ACADEMIC WRITING PROJECT

Bálint Szuszkó

COMPARISON OF THE RECESSION CAUSED BY THE COVID-19

PANDEMIC AND THE 2008-2009 WORLDWIDE ECONOMIC CRISIS AND
THEIR EFFECTS ON GLOBAL ECONOMIES

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TARTALOMJEGYZÉK

INTRODUCTION............................................................................................................................................. 3

CRISIS OR RECESSION..................................................................................................................................................3

ORIGINS........................................................................................................................................................ 4

CAUSES AND ORIGINS OF THE 2008 FINANCIAL CRISIS....................................................................................................4

ORIGINS OF THE RECESSION CAUSED BY THE COVID-19 PANDEMIC..................................................................................5
COMPARISON OF THE ORIGINS OF THE TWO CRISES.......................................................................................................6

DYNAMICS OF THE CRISES.............................................................................................................................. 6

DYNAMICS OF THE 2008 GLOBAL FINANCIAL CRISIS.......................................................................................................7

DYNAMICS OF THE RECESSION CAUSED BY THE COVID-19 PANDEMIC................................................................................8
COMPARISON OF THE DYNAMICS OF THE TWO RECESSIONS..............................................................................................9
EFFECTS ON THE S&P 500 INDEX............................................................................................................................10

CONSEQUENCES.......................................................................................................................................... 10

CONSEQUENCES OF THE 2008 GREAT RECESSION........................................................................................................11

CONSEQUENCES OF THE RECESSION CAUSED BY THE COVID-19 PANDEMIC.......................................................................12
COMPARISON OF THE CONSEQUENCES OF THESE TWO RECESSIONS..................................................................................12

CONCLUSION............................................................................................................................................... 13

REFERENCES................................................................................................................................................ 15

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INTRODUCTION

The aim of this paper is to provide insight and compare the 2008 global economic crisis and the
economic recession caused by the Covid-19 pandemic. Financial crises have always existed. If we look
at historical charts of the SPX or any other major financial index, we are clearly going to see where
the major financial downfalls have happened starting from the great depression in the 1920’s. The
composition of the work will be the following. First, we are going to explore the origins and causes of
both crises. We are going to collect and compare information about the history of the two events.
This is essential in order to better understand the nature of the two events. If we know where they
have originated from, then we can compare their other aspects as well, but we must understand the
background deeply before the paper can proceed to the next chapter. Then we are going to talk
about their dynamics which is also very important because the two events had very different
intensities and they happened in different timeframes and intensities. To do this we are going to
compare the effect of the two events on the GDP growth of several countries. GDP growth is a great
indicator to study recessions, since in times of recession economic activity usually slows down which
means a downturn in growth. After the GDP, the paper will discuss the effects on the American stock
market. This will be done by assessing the effects on the Standard and Poor's 500 index. This might
be one of the most important parts of the paper. This is due to the difference in the nature of the
two crises. If we investigate their dynamics, we can better understand the other information which is
in the other chapters of the project. After we have understood the timeframe, we are going to move
on to the consequences of the two major economic events. This is very important in order to see
how the global economy has reacted to the shocks caused by both the 2008 and the 2019-2020
recession and how the different governments have coped with the situation and finally how they
have solved the issues and stimulated the economy in order to get out of the crises. Finally, when all
the necessary aspects of the project have been analyzed conclusions will be drawn from them, we
are going to get a full picture and a better understanding of the whole topic.

CRISIS OR RECESSION

Before we can compare the two economic world events, we must understand that a recession and a
financial crisis, and how do they relate to each other.

First, what is a financial crisis? According to Kenton, (2019) Asset values suffer a sharp
decrease in value during a financial crisis, firms and individuals are unable to pay their loans, and
financial institutions face a shortage of liquidity. During a panic or bank run, investors sell off their
assets or withdraw cash from savings accounts out of fear that their value will decline if they keep

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them in a financial institution. Next, we must understand what a recession is? According to
Chappelow, (2019) A significant, pervasive, and protracted decline in economic activity is referred to
as a recession. Although more complicated calculations are often utilized, a general rule of thumb is
that two consecutive quarters of negative gross domestic product (GDP) growth indicate a recession.
We can say that a financial crisis can be a sign, or even the start of a recession, but generally a
recession is a much longer process than a financial crisis and can have reasons from a much broader
spectrum.

ORIGINS

In the first part of the paper, we are going to review and compare the origins of the two financial
Crises. This is very important because in this aspect, the two events are extremely different as we will
see later in this segment of the paper. We are going to start by discussing how the 2008 financial
crisis has started, then we are going to move on to the recent pandemic. This chapter collects the
most important events that led up to the crises and it showcases the nature and the differences of
both the 2008 global financial crisis and the recession caused by the spread of the novel coronavirus
disease. If we understand the origins of both crises, we can draw our conclusions about them more
easily and the other segments of the work will be much clearer. This is a very interesting topic this
time, because in the time of the covid-shock the cause is natural and this happens much less often
than any other cause, like the collapse of the banking system or a specific industry. This time the
cause was nature and a virus, nobody has seen coming. The last time a virus caused a financial crisis
like this was the influenza or (Spanish flu) in the 1910’s. Although the disease was similar, today’s
world with its connectivity is much more venerable to such events like supply chain failures because
of lockdowns. If we understand the origins of the crises, we can draw our conclusions and we are
going to find out how two seemingly very different events with seemingly very different effects still
manage to have some analogies lying between them and how detrimental could they become to the
global economy.

CAUSES AND ORIGINS OF THE 2008 FINANCIAL CRISIS

If we want to understand the reasons of the 2008 world economic crisis, we must go back in time
to 2000. According to Singh, (2021) The Federal Reserve reduced the federal funds rate from 6.5% in
May 2000 to 1% in June 2003 in response to the September 11 terrorist attacks, the dot-com bubble
crash, and a slew of corporate accounting scandals. By doing this, home prices started to skyrocket
due to the wide and cheap availability of credit. People with no jobs and terrible credit scores were
able to apply for these loans. They were called subprime borrowers. More and more people started
to take advantage of this and bought sometimes even multiple properties with borrowed money.

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According to Singh, (2021) The Wall Street banks bought the loans from the banks after which they
packaged them into what were marketed as low-risk financial products, such as mortgage-backed
securities and collateralized debt obligations (CDOs). Subprime loan origination and distribution soon
saw the growth of a sizable secondary market. These financial instruments have spread throughout
the global financial system like a disease which proved to be fatal later. Finally, the SEC (Securities
and Exchange Commission) lowered the minimum capital requirements for five investment banking
firms (Lehman Brothers, Merryll Lynch, Bear Stearns and Morgan Stanley. This decision has
incentivized these banks to take more risk. This went so far that the banks could have been leveraged
as high as 40 times their original investment. According to Hayes, (2022) Financial leverage is the
outcome of using borrowed money as a source of funding when making investments to increase a
company's asset base and produce returns on risk capital. Then by 2004 interest rates started to rise
again and when home prices started to fall in 2006, we could already see the signs of the recession
which would then become the worst financial crisis since the great depression many years ago. When
the dominos started to fall and people could not continue paying their loans, the trust in CDO’s which
were perceived safe previously broke down and the investors started to panic. Now that we have
investigated the reasons behind the financial collapse on 2007-8, we must do the same with the
recent Coronavirus pandemic.

ORIGINS OF THE RECESSION CAUSED BY THE COVID-19 PANDEMIC

While the Global Financial Crises originated from the financial sector, this recent recession had
reasons which are very different from the previously mentioned. First, we must understand what the
Covid-19 Pandemic is and how it started. The novel coronavirus, also known as Covid-19 is a
respiratory disease which originated from Wuhan, China and has spread around the globe, infecting
millions, of people in every country around the globe. In this case the reasons behind the economic
downfall were the restrictions and lockdowns which had to be implemented by many governments
around the globe to stop or slow down the transmission of the virus. Of course, when most countries
around the world close their borders for merchant activities and tourism, it is going to hurt the
economies and markets around the globe. Companies occupied in the most affected industries, like
tourism and international merchandise were hit the hardest. To show this, I have brought an
example from one of the most affected industries, the Airline industry. According to (Altintas, 2020)
The Emirates Group's H1 2020 revenues plunged to US$ 3.7 billion, down 74% from last year, and the
company revealed losses for the second time in its 35-year history (vly). Emirates Airline, the largest
member of the group, has experienced a 75% fall in revenue, to US$ 3.2 billion. In terms of
operations, Emirates only carried 1.5 million passengers in the first half of 2020, a number it would
have reached in little over nine days of regular operations prior to COVID. This clearly shows how

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drastically the virus affected the economy. Supply chains also could not function in this environment.
As different lockdowns and restrictions became implemented around the world, businesses could not
sell their inventories and they were left without customers. However, when they were finally able to
sell their products, another problem has come in the picture. This was the production of their
products. Because of the regulations many people had lost their jobs at places of production. The
most effected industries were those where human labor takes up most parts of the production. One
of the most human labor-intensive industries is the clothing industry. According to Smith, (2022)
Although the production decline in the textile industry was less severe, it was nonetheless critical.
The retail trade in clothing, textiles, and footwear did not turn around in Europe until May, when
lockdown restrictions were gradually relaxed, and commerce resumed at a rate akin to that which
prevailed before the coronavirus pandemic.

COMPARISON OF THE ORIGINS OF THE TWO CRISES

If we look at the origins of both the 2008 great recession and the crisis induced by the coronavirus
pandemic, we can clearly see that there are some striking differences between the two. The first and
most important difference is their existence itself. While the 2008 global recession has come to life
from the financial sector, the other one was not created by human errors or the financial system. It
has just simply appeared out of nowhere due to a disease humanity had to stop. The global financial
crisis of 2008 was a crisis of the financial and the housing sector which has then spread to the whole
economy and produced extensive damage, the recession caused by the pandemic has affected many
industries from the beginning and had different effects on them. In the case of the covid shock we
have talked about the travel and hospitality industries with the example of the emirates group we
have noticed how dramatic these restrictions were and how serious the problem was. Then we have
explored another aspect of the crisis with the supply chain and logistics disruption which came in two
waves. First the loss of ability to sell the already existing inventories, second the logistics and
production problem.

DYNAMICS OF THE CRISES

In the following part we are going to assess and compare the dynamics of the two financial crises.
There are many indicators that we can use to do this comparison. We are going to use the GDP
growth rate of multiple countries to showcase this phenomenon. We are going to look at and assess
their speed of which they happened and how fast the different economies in different parts of the
world have recovered from these shocks. This is very important for us to see the real effects of the
financial downfalls. To understand this, we are first going to look at GDP growth in both cases.
According to Callen, (2022) GDP calculates the monetary value of the final goods and services—those

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purchased by the consumer—produced in a nation during a specific time period (say a quarter or a
year). It accounts for all the output produced inside a nation's boundaries. GDP is made up of
products and services generated for market consumption as well as certain nonmarket production,
including government-provided defense or educational services. Economists have identified different
shapes on these charts to help analyze different scenarios. These shapes range from the most
optimistic V shape to the most pessimistic L shape. If the recession has a V shaped recovery, it means
that the crisis did not cause a huge damage in the economy which allows for a quick and simple
recovery. On the other hand, if we have observed an L shaped one, it means that extensive damage
has happened, and the recovery will be slow and hard from the crisis.

DYNAMICS OF THE 2008 G LOBAL FINANCIAL CRISIS

In the case of the global financial crisis there has been a huge damage to the economy, which means
that the recovery from it was extremely slow. This would suggest that there was an L shaped
recovery in the GDP growth of the economies. According to Yilla, (2020) This is essentially how the
Great Recession's recovery appeared. Despite all the efforts of the Federal Reserve and the fiscal
stimulus provided by the American Recovery and Reinvestment Act of 2009, it took six years for the
per capita GDP to recover to 2007 levels, and real GDP is still far below pre-recession predictions.
This slow recovery was even worsened in some countries, mostly in Europe due to the sovereign
debt crisis. Because of this reason the L shaped recovery has differed and changed to a W shape,
which means there was some additional economic downfall in those countries. According to Kenton,
(2021) Several European nations went through a period of excessive government debt, the collapse
of financial institutions, and sharply rising bond yield spreads in their government securities during
the so-called "European sovereign debt crisis." The countries which were most affected by this
additional recession which made recovery for them even harder and in some cases impossible on
their own were mostly southern European countries like Portugal, Italy, Greece, and Spain. Of these
nations, Greece was probably in the worst situation. This has happened because in 2004 when the
country has adopted the Euro as its national currency, they did not even come close to the necessary
requirements to join the eurozone with both their national debt and deficit being way higher than
the requirements. According to the Council on Foreign Relations, (2018) Both the budget deficit and
debt ratio were significantly higher than 3% of GDP. It is later revealed that American investment
bank Goldman Sachs assisted Greece in 2001 in hiding a portion of its debt through intricate credit-
swap operations.

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On the first chart by Baily and Bosworth, (2013) We can see the GDP growth in the United States
between 2004 and 2012 which shows an L shaped recovery curve. We can say that it is a very poor
performance of the economy, on the other hand we can see that the country did not suffer
aftershocks like the European Sovereign debt crisis. On the other hand, the second graph by the
World Bank, (n.d.) we can see the GDP growth of Italy in the same time period. It is visible that the
country has suffered a greater damage partly due to the European sovereign debt crisis and the
recovery took a W shape instead of an L. From these pictures we can draw the conclusion that not all
countries have suffered the same effects thus the dynamics of this crisis can vary by country.

DYNAMICS OF THE RECESSION CAUSED BY THE COVID-19 PANDEMIC

The recession caused by the Covid-19 Pandemic lasted a much shorter time and the recovery was
much faster. This was due to the nature of the recession. Since it was not caused by human activity
but a virus and the lockdowns because of it, the recovery could start immediately after the
lockdowns have been lifted.

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On the graph by Milesi-Ferretti, (2021) We can clearly see that the recovery is taking a V shape. As
we have discussed earlier this means that the recovery was faster, and the actions taken by the
governments were more effective. According to Milesi-Ferretti, (2021) Different nations saw different
levels of the downturn during the first half of 2020; the UK and some euro area nations were
particularly hard impacted, while Japan and the U.S. experienced a more modest decline. The GDP
levels of the G7 economies began to converge in the third quarter of 2020 with the reopening, but
between the fourth quarter of 2020 and the first quarter of 2021, lockdowns to limit the pandemic
were implemented, and vaccine availability trailed behind that of the U.S. We can also see that
although different countries were hit with different strengths compared to the 2008 global financial
crisis the recovery is more or less uniform in shape. This is due to the nature of the recession and
because the governments around the globe took similar action regarding both the restrictions and
the lockdowns, as well as the aid which they provided for the economy and the population vas very
similar in many cases.

COMPARISON OF THE DYNAMICS OF THE TWO RECESSIONS

In the previous segment we have analyzed how the dynamics of these two world economic events
have worked. Now that we have this information, we can compare the two and draw some
conclusions about them. The first thing that comes to mind when we are comparing the dynamics of
the two is the duration and intensity of them. We can see that the 2008 Global Financial Crisis took
up a much longer timeframe. Although the initial drop was similar in depth, the recovery took much
longer in the case of 2008, while in the recent recession caused by the covid-19 pandemic the
recovery was rather fast and did not leave a huge mark in the GDP growth of the countries. We can
also see that the recovery from the 2008 financial crisis was also slowed down by other world events
like the foreign debt crisis in Europe. It is important to note that this did not happen in every country
thus the speed of recovery varied by country. It would be easy to say that the recession caused by
the pandemic also had similar setbacks in Europe for example with the appearance of the energy
crisis and the war in Ukraine, however in my opinion it is not the same because in the case of the
covid pandemic the economic performance has already recovered by the time these crises broke out.
In the case of the 2008 financial crisis this cannot be said as we can see on the graphs. In contrast of
the 2008 great recession where the intensity and the time of recovery were quite diverse between
different countries in different situations, in the case of the covid-shock the shape was similar,
however the intensity of the crisis was different country by country, since the virus has spread in
different paces and intensities as well.

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EFFECTS ON THE S&P 500 INDEX

Since the 2008 and the 2020 covid recessions were drastically different in their origins, it is important
to see their effects on the financial sector. We know that the great recession was detrimental to the
housing market and the banking sector, which caused a drastic shock to financial markets. On the
following chart by Statista, (2022) we are going to see the drop both crises have caused on the
SPX500 index. Different indexes can be a good indicator of a recession. The reason for this is the
following, According to Chen, (2019) An index is a tool for tracking the performance of a collection of
assets in a consistent manner. The performance of a group of securities meant to mirror a particular
market segment is often measured through indexes. When we are analyzing an index like the
Standard and Poor's 500 we are analyzing the overall performance of a country’s economy as well
since the stocks or securities packaged in indexes range from various sectors which means we can
have an overview about how well the economy performs.

According to Tamplin, (2022) The Standard and Poor's 500, or

S&P 500, is a stock market index that measures the
performance of 500 large-cap U.S. businesses across a range
of industries. It is frequently used as a barometer of investor
sentiment, and the results show how the American economy
is doing. As a result, the S&P 500's returns normally increase
in a strong economy and generally decline in a weak one. We
can see that the drop in the index was quite large in both
cases. This is due to the gravity of the two situations. Both
events had extensive effects on the global and on the US
economy. We can say however that the drop in the case of
the 2008 great recession was much higher. This is partly due
to the banking nature of the crisis, which was detrimental to financial markets and partly due to the
length, time and recovery of the crisis which we had discussed earlier.

CONSEQUENCES

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In the following part of the paper, the consequences of both events are going to be collected. If we
understand the consequences of the recessions, we can improve our strategies for us to be able to
react in a more efficient manner to future recessions. There can be many consequences of a
recession on which are monetary and fiscal in nature. Some of which are the following. During a
recession, credit is usually less available for lenders, and short-term interest rates usually are
lowered. To help with the losses of their profits, many companies must implement downsizing
measures which drastically increases unemployment. Naturally the thing which follows the rise in
unemployment is the drop in consumption. This is due to the scarcity of funds for the ordinary
people. Finally, the last element in the chain is the slowdown of the economic activity which is
caused by the drop in spending. The governments can use some tools which help alleviate the
hardship of a recession. Usually this comes in a form of government contracts or bailouts of major
market participants which are in danger of going bankrupt, or in the case of the recession caused by
the coronavirus pandemic scientific research and the management of lockdowns, travel and
commerce restrictions in a way that lets economies survive.

CONSEQUENCES OF THE 2008 GREAT RECESSION

The 2008 great recession was a banking and housing crisis. This financial crisis is considered to be one
of the worst of its kind. The consequences which followed were grave not only for the large banks
but for ordinary people as well. One of the aspects which brought some of the worst consequences
of the crisis was Uncertainty. According to Strauss-Kahn, (2020) Up until 2007, Americans with
"Neither Income nor Jobs & Assets" (NINJA) were eligible for subprime loans. The location and
magnitude of the latter toxic risk were kept secret and transferred through ostensibly reliable
securitized assets and financial vehicles. As a result, there was a freezing of global financial ties and a
rise in uncertainty, including about economic measures to deal with this unprecedented
circumstance. Uncertainty is a risk which can hardly be accounted for, and its probability is almost
impossible to predict. Due to this nature of uncertainty, if it is present in a recession, it generally
slows down economic activity and trading connections, this can worsen an already ongoing financial
crisis. According to the Corporate Finance Institute, (2022) The crisis had a significant effect on the
housing market. Within a few months, evictions and foreclosures started. In consequence, the stock
market crashed, and some large corporations failed, losing millions of dollars. Naturally, this led to
massive layoffs and protracted spells of unemployment throughout the world. International trade
slowed to a crawl as a result of declining credit availability and waning confidence in financial

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stability, which led to fewer and more cautious investments. Finally in 2009 the American Recovery
and Reinvestment act was passed in the United States. This meant that the country started and
expansionary fiscal policy. According to Hayes, (2020) The Act included $787 billion in tax
cuts/credits, jobless benefits for families, and spending on infrastructure, education, and healthcare.
This amount was later increased to $831 billion.

CONSEQUENCES OF THE RECESSION CAUSED BY THE C OVID-19 PANDEMIC

This financial crisis was very different from the previous ones in recent history. This means that like
the origins and dynamics of it, the consequences were different as well. Unlike the notorious
corporate bailouts of the 2008 great recession, this time the governments focused more on ordinary
people and small businesses. This is because these were the people who were hit the hardest by the
crisis. With the closures and restrictions introduced to combat the spreading virus, many people have
lost their jobs and many small businesses went bankrupt. This was because customers simply could
not access their shops, or the people simply were not in a financial situation where they would have
spent a lot of money on things that were not necessary for their homes or themselves. To
understand the consequences of the recession caused by the virus, it is not enough to state the facts
that the ordinary people have suffered a large economic downfall. According to Doleschel and Manu,
(2021) New investment decreased as a result of the rise in economic outlook uncertainty and the
implementation of lockdown measures. In comparison to the final quarter of 2019, gross fixed capital
formation globally (excluding the euro area) decreased by almost 10% in the first two quarters of
2020. This resulted in a 0.5 percentage point slowdown in capital stock growth overall, though this
was mostly regained in later quarters. Comparatively, although at a slower rate, the Great Recession
saw a far higher overall fall in global capital accumulation. This can be explained as the in the 2008
great recession, the housing and the financial market was one of the most affected and effectively
they started the crisis. Both markets and industries are typical for capital accumulation, so it is clear
why there was such a prominent fall. In order to alleviate the damage, the pandemic is causing
governments gave some exemptions from these lockdowns to some essential ports and so on.
According to International Finance Corporation, (2020) Governments have largely responded to the
problem by classifying ports, shipping, and trucking as critical and exempting these sectors from
lockdowns. For instance, the Indian government exempted from lockdown regulations the flow of
key commodities, supply lines, and cargo moving via ports. Most airports across the world are still
open to cargo planes even while many are restricted to passenger flights, which can be crucial for the
COVID-19 response (for example, to transport medical supplies). Governments and third-party
logistics providers need to work together more closely to address supply chain bottlenecks and
streamline approvals.

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COMPARISON OF THE CONSEQUENCES OF THESE TWO RECESSIONS

Both events are very important. Both challenged countries and their governments to solve a complex
problem. The nature of the two shocks were quite different, so the responses to them had to differ
as well. In the case of the 2008 worldwide recession the answer was the American Recovery and
Reinvestment act in the United States, and a global cooperation of national banks and the IMF to
alleviate the stress on the economies which were suffering the crisis. On the other hand, when it
comes to the recession caused by the Coronavirus pandemic, responses were different from the
previous crisis. The first, and most important thing to note about the consequences of this recession
is its cause itself, which was a virus so the first thing that the countries did in order to stop it was to
invest in an interna5tional effort to find the vaccine to combat the disease. Once the vaccine was
developed the reopening could start with some additional financial aid from the governments. A
common thing between the two events was uncertainty. This is a phenomenon which can be
observed in recessions quite frequently. If there is uncertainty, which is a non-quantifiable risk, trust
in the financial markets and the available investments drops in the eyes of the investors which makes
for a deficit in new capital and makes it more probable for investors to sell their investments. This
kind of uncertainty can have many reasons. In the case of the 2008 global financial crisis, it came
from the distrust in the financial system, while in the case of the covid-shock it came from the not
knowing. People and governments did not know how long it will take to develop a vaccine for the
virus and what restriction will be the next that different countries implement or when will they lift
them. The reasons were different, the result similar, uncertainty.

CONCLUSION

After we have collected the necessary information and analyzed both global financial events by
comparing their different aspects like their origin, their dynamics and their consequences, finally we
can draw our conclusions about the matter. The origins of the crises were very different. They have
appeared in different sectors of the economy; however, they have affected all the global economy.
The 2008 global financial crisis was more man made than the later Covid-shock. While during the
2008 financial crisis was more balanced throughout the sectors, the recession caused by the
pandemic has affected specific industries in a manner never seen before. Next, we have analyzed
their dynamics, the timeframe in which they have happened. To do this we have collected
information about multiple country’s GDP growth data from the relevant years and compared the
two events. We have noted that the 2008 recession had a longer lasting effect and recovery, taking
an L shaped recovery curve. In some countries the situation was even worsened by other economic
events like the foreign debt crisis. On the other hand, the recession caused by the covid-19 pandemic
had a much swifter dynamic. It came faster and it went away faster as well. The recovery here took a

13
V shape, which is considered to be the most promising. This was mainly due to the nature of the
crisis and that it took place in an otherwise healthy economy. With the listing of the restrictions,
business life could go on as normal and the recovery was much faster thanks to the quick action of
the market participants and the governments introducing stimulatory motions to help, alleviate the
crisis. When talking about the dynamics, we have also reviewed the effects of both crises on the
Standard and Poor's 500 or S and P 500 index. We have found that although both recessions had an
impact on the performance of the index, the 2008 great recession was much more detrimental to the
SPX500 and other indexes as well. This due to two reasons. The nature of the crises, and the shape
and speed of recovery. Regarding the consequences of the crisis, we can note the following things.
The 2008 financial crisis is considered to be one of the worst of its kind. The crisis had a significant
effect on the housing market, evictions and foreclosures started. In 2009 the American Recovery and
Reinvestment act was passed in the United States. This Act included $787 billion in tax cuts/credits,
jobless benefits for families, and spending on infrastructure, education, and healthcare. Other
consequences included job losses and uncertainty, which is a similarity to the covid-19 caused
recession as well. The past recent financial crises were substantially different from this one. In
contrast to the infamous corporate bailouts of the Great Recession of 2008, governments this time
around paid greater attention to regular citizens and small enterprises.  Global capital accumulation
fell by a far greater amount overall during the Great Recession. This can be explained by the fact that
one of the markets most affected by the crisis was the housing and banking one. Ports, shipping, and
trucking have all been designated as important industries by governments in response to the issue,
exempting them from lockdowns. As a closing statement of the paper, we can say that recessions
always existed and will continue to exist in the future. By comparing past crises and analyzing their
effects we are going to be better prepared for the next one and we can take action to recover from
another crisis quicker and more efficiently than ever before.

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