Understanding The Great Recession Feat. Michael Scott

Something that college students worry about is the state of our economy. We worry about it, we wonder about it, but we really don’t know where to start when it comes to learning about it. One reason why we are so concerned about understanding how our economy works is because witnessed the effects of a recession from 2008 until recent years. We were too young to have “caused” it but old enough to understand that things were not right. It left us wondering how we can prevent this from happening again in our lifetimes. To do this, a good place to start is by understanding what caused the Great Recession in the first place. To help us explain this unfortunate occurrence in our personal history, is Michael Scott!

1. Interest Rates

Interest rates were set too low by the federal reserve, they were "artificially low."

2. Houseing Market

3. Together..

People who probable should not have been getting loans were getting them and they were using them to buy houses. When the interest rates were moved back up to counter the inflation that was happening (a whole other issue) those people realized they could no longer afford their mortgage. At the same time, housing prices fell and they suddenly owed more on their mortgage than they did on their houses which led to a wave of foreclosures across the country. Situations like this led to unpaid loans, a drop of capital within banks, and therefore internal collapse with in the banks themselves.

4. This major problem with such a large market combined with other factors which eventually led to what we know as the Great Recession.

5. People started to notice things were not quite right.

Little by little... everyone from large corporations to small businesses started to see their numbers take a dip.

6. Major companies file for bankruptcy

Although Michael here didn't truly understand what it meant to declare bankruptcy, many Americans had to face this harsh reality. The fact that Lehman Brothers, such a big traditionally stable company declared bankruptcy was a huge shock to many especially those involved in the company.

7. Panic ensued

Well, perhaps different degrees of panic for different people. I think it's fair to say that most if not all Americans were scared at some point, scared they might lose their job, their house, savings, etc.

8. Luckily many people did not stay down forever

Despite the growing anxieties, people found ways to cut corners and keep their businesses a float until the worst was over

9. Companies had to find innovative ways to cut costs and make more revenue that still remain in place today.

For example...

10. Downsizing, Budget cuts, Less perks, Restructuring, Innovation

I think it is safe to say that almost every American was effected in some way by these efforts within their company that were put in place to something conserve capital.

11. However, every Office fan knows Micheal Scott was not a fan

Ron Tom / © NBC Universal

12. After a few years the economy began to reset itself. But how?

It is hard to say for sure at what was the leading factor in the economic recovery. As cuts and restructuring took place within companies, it did so on a larger scale within our country as well. Bank rescues, cut backs on interest rates, attempts to erase deficits, stimulus plans, the list goes on. As these started to take effect, banks stabilized and jobs were created. As jobs were created people started spending money again and as they did, business got stronger which led to renewed trust in the system.Some of the more technical were bank rescues, cut backs on interest rates, attempts to erase deficits.

13. Though the worst of the Great Recession seems to be behind us, we can still see the effects it has had on individuals, small businesses, and large corporations a like. It is important to understand what lead to it in order to catch the warning signs in advance and to prevent further economic falls like this.