At the same time, there was a severe contraction of liquidity in credit markets worldwide, caused in part by a debacle related to subprime mortgages.
At the same time, there was a severe contraction of liquidity in credit markets worldwide, caused in part by the subprime mortgage crisis, which resulted in the U.S. government's providing emergency loans to several American firms and the bankruptcy or sale of several major financial institutions.
By Amy Davidson Sorkin February 24 , 2009Ben Bernanke, the Chairman of the Fed, told Congress this morning that our economy was experiencing a "severe contraction," but that if we do everything the Obama Administration wants us to do then 2010 could be a "year of recovery".
(Photograph: Platon) Ben Bernanke, the Chairman of the Fed, told Congress this morning that our economy was experiencing a "severe contraction," but that if we do everything the Obama Administration wants us to do then 2010 could be a "year of recovery".
The result was a severe economic contraction, on a scale not seen since the Great Depression.
In fact, it is likely to undergo a severe contraction over the next few years.
That was a "pretty severe contraction," the White House press secretary, Robert Gibbs, said aboard Air Force One en route to Missouri.
Compared with the same quarter last year, gross domestic product fell 3.7percentt, which was a less severe contraction than economists had forecast.
But it was partly a natural response to a severe contraction (in the Baltics, for example, GDP fell by up to a fifth from peak to trough).
Banking is a crucial segment of the economy; a severe contraction in banking has a far greater potential impact than if, say, carpet weavers found themselves in a similar situation.
