Today on Crash Course Economics, Adriene and Jacob talk about the 2008 financial crisis and the US Goverment’s response to the troubles. So, all this starts with home mortgages, and the use of mortgages as an investment instrument. For years, it seemed like the US housing market would go up and up. Like a bubble or something. It turns out it was a bubble. But not the good kind. And the government response was…interesting. Anyway, why are you reading this? Watch the video!
More Financial Crisis Resources:
Financial Crisis Inquiry Report:
TAL: Giant Pool of Money:
Timeline of the crisis:
Crash Course is on Patreon! You can support us directly by signing up at
Thanks to the following Patrons for their generous monthly contributions that help keep Crash Course free for everyone forever:
Fatima Iqbal, Penelope Flagg, Eugenia Karlson, Alex S, Jirat, Tim Curwick, Christy Huddleston, Eric Kitchen, Moritz Schmidt, Today I Found Out, Avi Yashchin, Chris Peters, Eric Knight, Jacob Ash, Simun Niclasen, Jan Schmid, Elliot Beter, Sandra Aft, SR Foxley, Ian Dundore, Daniel Baulig, Jason A Saslow, Robert Kunz, Jessica Wode, Steve Marshall, Anna-Ester Volozh, Christian, Caleb Weeks, Jeffrey Thompson, James Craver, and Markus Persson
—
Want to find Crash Course elsewhere on the internet?
Facebook –
Twitter –
Tumblr –
Support Crash Course on Patreon:
CC Kids: …(read more)
BREAKING: Recession News
LEARN MORE ABOUT: Bank Failures
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
The 2008 financial crisis was one of the most significant economic events in recent history. It sent shockwaves throughout the global economy, causing millions to lose their jobs, homes, and savings. To understand how it happened and its implications, Crash Course Economics has dedicated an entire episode to dissecting the causes and consequences of this devastating crisis.
The video begins by explaining the concept of a financial crisis – a sudden and severe disruption in the financial system that affects the economy as a whole. They emphasize that financial crises are not a new phenomenon and have occurred throughout history. However, the 2008 crisis was particularly severe due to its global scale and the complex financial instruments involved.
The video highlights one key trigger of the crisis – the bursting of the housing bubble in the United States. It explains how lax lending standards and a surge in subprime mortgages led to a housing market boom, which in turn fueled the creation of complex financial products called mortgage-backed securities. These securities were based on the value of the underlying mortgages and were bought and sold by financial institutions worldwide.
At this point in the video, the hosts introduce the concept of leverage – the practice of borrowing money to make investments. They explain how financial institutions used high leverage ratios to increase their returns. However, this also meant that even a small decrease in the value of their assets could wipe out their capital and lead to bankruptcy.
The video then delves into the role played by investment banks, such as Lehman Brothers, and the proliferation of financial derivatives, such as collateralized debt obligations (CDOs), in exacerbating the crisis. These complex products were difficult to understand and value accurately, which made it challenging for investors to assess their risk exposure.
As the crisis unfolded, panic spread throughout the financial system. The video explains the concept of a bank run, where depositors rush to withdraw their money out of fear that the bank will collapse. This amplified the crisis, leading to the collapse or near-collapse of several major financial institutions.
To mitigate the crisis, governments and central banks implemented various measures, such as bank bailouts and quantitative easing. These actions aimed to stabilize the financial system, inject liquidity, and restore confidence in the markets. Nevertheless, the crisis had lasting consequences, including a deep global recession and a long-lasting impact on unemployment rates.
The video concludes by highlighting the lessons learned from the crisis. It emphasizes the importance of regulation and oversight in the financial sector to prevent excessive risk-taking and moral hazards. It also underscores the need for transparency and accountability in the creation and trading of complex financial instruments.
In summary, the Crash Course Economics video on the 2008 financial crisis provides a comprehensive overview of the causes and consequences of this significant event. By examining the housing bubble, financial leverage, and the proliferation of complex financial products, it underscores the systemic risks posed by an unregulated financial sector. Understanding the factors that led to the crisis is crucial in preventing similar events in the future and building a more resilient and stable global economy.
had to come to this video while watching the big short. its a great film by the way, just like this video
Let me do my angry Squidward impression again… the housing bubble?
I think your problem is that you’ve eaten all your 5’s Because it’s much easier to deal with the five that turns into a six and an eight or nine that was a six
TLDR: Greed, it was greed =P
Any Hindi vedio this story
Oh but its not gambling
Amazing video, thanks!
You skipped the part where the government coerced banks to lower lending standards, thus causing a 30 year moral hazard that led to the collapse of the housing market. But go on.
We will never see pre-Great Depression or even pre-2008 levels of stability for the rest of time. The predatory bankers/investors/lenders should've been made an example of and jailed, or worse (but hindsight is obviously 20/20).
I was about 7 years old when the market crash happened, my mom and dad had JUST bought a home after it happened for 90,000$ our home is now worth 550k!
this is why i bought bitcoin in 2013 cheap as chipds stack those saoshis this comment is time sensitive
Good video but what really caused the house prices to go up? Wish you went deeply than this and also how the Buble burst caused a crash in a stock market .
So from what I understand…
* Banks become very lax in their lending practices.
* Millions of people get loans to built houses either to rent or sell them since housing was one of the profitable business in the US, creating the "Housing Bubble".
* Various companies in the US insist investing in housing is one of the safest investments around, causing more people to invest in housing.
* People that got late into the "Housing Bubble" are unable to payback their mortages because of high prices, causing them to default.
* Working Class People that are still paying for their homes are unable to keep paying their mortages or landlords because of high prices, forcing them to sells their properties and/or their homes.
* Both late investors and working class people start defaulting on mass.
* Since nobody has the money to buy or built houses, the "Housing Bubble" pops, leading to the price crash of house prices.
* Not only are people not paying back their loans but any property that could be taken by the banks has no relatively good value to get their money back.
* Banks enter into panic mode, causing a lot of people to get their money out of the banks in mass, practically causing many banks to have no money left for significant loans or investments.
* Banks collapse, thus Economic Crisis ensues.
Covid recession be like: hold my beer
I still blame the FEDs for this, because in the end they benefit by either buying off the failed banks cheaper or something. The fed can print credit as long as someone will borrow it into existence, but they cannot print product (or production).
The way you conduct your explanation is just phenomenal.
Thank you.
My spouse and I are adding a variety of stocks/ETF to my present holdings for the long term, We've set aside $250k to start following inflation-indexed bonds and stocks of companies with solid cash flows, I believe it is a good time to capitalize on the market for long-term gains, but it wouldn't hurt to know means of actualizing short term profit.
The Market have been suffering over the past month, with all the three indexes recording losses in recent weeks. My $400,000 portfolio is down by approximately 20%, any recommendations to scale up my returns before retirement will be highly appreciated.
Finally,someone who explain this in a understandable way
Dang now in 2023 banks failed again
but why did energy stock fell because the bubble was just in housing market
Expecting it to happened this year again with different story
Silicon Vally Bank brought me here.
The AC/DC belt buckle took me by surprise
WOOOOOOOO ITS HAPPENING AGAIN
It ain't what you know that gets you in trouble. It's what you know for sure that just ain't so.