Business
2008 Financial Crisis Explained
A look into the 2008 financial crisis, a global economic meltdown triggered by the US subprime mortgage crisis, leading to the Great Recession.
What is it?
The 2008 financial crisis, also known as the Great Recession, was a severe worldwide economic crisis. It began in the United States with the collapse of the subprime mortgage market, where risky loans were bundled and sold to investors. When homeowners began defaulting, the value of these mortgage-backed securities plummeted. This triggered a widespread credit crunch and the failure of major financial institutions like Lehman Brothers, causing a domino effect across the global financial system.
Why is it trending?
Although it happened over a decade ago, the 2008 crisis remains a critical reference point in economic discussions. It is frequently cited when analyzing current market volatility, housing bubbles, and regulatory policies. The long-term consequences are still studied, making it a key case study for understanding systemic risk and preventing future economic collapses. Its lessons are perpetually relevant whenever fears of a new recession emerge.
How does it affect people?
The crisis had a devastating impact on ordinary people worldwide. Millions lost their jobs, homes, and retirement savings. It led to a sharp increase in unemployment and home foreclosures. Governments responded with massive bailouts for financial institutions and implemented stricter regulations, such as the Dodd-Frank Act in the US, to prevent a recurrence. The event eroded public trust in the financial system and highlighted how interconnected global markets can transmit risk, affecting personal wealth and economic security for years.