Hard Economic Times In 2008
CBS
Transcript
2008 was a tumultuous year for the economy the housing market collapsed created one financial crisis after another and it often seemed as if the news could only get worse here's a look back at the roller coaster that was our nation's economy in 2008. i think this is the most significant financial crisis in the post-war period there are fears the sell-off will continue on wall street soaring gas prices falling home prices and rising unemployment what kind of recipe is that overall that's a recipe for a recession 2008 was a bad dream it was a bloody year on wall street and a real capitulation for a system run amok nearly a quarter of a million homeowners are in danger of losing their homes the bankers made irresponsible loans to homeowners permitted them to buy property on margin then the housing prices collapsed the mortgages couldn't be paid and the banks essentially became insolvent the collapse of bear stearns was catastrophic it was a wake-up call to wall street that was a real tell in the unfolding and the house of cards coming crumbling down fannie mae and freddie mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in the financial markets the seizure of fannie mae and freddie mac as home prices started to fall set off a chain of events that made housing effectively freeze it is definitely a very very difficult time and it's not going to get better quickly meanwhile merrill lynch fearing it could be next agreed in an act of desperation to a shotgun marriage with bank of america when lehman brothers got in trouble the thinking was just let it fail that was an enormous shock to the system others were in trouble as well one by one we learned that major financial institutions some of the largest lenders in america had made bad loans bundled them into securities that were virtually worthless insure them with companies that couldn't stand behind the insurance and in the end the federal government had bailed them out because we need these big banks to keep the economy going good evening everyone the bush administration and congress are working out their differences over that 700 billion bailout i think we've turned the corner in terms of stabilizing the system there were congressmen whose offices were being flooded with letters with phone calls from angry constituents that 700 billion dollars would go to wall street the automobile industry crisis was a major shock to the country because some 2 million jobs are dependent on it we cannot simply stand by and watch this industry what do you have to say to the collapse to your investors the brain made off scandal as the capitulation point of investor confidence and the ability of investors to have faith in our system 2008 will be remembered as the worst year since 1929. we bid up houses too high we borrowed too much money from foreigners to finance it the banks became involved in risky loans the economy is genuinely in crisis george bush's legacy to barack obama is a very very difficult one