Global Recession is coming, but what does it mean for the likes of Bitcoin? Will we see retail investors jump in from the stock market?
The primary cause of the great recession was the credit crunch (2007-08). Credit crunch for a short background to why bad debts in the US housing market had such a big effect on economies in the US and Europe. In summary: Credit crunch led to a fall in bank lending, due to a shortage of liquidity. Fall in consumer and business confidence resulting from financial instability.
Fall in exports from the global recession. Fall in house prices leading to negative wealth effects. Fiscal austerity compounded the initial fall in GDP. In Europe, the single currency created additional problems because of over-valued exchange rates, and high bond yields.