the global financial crisis explained in two minutes less gold the global financial crisis of 2007-2008 was a major financial crisis that affected the world economy it began in the United States and then spread rapidly to other countries the crisis was caused by a combination of four key factors one subprime mortgages two the housing market bubble free financial institutions like investment Banks and for a lack of Regulation all right the first one subprime mortgages sub means below Prime means the best or premium so subprank is below the best so below average many people with poor credit
history were given top Prime mortgages I.E loans to buy homes that they eventually couldn't afford these loans went on our subprime mortgages these loans were also packaged into financial securities that the investment Banks were investing in number two the housing market bubble so as a result of lots of people buying homes because now they can afford to do so given subprime mortgages house prices started increasing this created a housing market bubble which eventually burst alright number three financial institutions many of the large financial institutions like the investment Banks all invested heavily in subprime mortgage back
Securities so when the housing market bubble burst and people defaulted on their lawns the investment Banks and those who invested in these financial securities were in trouble the value of these Securities plummeted causing huge losses for these financial institutions last but not least number four the lack of Regulation there was a lack of regulation in the financial services industry which allowed these poor practices to occur without any proper oversight the global financial crisis of 2007-2008 had far-reaching impacts all over the world many financial institutions faced bankruptcy a lot went bust some had to be bailed
out by governments and the general public lost their faith in the financial system as a result the crisis led to a sharp decrease in economic growth increase in unemployment and a heavy drop in the stock market this crisis should serve as a reminder of the importance of Regulation and oversight in the financial services industry in order to prevent such events from happening again before you go if you've got a finance term that you don't understand let me know in the comments below and I'll do a two-minute explainer on it if you aren't already subscribe and
I'll see you in the next one peace foreign
