed a threat to the American culture, and conservatives had to do something. First, social conservatives considered American culture as one of Europeans heritage and hence declared English as the official language in the US. Illegal immigration was becoming an issue in the US, and therefore, the proposed Comprehensive Immigration Reform Act by Congress was intended to strengthen security alongside the US-Mexican border as well as provide legalization for illegal immigrants to become US citizens (980). Unemployment made immigration a concern, and this led to states such as Alabama and Arizona pass new strict laws that criminalized irregular immigration. However, all these efforts were unforthcoming as immigrants still flowed in even though the rates were lower.

Part 3

The 9/11 terror attacks by the al-Qaeda that left about 3,000 people dead declared war between the United States and Afghanistan. The United States staged attacks against the Taliban and al-Qaeda while targeting its leader Osama bin Laden. The United States hence began a bombing campaign in October, and by November, the Taliban was withdrawn from power. Al-Qaeda and its leader went into hiding. However, a few "unlawful combatants" from Afghanistan were held in the U.S. naval base at Guantanamo Bay, Cuba, for questioning where they were tortured (971). A decade earlier, the occurrence of the Gulf War created tension between the US and Iraq, a war that was revisited. The fear that Saddam Hussein was making weapons of mass destruction posed a threat to US security, and this led to attacks. The apparently well-intended intervention by the US later proved fatal as thousands of Iraqis were killed and this led to a growth in resentment towards America. The Obama administration called an end to the Afghanistan and Iraq wars. The damages for these wars were remarkably high. The Iraq war saw 4,475 American soldiers die, and 32,220 wounded while Afghanistan, by February 2013 2,165 were dead and 18,230 wounded (990). About $4 trillion was spent on these wars, and this is only meant to escalate (990). Therefore the goal of homeland security was not successfully achieved.

Part 4

Immigration has been one issue that has made the United States a heterogeneous state. The legalization of illegal immigrants hence facilitated the inclusion of these individuals as Americans. The LGBT group of individuals has also been accepted constitutionally, and their integration has also led to the formulation of rules that hinder their discrimination. They are also eligible for medical insurance (989). The great recession, on the other hand, made the US homogenous and exclusive as this period only favored the 0.01% wealthy individuals in the country while the rest suffered in poverty, bad debts, and unemployment (971). The declaration of English as the official language also eliminated diversity and hence homogenized the US.