9781422281185

more new houses were being built. Housing businesses laid off workers. Home sales fell. Many businesses closed shop. Interest rates increased. Rising numbers of people could not pay their home loans. As a result, banks began to fore- close on homes. Banks lost money because they had loaned out more money than the homes were worth now. A Gloomy Past For a while, many feared that a depression would happen. In the 1930s the Great Depression caused chaos in the United States. The stock market crashed, resulting in the loss of millions of dollars. Banks failed, wiping out the sav- ings of many people. Unemployment surged. People lost their homes at a much greater rate than normal. Many peo- ple went hungry. This bust continued from 1929 to 1940. Before long, the Great Depression expanded to Canada, and then around the world. The United States learned valuable lessons from the Great Depression. Laws made banks stronger and safer. Government policies kept such a big calamity from happen- ing again. They could not prevent it entirely, though. Nothing could. The Great Recession In 2007, some protections kept the economy from reaching the depths suffered during the Great Depression. However, times were still hard. Banks had difficulties, and some failed. In 2009 a total of 176 banks closed their doors. Banks that held on slowed making loans to a trickle. The

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The Economics of Global Trade