Losing of life. The 2008 recession accomplished

Losing something important can tear one apart. Whether it’s one’s personal items or a loved one, loss can psychologically inflict horrendous effects. Likewise, losing money can cause people to become homeless and destroy their future and quality of life. The 2008 recession accomplished that, as the nation’s economy plummeted. Thus, people’s greed and ignorance drove the housing market to collapse, profiting those who foresaw it, while many lost everything.Quantity over quality has been an idea that has had undesirable outcomes. In 2008, bankers ignored people’s credit score and provided them with loans, that were likely to be defaulted on. With a lot of insecure money circulating in the economy, “borrowers got into high-risk mortgages such as option-ARMs, and they qualified for mortgages with little or no documentation. Even people with bad credit could qualify as subprime borrowers.” When banks packed loans from several customers from different banks into mortgage-backed-securities, the entire housing market rested on improbable loan payments. In large numbers, people sought out loans of a greater quantity than they could afford. The high-risk loans eventually gave way and “borrowers who bought more home than they could afford eventually stopped making mortgage payments. To make matters worse, monthly payments increased on adjustable rate mortgages as interest rates rose.” Once people began defaulting on monthly payments, banks lost that money and banks began to go bankrupt. In contrary, short-sellers did one thing no one had thought of: betting against the U.S. economy.In every economy, there are those who see what others can’t. Such as in this case, Michael Burry, a retired physician, saw the fraudulent subprime mortgages backed by risky loans. Burry purchases credit default swaps based “on billions of dollars worth of both subprime mortgage-backed securities and the bonds of many of the financial companies that would be devastated when the real estate bubble burst. As the value of the bonds fell, the value of the credit default swaps would rise.” Once you short a stock, there is no certainty on the amount of money you can lose if the shares rise. As predicted, the short was a success when the stock market fell 778 points, the lowest drop in history. Burry’s subprime short “racked up $720 million in profits for his investors, but took little satisfaction in it.” Burry, along with others, made tremendous profit, while risking it all. However, Burry’s success couldn’t set right the horrific social and economical effects of the crisis.The destruction done to society and the economy was forever felt by the people of our country. When the stock market plunged, the economy lost trillions in circulation, causing banks to foreclose. Economists didn’t recognize the corruption within, therefore “the U.S. lost $7.4 trillion in stock wealth from July 2008 to March 2009… This is roughly $66,200 on average per U.S. household.” Follow -up. Citizens suffered the hardest loss, losing everything they owned due to banks going bankrupt. Unemployment rose, and “5.5 million more American jobs were lost due to slower economic growth during the financial crisis than what was predicted by the September 2008 CBO forecast.” With roughly six million unemployed and the economy impaired, how were Americans able to recover from the recession when they’ve lost everything they owned? The damage done to the American people was unrepairable and relief was essentially required.The banks’ desire for an influx of circulation in the market caused the ruination of lives and merriment to those who short-sold stocks. Furthermore, Burry and others may have seen the incoming crisis, but how could that remedy those who lost everything? Through the months following, unemployment rose, people lost their homes, families broke apart. This crisis illuminated the need for change to preclude this event from recurring. Therefore, the 2008 stock market crash evokes the profound question upon society: is a prevention of loss unethical or is it necessary to prevent its outcomes.

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