The year 2008 witnessed the outbreak of a devastating global financial crisis that left a clear mark on the world economy for a decade. The roots of this crisis lie in the subprime mortgage bubble in the United States, which quickly transformed into a systemic crisis that shook the foundations of financial institutions and led to significant losses in the financial markets.
The Genesis of the Crisis: High-Risk Loans and a Housing Boom:
The initial spark of the crisis began when bankers in the United States adopted an expansionary policy in granting mortgage loans, even to individuals with unstable financial situations and a lack of ability to repay. These loans became known as "subprime mortgages" or "high-risk mortgage loans."
The matter did not stop at granting these loans; bankers also converted these debts into complex investment instruments and sold them to investors worldwide. This activity led to an unprecedented inflation of real estate prices, creating what became known as the "housing boom."
The Collapse: Default and Catastrophic Consequences:
The housing bubble soon began to deflate when many borrowers were unable to meet their obligations and repay their mortgage installments. This resulted in a widespread wave of foreclosures, which led to an increase in the supply of real estate and a collapse in its prices.
The repercussions of this collapse were catastrophic for the financial system. Banks and investment institutions incurred significant losses as a result of holding investment instruments linked to these defaulted mortgages. The crisis reached its peak with the bankruptcy of the giant investment bank "Lehman Brothers," an event that ignited fears of a comprehensive collapse of the global banking system.
The Impact of the Crisis on Financial Markets:
The repercussions of the crisis were not limited to the real estate and banking sectors but extended to global financial markets. Between January and October 2008, major stock markets around the world experienced sharp declines ranging from 30% to 50%. These declines reflected the panic and lack of confidence that prevailed among investors and institutions alike.
Conclusion:
The 2008 subprime mortgage crisis serves as a stark example of the inherent risks in lax credit granting and excessive complexity in financial instruments. The crisis exposed the fragility of the global financial system and led to widespread economic and social consequences. The lessons learned from it remain relevant today in the efforts of regulators and institutions to build a more stable and resilient financial system.
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