'Great Recession' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
The Great Recession proved to be the worst American and world wide economic downturn since the 1930’s era Great Depression. It began within the U.S. in December of 2007 and is said to have ended in June of 2009 officially. There is ongoing debate with some economists as to whether the full effects of the Great Recession have really ceased, or this is merely a lull in between bouts of a greater depression.
The Great Recession started in the U.S. but later spread to most industrialized countries around the globe. This world wide recession led to a severe drop in trade and a significant drop in economic activity. The financial crisis of 2007-2010 actually kicked off the Great Recession.
The financial crisis and resulting Great Recession ultimately stemmed from irresponsible lending policies practiced by banks on a widespread level and encouraged by the U.S. and British governments. Along with this, the increasingly common practice of securitizing real estate and mortgages led to the financial collapse. Mortgage backed securities from the United States were promoted and sold around the globe. They turned out to be far more speculative and risky than anyone had predicted or disclosed.
Besides this, a worldwide boom in credit encouraged a speculative asset bubble in stocks and real estate. As prices continued to rise, the risky lending only grew more prevalent. The crisis actually flared up as a result of severe losses on sub prime loans that started in 2007. These demonstrated that other loans were also at risk amid too high real estate prices. As the loan losses continued to rise, Lehman Brothers suddenly collapsed on September 15th of 2008.
An enormous panic ensued in the inter-banking loan markets. With stock and real estate prices sharply declining, historical and major commercial and investment banking institutions throughout both the U.S. and Europe showed how much they had over extended themselves with major leverage as their losses quickly mounted. The governments of their home countries had to step in with enormous amounts of public tax dollars in order to save many of them from imminent bankruptcy.
This resulting Great Recession has led to a substantial decline in international trade, dropping commodity prices, and high and mounting unemployment around the world. Although the National Bureau of Economic Research declared the Great Recession officially over at the end of 2009, other economic experts are not convinced. Nobel prize winning economist Paul Krugman has said that this Great Recession heralds the start of a second Great Depression. Others who are less pessimistic have claimed that true recovery in the United States will not emerge until the end of 2011.
A number of events have been blamed for causing the financial crisis and Great Recession. The environment that preceded the crisis included an unnatural rise in asset prices along with an accompanying boom in worldwide economic demand. These are believed to have resulted from the multi-year period of too easily available credit, insufficient regulation, and poor oversight from the regulatory bodies who all too often simply looked the other way when times were good.