The Global Credit Crisis of 2008: Causes and Responses

Abstract

Since the COVID-19 pandemic began in 2018, the world has been suffering. Most obviously, the coronavirus killed millions of people and severely disrupted People's Daily lives. Beyond that, one of the most important effects is the enormous damage to the global economy. Unfortunately, 2021 saw the Russia-Ukraine incident, which seriously hurt the European economy and led to great challenges for the global economy. People grew less confident in the economy and began to hoard gold. In the process of global economic development, there have been many financial crises, the financial crisis in August 2008 is undoubtedly the biggest impact on the global financial market since 1929, and the impact is even worse than that of the Great Depression. The crisis was caused by a housing bubble and misleading economic policies such as the Federal Reserve's monetary policy, subprime mortgages, and CDS. Large financial institutions failed in droves, including Lehman Brothers. The causes and effects of the financial crisis are discussed in this article. The study concludes by discussing the significance of the issue and a variety of measures to stop such occurrences in the future. To ensure steady development of the global economy, especially in light of the ongoing effects of the COVID-19 epidemic and the conflict in Ukraine, this paper must draw lessons from the previous financial crisis and enhance government intervention of the financial system through policy adjustments.