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GENESIS OF CURRENT U.S. GREAT RECESSION AND ITS GLOBAL TRANSMISSION

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Author(s): Matiur Rahman | Muhammad Mustafa

Journal: International Journal of Economics and Research
ISSN 2229-6158

Volume: 0I;
Issue: 01;
Start page: 69;
Date: 2010;
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Keywords: Great Recession | Mortgage Market Debacle | Mortgage-Backed Securities

ABSTRACT
This paper is an exploration of the primary reasons for current U.S. great recession, its global transmission, major economic and financial programs, future challenges, and exit strategies. The root cause lies in the U.S. real estate market debacle due to massive subprime lending and proliferation of mortgage-backed securities. The real estate market trouble spilled over into U.S. major banks and other financial intermediaries as well as financial markets. Due to rapid financial globalization, the U.S. financial meltdown and deep recession caused damages to other major economies in the world. Worldwide major economic and financial programs saved the world economy from further deterioration, and set a stage for uncharted nascent recovery. There are dangers of high global inflation in the future with chance of double-dip recession if exit strategies are applied untimely to withdraw excess liquidity in inappropriate doses.
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