Keynesian Theory Case Study

Explain why the financial system crashed in the autumn of 2008, and consider how Keynesian expansionary policy to fight the recession may be held back by problems in rolling over the national debt.
Recession was preceded by perhaps the most significant rise in the near past: in 2003-2008. World GDP grew by its one third (1/3).
U.S. mortgage crisis which happened for one year (from August 2007 to August 2008) has become a deep financial crisis. In III quarter of 2008, the U.S. entered a recession, and it became apparent that the first time since the 1974-1975 crisis. It will cover the entire developed world.
High economic growth rates in the world since the early 2000's against the backdrop of the deep imbalances in savings and accumulation. In the current cycle, exacerbated systemic problems in the functioning of the global financial system. On the one hand, the huge accumulated a negative balance of payments in the U.S. (since 1999 - long before the rise in oil prices) and the EU (since 2006), on the other - a growing surplus of the developing countries trillions of dollars, or about 1,2% of global GDP.
The flow of savings from developing countries - mainly China, India, OPEC and Russia - was in the last decade, about 1% savings rate of developed countries to compensate for the lack of their own savings. Negative real interest rates in developed countries. Soft (moderate) monetary policy in the context of the global slowdown of inflation, as well as the inflow of capital from developing countries have contributed to the fact that during most of 2000's real interest rates in developed countries were negative.
This resulted in a "bubble" in the markets of certain assets - stocks, real estate, etc. The lack of a traditional stock market crisis in the U.S. in mid-1990's, which would have reduced the size of "bubbles".
Keynesian theory of instability directly implies the need for government economic policy. In terms of Keynesian insufficiency of gross expenditure leads to an increase in unemployment, redundancy is gross expenditure generates inflation. Thus the government needs to reduce total costs in the economy when they are too large and vice versa, to increase these costs when they are too low. The stabilization policy is the government's control over the economic situation in order to approximate the GDP to its potential level and maintain low and stable inflation. Policy objective of economic growth is the increase in actual volume of GDP.