ABSTRACT
This chapter explains the financial crisis of 2008 and the Great Recession. The Great Recession of 2007 to 2009 reflected new economic structures that have arisen in the last thirty years and have born a bitter fruit. Changes in economic structure set the stage for the financial crisis, while cyclical problems set it off. When a recession in the United States reduces US imports, it hurts the trade of other countries and reduces their profits and their employee income. Recessions and depressions spread through the global economy by three different mechanisms: trade, investment, and finance. The monetary system took the place of the barter system used in medieval feudal Europe and in the early Western United States. The housing crisis, as well as the changes in the banking system toward more risky loans, led to an equally amazing credit bubble and credit crash. Finally, the financial crisis was the result of long-run structural changes in capitalism.
