Anyone say in detail, How the global economic recession happened, the cause of it???? ?

Anyone say in detail, How the global economic recession happened, the cause of it???? ?

Everything started with dot com crash in 2000. Bush needs to stimulus the economy, and the interest rate was kept low to encourage spending to boost the economy.

However, the interest rate was kept low for too long, which leads to mortgage boom. Banks are giving loans and repack the mortgages as assets backed securities to pass the risks to investors.

Investors love this products (assets backed securities), because it is backed by an asset (house) and earn a better rate than interest rate. They assume that it is almost risk free because they consider house price will keep moving up.

The problem is that the price of house has gone up too much and too fast. It finally comes down, with many foreclosures, and those assets back securities are worthless affecting many investing firms and many mortgage lenders. And suddenly nobody wants to lend anymore because of the risk of default. (Also they have to satisfy a required reserve/loan ratio).

So the sudden contraction of credit market makes many business unable to obtain required loan, and consumer stop buying. Without spending (consumer and business), inventory rises and production is cut. In turn people are fired and consumption further decreases.

In this situation, only government spending is big enough to boost the economy, and that's exactly what government around the globe is doing.