One of the biggest economic events since the start of the 21st century was the 2008 financial crisis in the United States. The 2008 financial crisis led to one of the largest economic downturns since the United States' Great Depression. 1930s. In Chapter 12 of our textbook, Mankiw provides a brief case study of the 2008 financial crisis. In his case study, Mankiw focuses on the historically low interest rate set by the FED in response to the collapse of the Internet bubble at the beginning of the year. 2000s, weak government regulation and the financial innovation of securitization were the main factors that fueled the real estate market bubble of the 2000s (Mankiw 348). It was the eventual overheating of the housing market bubble that led to the financial crisis of 2008. The crisis ultimately led to a substantial increase in mortgage defaults and foreclosures, as well as d Significant losses for banks and shadow banks that held mortgage-backed securities. and greater volatility in the stock market (Mankiw 349). Mankiw provides an adequate overall analysis of the 2008 financial crisis as it occurred; However, Mankiw omits many key points in his case study in reference to the factors that contributed to the financial crisis and its ultimate repercussions not only on the United States economy, but also on the global economy. Mankiw correctly diagnosed many of the factors that led to the 2008 financial crisis and their effects on the crisis need to be addressed and further explored. The first of these problems is the financial innovation known as securitization. Due to securitization, mortgages were no longer kept on the lenders' books. Instead, lenders sold them to packagers who packaged the individual loans into cut-up bonds... middle of paper ... bills. So the danger, the fate of the economy, is less under the control of the government or the FED because it extends further to the faceless investors whose profit speculation very much determines the health of the economy. The 2008 financial crisis left much of the United States economy in shambles, and debate continues over what precisely led to the collapse. In reality, it was a combination of all the factors mentioned above that contributed to the economic collapse of 2008. Preventing it again would require greater regulation and a relaxation of liberal economic policies. However, this is easier said than put into practice in an era dominated by liberal policies. Another financial crisis will occur; However, it will depend on U.S. policymakers and others in the financial and economic sectors to determine the end of the crisis...