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The 2007–2008 financial crisis, or Global Economic Crisis (GEC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers,[1] excessive risk-taking by global financial institutions,[2] a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a “perfect storm”, which led to the Great Recession.

A continuous buildup of toxic assets in the form of subprime mortgages purchased by Lehman Brothers ultimately led to the firm’s bankruptcy in September 2008. The collapse of Lehman Brothers is often cited as both the culmination of the subprime mortgage crisis, and the catalyst for the Great Recession in the United States.

The TED spread (in red), an indicator of perceived credit risk in the general economy, increased significantly during the financial crisis. The TED spread spiked up in July 2007, remained volatile for a year, then spiked even higher in September 2008, reaching a record 4.65% on October 10, 2008.
Mortgage-backed securities (MBS) tied to American real estate, as well as a vast web of derivatives linked to those MBS, collapsed in value. Financial institutions worldwide suffered severe damage,[3] reaching a climax with the bankruptcy of Lehman Brothers on September 15, 2008, and a subsequent international banking crisis.[4]
The preconditioning for the financial crisis was complex and multi-causal.[5][6][7] Almost two decades prior, the U.S. Congress had passed legislation encouraging financing for affordable housing.[8] However, in 1999, parts of the Glass-Steagall legislation, which had been adopted in 1933, were repealed, permitting financial institutions to commingle their commercial (risk-averse) and proprietary trading (risk-taking) operations.[9] Arguably the largest contributor to the conditions necessary for financial collapse was the rapid development in predatory financial products which targeted low-income, low-information homebuyers who largely belonged to racial minorities.[10] This market development went unattended by regulators and thus caught the U.S. government by surprise.[11]
After the onset of the crisis, governments deployed massive bail-outs of financial institutions and other palliative monetary and fiscal policies to prevent a collapse of the global financial system.[12] In the U.S., the October 3, $800 billion Emergency Economic Stabilization Act of 2008 failed to slow the economic free-fall, but the similarly-sized American Recovery and Reinvestment Act of 2009, which included a substantial payroll tax credit, saw economic indicators reverse and stabilize less than a month after its February 17 enactment.[13] The crisis sparked the Great Recession which resulted in increases in unemployment[14] and suicide,[15] and decreases in institutional trust[16] and fertility,[17] among other metrics. The recession was a significant precondition for the European debt crisis.
In 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act was enacted in the US as a response to the crisis to “promote the financial stability of the United States”.[18] The Basel III capital and liquidity standards were also adopted by countries around the world.[19][20]…(read more)

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The 2008 financial crisis is considered one of the most significant economic downturns in modern history. It had far-reaching implications that affected millions of people around the world, leading to job losses, foreclosures, and a global recession. In order to understand the root causes of this crisis and its lasting effects, it is important for economics and finance students to delve into the intricacies of what truly transpired during that tumultuous time.

One valuable resource for students looking to gain a deeper understanding of the 2008 financial crisis is the documentary film, “Unraveling the 2008 Financial Crisis: A Deep Dive!”. This video provides a comprehensive look at the events leading up to the crisis, the key players involved, and the fallout that ensued. Through interviews with economists, financial experts, and government officials, the film offers a detailed analysis of the complex web of factors that contributed to the meltdown of the global financial system.

One of the central themes of the documentary is the role of risky financial practices, such as subprime lending and the securitization of mortgages, in creating the conditions for the crisis. The film explains how banks packaged these high-risk loans into complex financial products that were then sold to investors, leading to a dangerous bubble in the housing market. When the bubble burst, it triggered a chain reaction that reverberated throughout the entire financial system, causing widespread panic and destabilizing markets worldwide.

The film also explores the regulatory failures that allowed these risky practices to proliferate unchecked. It highlights the inadequacies of government oversight and the lack of transparency in the financial industry, which enabled banks to take on excessive levels of risk without sufficient safeguards in place. This lack of regulation ultimately exacerbated the impact of the crisis and made it much more difficult to contain.

For economics and finance students, “Unraveling the 2008 Financial Crisis: A Deep Dive!” serves as a valuable learning tool that can help them understand the complexities of the financial system and the importance of sound regulatory practices. By studying the events leading up to the crisis and dissecting the failures that allowed it to happen, students can gain a deeper appreciation for the critical role that effective regulation plays in maintaining a stable and healthy economy.

In conclusion, the 2008 financial crisis was a watershed moment that forever changed the landscape of the global economy. By watching “Unraveling the 2008 Financial Crisis: A Deep Dive!”, economics and finance students can gain a nuanced understanding of the factors that precipitated the crisis and the lessons that can be learned from its aftermath. Armed with this knowledge, students can better equip themselves to navigate the complexities of the financial world and contribute to building a more resilient and secure economic future.