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crisis that escalated in autumn 2008 in connection with the lehman brothers bankruptcy is the largest since the great depression at the end of the 1920s and early 1930s. confidence in the financial markets fell substantially last autumn and credit spreads – the difference between the interest rate on higher risk assets and that on safe assets – rose rapidly. it was initially unclear how large the consequences of the financial turbulence would be for developments in the real economy, but it soon became clear that the consequences were widespread. credit terms were quickly tightened for companies and households in both the united states and the euro area. lending growth also slowed down in sweden. households and companies went from being relatively optimistic regarding future by bubble, we mean here a development, which if it continues, will evidently not be sustainable in the long term. developments to being very pessimistic. the global economy entered a recession where demand was falling more quickly than at any other time since the second world war. now the financial turbulence has largely subsided as a result of the measures taken by central banks and governments, although the situation in the financial markets can still not be called normal. the global economy has begun to grow again. although the imf is assuming that only half of all banks ’ losses have been realised, market confidence has recovered and credit spreads have fallen markedly. however, there is still uncertainty over the recovery in the world economy and the sustainability of the improvement that has occurred. our assessment is that the recovery in sweden will be slower than most of the previous recoveries have been. one reason for this assumption is that studies indicate that recessions in the world economy caused by problems in the financial sector are followed by a weaker recovery than in other recessions. what caused the crisis? there have been many discussions on what caused the crisis and different analysts emphasise different factors. those factors that most often feature in these discussions are macro economic imbalances, us housing policy, inadequate regulatory frameworks and supervision, and an overly expansionary monetary policy, particularly in the united states. here i shall briefly discuss these factors. macro economic imbalances at the macro economic level the us economy prior to the crisis was characterised by very low savings and a high level of household indebtedness. the us economy as a whole used more goods and services than was produced, which was reflected in a large deficit in its international trading. the opposite situation applied to a number of asian countries, where saving was high and the net export figure was positive. one can say that there was