Crisis Economica

http://www.obliviousinvestor.com/financial-crisis-vs-economic-crisis/
this is WHY it is a FINANCIAL CRISIS, not an ECONOMIC crisis

DEFINITION
FIRS OF ALL, let’s see what a global financialcrisis is…..IT IS A worldwide period of economic difficulty experienced by markets and consumers. A global financial crisis is a difficult business environment to succeed in since potential consumerstend to reduce their purchases of goods and services until the economic situation improves.

BACKGROUND
Since 2007, nations around the world experienced a series of major economic and financialproblems. The events began with the financial crisis of 2007–2008, considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the threatof total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world.
 The crisis played a significant role in thefailure of key businesses, and a downturn in economic activity leading to the 2008–2012 global recession and contributing to the European sovereign-debt crisis.
CAUSES
Some of the reasons for thiscrisis are: 

1. The US Real estate market crash 

2. High default rates on Sub prime loans & 

3. Sub prime Mortgage backed securities
A Sub prime loan is a loan that is granted to aborrower who does not qualify for loans owing to a variety of risk factors like low income level, bad credit history etc. 
In general, banks giving home loans to people who couldn't afford homes.That's what started it. Lots and lots of things happened afterward. 
The effects of this economic meltdown are: 

1. Banks have incurred huge losses. Their earnings came down. 
2. Financialinstitutions have gone bust or have been taken over by bigger organizations 
3. The housing prices have plummeted 
4. The liquidity in the financial system has come down 
5. High unemployment ...