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The 2008 economic crisis is likely to be a consequence of the bubble which burst in the summer of 2007 in the American bank system, due to housing loans whose owners could not afford to repay. ((This post is based on the following article: Koumparoulis, Dimitrios N. "2008 Global economic crisis: A commentary." Journal of Economics Bibliography 5.1 (2018): 41-44.))A Blog Article by Dimitrios Koumparoulis.This economic crisis has as an official starting date of September 15th, 2008, when the Lehman Brothers, one of the largest buyers of the “toxic debt” collapsed. Keynes’ theory suggests an increase in expenditure and/or a decrease in taxes during an economic recession. This theory however provokes skepticism since its application may cause a financial derailment in countries which, even in periods of an economic boom failed to reduce their national debt and commercial deficit towards third countries, which can cause an economic distortion.A solution for the crisis may involve clearing the market of the investment products which stemmed from non-guaranteed housing loans. Consequently, the Glass-Steagall Act and the Paul Volcker’s proposal, known and as “Volcker Rule”, agreed upon by Wall Street bankers as a last-ditch effort of the former president Obama in 2009, to set up a relevant committee in order to restrict the United States banks from making certain kinds of speculative investments that do not benefit their customers. Arguably, a lack of business ethics on the part of some executives may have had an impact on the extent of this economic crisis.In Europe’s small open economies and under-performing economic regions, i.e., the Euro zone, this economic crisis had dramatic effects, mainly in the South. ((Ireland: The first Eurozone country that entered into recession in 2008. It received 67 billion euros in loans in December 2013, when the real estate market collapsed, as banks began to face a problem. Over the years, Ireland has become a pole of attraction for global giants of technology, with many companies creating their European base there. Investments are booming, and Ireland is exemplified by the International Monetary Fund for Greece.Portugal: It received 78 billion Euros as rescue loans in 2011, when it failed to control the budget deficit. It was forced to do painful and unpopular economic reforms to regain its competitiveness. The "bitter medicine" had an effect. Portugal came out of the program in May 2014.Cyprus: It was in trouble in 2013 when the financial system began to collapse. It was forced to close its banks to prevent total collapse. It has borrowed 10 billion Euros in March 2013. In return this country has also had to implement economic reforms, including the cuts in public spending and the privatization program.Greece: It may have avoided the disastrous exit out of the Eurozone, but it remains in an economic crisis.)) The continued credit expansion presents risks since there could be little room for economic policy maneuver. In the present, it is not clear if another economic crisis could be avoided, as there were data showing negative signs in the subprime mortgage market since 2006, but efforts were made to ignore the evidence as the volume and value of transactions in the secondary financial market was significant. ((Financial claims securitization took place for several years in the United States (US) while in the Euro area it was adopted with a delay. However, its growth was rapid: the value of securitized mortgages of financial assets in Euros rose from € 50 million in 1999 to € 400 million in 2007 (ECB Bulletin, “Securitization in the Euro area”, 2/2008). This increase was certainly not equally distributed among European Union member states and continued to lag behind growth in the US and the United Kingdom. At the same time, it spurred international credit risk transfer activity: the value of credit swap contracts (CDS) worldwide rose from zero in 2001 to $ 60 trillion at the end of 2007 (International Financial Crisis, Charilaos Mertzanis, 2008).))The economic cycle theory of the Austrian School, represented by the economists Ludwig von Mises, Friedrich Hayek, Murray Rothbard and Eugene Heathe, suggests that the causes of cyclical fluctuations in economic activity, from periods of growth to the times of recession, should be sought in the money circulated, in the sources of its issue and its use. According to representatives of the Austrian School, the monetary policy of governments could be a significant factor of financial instability and fluctuations as potential triggers of financial crises.Written by Dimitrios KoumparoulisEdited by Pablo MarkinFeatured Image Credits: Lehman Brothers building, New York, US, April 28, 2003 | © Courtesy of Scott Cawley/Flickr.[cite]&#160;