The Economy started it's downfall in 2008 it just hasn't hit bottom yet. It is like a dam ready to burst. Whenever it sprouts a leak a patch is put in place but eventually there are too many holes and the whole thing bursts. That is where we are now.
THE collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. It took huge taxpayer-financed bail-outs to shore up the industry. Even so, the ensuing credit crunch turned what was already a nasty downturn into the worst recession in 80 years. Massive monetary and fiscal stimulus prevented a buddy-can-you-spare-a-dime depression, but the recovery remains feeble compared with previous post-war upturns. GDP is still below its pre-crisis peak in many rich countries, especially in Europe, where the financial crisis has evolved into the euro crisis. The effects of the crash are still rippling through the world economy: witness the wobbles in financial markets as America’s Federal Reserve prepares to scale back its effort to pep up growth by buying bonds.
Former Federal Reserve Chairman Ben Bernanke, a prominent student of the Great Depression, contends that the 2008 financial crisis was actually worse than its 1930s counterpart.Mr. Bernanke is quoted making the statement in a document filed on Aug. 22 with theU.S. Court of Federal Claims as part of a lawsuit linked to the 2008 government bailout of insurance giant American International Group Inc. “September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” Mr. Bernanke is quoted as saying in the document filed with the court. Of the 13 “most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.”Former Treasury Secretary Timothy Geithner is quoted in the document offering a similarly apocalyptic assessment. From Sept. 6 through Sept. 22, the economy was essentially “in free fall,” he said.Starr International Co., a company run by AIG’s former chief executive, Maurice “Hank” Greenberg, sued the U.S. government in 2011, seeking billions of dollars in damages over AIG’s rescue. Starr’s suit alleges that parts of the government’s $182 billion bailout and sale of AIG assets were unconstitutional.Asked why he thought it was essential for the government to rescue AIG, Bernanke said, “AIG’s demise would be a catastrophe” and “could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs.”
The European debt crisis is a multi-year debt crisis that has been taking place in several eurozone member states since the end of 2009. Greece, Portugal, Ireland, Spain and Cyprus were unable to repay of refinance their government debt of to bail out over-indebted banks under their national supervision without the assistance of third parties like the EFSF, the ECB, or the IMF.